Seocho 2013west 1354 (Law No. 19, 2013)

Where the input tax amount of gold bullion exporter is deducted under the good faith principle, five years of exclusion period shall be applied.

Even if there is a range of gold bullion companies in the course of a series of gold bullion transactions, as well as actual gold bullion has been distributed and exported, and since evidential documents such as tax invoices have been issued properly at each transaction stage, the Plaintiff’s act of receiving a refund or deduction of value-added tax under the tax invoice of this case does not constitute a case where national tax is deducted or refunded due to fraud

The exclusion period for national tax assessment under Article 26-2 of the Framework Act on National Taxes

2013Guhap60576 Revocation of Disposition of Imposition of Value-Added Tax

AAA Commercial Corporation

O Head of tax office

March 28, 2014

May 27, 2014

1. On July 10, 2012, the Defendant’s imposition of the first value-added tax for the Plaintiff on July 10, 2012 and the second value-added tax for the first time in 2004 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. The plaintiff is a company established on March 9, 1995 for the purpose of wholesale and retail business, manufacturing business of precious metal, and export and import business.

B. From January 1, 2004 to June 30, 2004, the Defendant purchased gold bullion from BB Co., Ltd. (CC, D, D, EE, Co., Ltd., FF, GG, and H (hereinafter collectively referred to as “the instant purchaser”), respectively, and paid the price in full (hereinafter referred to as “the instant gold bullion transaction”). From July 1, 2004 to December 31, 2004, the Defendant received purchase tax invoices equivalent to the purchase amount from each of the instant purchaser, and filed a return by deducting them from the input tax amount for the pertinent taxable year.

C. The Defendant: (a) even though the Plaintiff knew that the zero tax rate was applied to the export of gold bullion under the Value-Added Tax Act and the input tax amount of the value-added tax was refunded, it was unfairly deducted and refunded the input tax amount related to gold bullion export from the first import to the final export; (b) determined that the ten-year exclusion period for imposition of the value-added tax was applied to the Plaintiff, where the input tax amount was deducted and refunded due to fraud or other unlawful acts; (c) on July 10, 2012, the Defendant issued a notice of the imposition of the principal tax other than the above additional tax (hereinafter referred to as “the imposition of the principal tax of each case”).

D. The Plaintiff appealed and filed an appeal on March 11, 2013. However, the Tax Tribunal dismissed the Plaintiff’s appeal on July 19, 2013.

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, 3, Eul evidence 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The parties' assertion

(1) The plaintiff's assertion

Since the transaction of this case between the plaintiff and the purchaser of this case was actually distributed and exported through the transfer of gold bullion, and the evidential documents, such as tax invoices, were issued normally at each transaction stage, the transaction of this case does not fall under "the case of evading national taxes or being refunded or deducted through fraudulent or other unlawful acts" under Article 26 (1) 1 of the former Framework Act on National Taxes, and therefore the exclusion period for imposition of five years under Article 26 (1) 3 of the former Framework Act on National Taxes shall be applied. Thus, the disposition of this case is illegal since it was imposed after the exclusion period for imposition of five years.

(2) The defendant's assertion

(A) The Plaintiff’s input tax deduction is not allowed against the principle of good faith as well as the provisions of the Framework Act on National Taxes on the exclusion period of imposition under the principle of good faith as to the Plaintiff’s input tax deduction and refund, by abusing the input tax deduction and refund system by taking advantage of the malicious business operator’s illegal transactions aimed at evading output tax amount. In such a case, the Plaintiff’s input tax deduction is not applicable.

(B) Even if the provision of the Framework Act on National Taxes regarding the exclusion period of imposition applies to the Plaintiff, the exclusion period of imposition shall apply as the Plaintiff’s act of deducting the input tax amount falls under “Fraud and other unlawful acts,” and thus, the exclusion period of imposition shall apply as the Plaintiff’s act constitutes a case where the exclusion period of imposition is applied, or where

(C) According to Article 12-3(2)3 of the former Enforcement Decree of the Framework Act on National Taxes, in cases where the deducted tax amount is collected due to nonperformance of duty, etc., the date on which the cause for collecting the deducted national tax occurred. Thus, the period of exclusion of the imposition should be deemed to be the date on January 20, 2011, where the Supreme Court en banc Decision (209Du13474) states, “The exporter’s input tax deduction and refund, which was made by a malicious entrepreneur through taking advantage of the input tax deduction and refund system by taking advantage of the illegal transaction of a malicious entrepreneur for the purpose of evading the output tax amount, shall not be permitted against the principle of good faith.”

B. Determination

(1) Provisions concerning the exclusion period of imposition

Article 26-2 (1) of the former Framework Act on National Taxes (amended by Act No. 10405, Dec. 27, 2010; hereinafter the same) provides that "ten years from the date on which a national tax may be imposed, where a taxpayer evades a national tax, obtains a refund or deduction by fraud or other unlawful means," subparagraph 1 provides that "if a taxpayer fails to file a tax base return by the statutory due date of return, for seven years from the date on which a national tax may be imposed," and subparagraph 2 of Article 26-2 (1) provides that "if a taxpayer does not fall under subparagraphs 1 and 2, for five years from the date on which a national tax may be imposed."

Meanwhile, Article 12-3(1)1 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 22038, Feb. 18, 2010; hereinafter the same) provides that “The date following the due date for filing a return or the due date for filing a return on the tax base and amount of the relevant national tax in the case of national tax,” and Article 19(1) of the former Value-Added Tax Act (amended by Act No. 9915, Jan. 1, 2010; hereinafter the same) provides that “the business operator shall report to the head of the competent district tax office having jurisdiction over the place of business within 25 days after the end of the taxable period.” Article 3(1) of the same Act provides that “The taxable period of value-added tax on the business operator shall be from January 1 to June 30, and from July 1 to December 31, 201”.

(2) As to exclusion of exclusion period under the principle of good faith

If a malicious entrepreneur in bad faith in a series of consecutive transactions does not pay the value-added tax collected by him/her by attempting to make an abnormal transaction that only causes losses and does not evade the value-added tax (hereinafter referred to as “illegal transaction”), such as an exporter in the next transaction stage, the State is bound to make a refund of the input tax with other tax revenues, if the exporter is entitled to deduct or refund the input tax without the burden of the output tax due to applying the zero-rate tax rate, such as the exporter. However, such a result constitutes an active outflow to the National Treasury beyond the passive tax revenue gap, and thus, the damage to the value-added tax system itself and the overall tax system may be caused by the transfer of the burden to the general public. In such a case, seeking the deduction and refund of the input tax amount is difficult to be paid. Thus, it is reasonable to deem that an exporter is considerably contrary to the principle of good faith and sincerity under Article 15 of the former Framework Act on National Taxes (amended by Act No. 9910, Jan. 1, 2010). 201.

However, in a case where an entrepreneur who is entitled to deduct or refund the input tax without bearing the input tax amount due to applying the zero-rate tax rate, such as an exporter, knew or was unaware of the fact that there was a malicious entrepreneur who makes an illegal transaction for the purpose of evading the value-added tax in the course of the series of transactions by a tax invoice, claiming the deduction or refund of the input tax amount by the tax invoice violates the principle of good faith, it is not allowed as a violation of the principle of good faith to claim the deduction or refund of the input tax amount under the Value-Added Tax Act, but in such a case, claiming the deduction or refund of the input tax amount under the Value-Added Tax Act, but in such a case, it is not allowed as a good faith to claim the deduction or refund of the input tax amount. As a legitimate requirement of taxation for the prompt determination of legal relations, both parties have different sources of tax, and the Framework Act on National Taxes does not stipulate the exclusion period of taxation, but does not exclude the exclusion period of taxation when there is no provision in the Framework Act on National Taxes.

(3) As to the exclusion period of imposition

(1) "Fraud and other unlawful acts" under Article 9 (1) of the former Punishment of Tax Evaders Act (wholly amended by Act No. 919, Jan. 1, 2010) means acts which enable the evasion of taxes, i.e., fraudulent means or other active acts deemed unfair by social norms, which make it impossible or considerably difficult to impose and collect taxes, and it does not constitute mere failure to file a tax return or making a false tax return without accompanying any other acts (see, e.g., Supreme Court Decision 201Do527, Apr. 28, 201). 20 if the Plaintiff’s tax base under Article 9 (1) of the former Punishment of Tax Evaders Act (wholly amended by Act No. 9919, Jan. 1, 201; 2017Du16527, supra, it cannot be deemed that the Plaintiff’s act constitutes an unlawful act of tax evasion under Article 20 of the Framework Act on National Taxes or an unlawful act of tax evasion under Article 16 of the same Act.

(4) As to the starting date of the exclusion period of imposition

Article 12-3 (2) 3 of the former Enforcement Decree of the Framework Act on National Taxes provides that "where the deducted tax amount is collected due to non-performance of obligation, etc., the date on which the cause for collecting the deducted national tax arises," but the disposition in this case according to the purport of the Supreme Court's decision that no claim for the deduction and refund of the input tax amount cannot be made due to the principle of good faith shall not be considered as "where the deducted tax amount is collected due to the non-performance of obligation, etc." under Article 12-3 (2) 3 of the former Enforcement Decree of the Framework Act on National Taxes, so the period for exclusion of the imposition of value-added tax shall be deemed as "where the deducted tax amount is collected due to the non-performance of obligation, etc."

(5) Sub-committee

Ultimately, the exclusion period for value-added tax in this case is five years, and the exclusion period for imposition of value-added tax in 2004 and 2004 is July 26, 2004 and January 26, 2005, which is the day following the filing deadline for the return of value-added tax. The disposition in this case was made only on July 10, 2012, when five years have elapsed from the above initial date. Thus, the disposition in this case was made after the exclusion period for imposition of value-added tax, and is unlawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is reasonable, and it is so decided as per Disposition.