National High Court Decision 2007No1221 (Law No. 23, 2007)

The amount deposited by a corporation to the account in the name of the representative director shall be deemed the revenue of the corporation.

○○○ Private Teaching Institutes entrusted and consulted on the requirements for the establishment of ○ Private Teaching Institutes and facility regulations in the name of the representative director by a corporation, other than school fees and school fees reverted to the Private Teaching Institutes’ Association among the school expenses, shall be the revenue amount of the corporation.

The contents of the decision shall be the same as attached.

Article 14 (Real Taxation under Framework Act on National Taxes)

Article 7 (Supply of Services)

1. All of the plaintiff's claims are dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s imposition of value-added tax against the Plaintiff on January 2, 2007, of KRW 79,606,860 for the first term of 2002, KRW 71,57,180 for the second term of 202, KRW 71,57,180 for the second term of 203, KRW 149,017,880 for the second term of 203, KRW 86,428,130 for the second term of 203, KRW 90,960, KRW 560 for the first term of 204, KRW 3,491,70 for the second term of 204, KRW 15,673,90 for the second term of 205, KRW 6,417, and KRW 205 for the second term of 200 for the second term of 205, KRW 208,537,2057,2045.

1. Details of the disposition;

A. On January 1, 2001, the Plaintiff was designated as a designated educational institute by the ○○○○ Doctrine Research Association (hereinafter “○○○ Doctrine”), an incorporated association, and operated the ○ Doctrine Doctrine Doctrine Doctrine Doctrine Doctrine Doctrine Doctrine, and was established on March 21, 2002.

B. On January 2, 2007, the Defendant decided and notified the Plaintiff of value-added tax and corporate tax as stated in the Plaintiff’s claim(hereinafter “each disposition of this case”) on January 2, 2007 on the ground that the Plaintiff was paid KRW 4,004,324,50 as the passbook in the name of immigration, who was the representative director of the Plaintiff, in return for the Plaintiff’s provision of services, such as establishment and consultation, from 2002 to 2005.

C. The plaintiff appealed and filed an appeal with the National Tax Tribunal on April 6, 2007, but was dismissed on August 23, 2007.

[Reasons for Recognition] Facts without dispute, Gap evidence 1-1-2, Gap evidence 2-2, Gap evidence 4-1-12, Gap evidence 5-1-2, Eul evidence 1-4 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff asserts that the defendant's disposition of this case against the plaintiff is unlawful, even though the plaintiff is not the plaintiff, since the plaintiff's representative director of the plaintiff company, who was the head of the Seoul Training Institute under the ○○ Association, received school fees, school tuition fees, and school tuition fees, etc. from the new establisher of the designated Education Center in his personal account, transferred the remaining money to the ○○ Association, and delivered it to the academic association and the business operator as necessary, and the person related to the ○○ Association received a non-prosecution disposition to the effect that ○○ residents were suspected of being suspected of being indicted.

(b) Related statutes;

Article 14 (Real Taxation under Framework Act on National Taxes)

Article 21 (Determination and Correction of the former Value-Added Tax Act)

Article 66 (Determination and Correction)

(c) Fact of recognition;

(1) The ○○ Association is a non-profit corporation established in 1997, and operates seminars, training, publication of teaching materials, etc. for the dissemination of logical reading. The designated educational center, which was designated and operated by the ○○ Association, is presumed to have approximately 180 nationwide.

(2) From January 1, 2001, the Plaintiff was the ○○ School Designation Training Center, which was established by the Plaintiff on March 21, 2002 for the purpose of the operation and management of private teaching institutes, the establishment and consulting of private teaching institutes, and the operation and distribution of the learning ability development institute. The Plaintiff operated ○○○ Exclusive Driving Schools with six branches in Seoul and Busan regions. The ○○ Private Teaching Institutes was the representative director of the Plaintiff on December 22, 2004. The ○○○ was operating the Plaintiff Company practically even after only the name of the representative director was changed to the ○○○○’s order, and the shares of the Plaintiff Company are owned by the ○○○ and 50% each, respectively.

(3) From among school members, the ○○ Association provided guidance on the requirements, procedures, education and training expenses (30,000 won for admission fees, 5,000,000 won for central education and training), and facility regulations (area, teaching districts, and writing notes, etc.) for the newly established designated education center, among the school members. On May 22, 2001, the ○○○○○ Development Institute (the ○○○○○) was announced as an advisory company on the requirements and facility regulations of the said newly established education center, but on April 27, 2002, the ○○○○ Development Institute (the ○○) was announced to change the consulting company providing the above advice to the Plaintiff.

(4) As a result of the Defendant’s tax investigation on the Plaintiff, 75 private teaching institutes, among 210 private teaching institutes, from 202 to 2005, 579,000 student fees, 3,026,890,000 student fees, 325,290,000 books expenses, and 4,401,525,000 won including other 470,345,000, and 470,370,525,000 won, which are deemed to have been remitted to the ○○○○ Association, and the total amount of 379,50,500,000 won (=3,50,000,000 x 75,050) were deducted from each of the above taxation periods (i.e., 300,4050,500 won).

(5) The Plaintiff is an individual company of Lee ○, who is a private company of Lee ○, received the benefits from the Plaintiff, but did not receive the benefits from the ○○ Association, and did not submit any documentary evidence as to the details of the deposit and use of the key amount of the instant case deposited in its personal account.

(6) In the case where ○○ Association-related persons filed a criminal complaint against ○○○○○, the ○○ Association-related persons received a disposition of non-prosecution as to the charge of occupational embezzlement and unjust enrichment with respect to the custody and disbursement of school membership fees, on the ground that there was no evidence, but to the charge of violating the Punishment of Tax Evaders Act as to the violation of the Punishment of Tax Evaders Act in relation to the instant case, it is evident that

[Reasons for Recognition] Facts without dispute, Eul evidence Nos. 5, Eul evidence Nos. 8-1, 2, 9, Eul evidence Nos. 11-1, 2, Eul evidence Nos. 12-1 through 75, Eul evidence Nos. 13, Eul evidence Nos. 14, Eul evidence Nos. 16, Eul evidence Nos. 17 and the purport of the whole pleadings

D. Determination

On the other hand, ○○ Association did not aim at profit-making business as a non-profit incorporated association. On the other hand, ○○ Association announced the Plaintiff as a consulting company that can give advice on the requirements and facility regulations designated by ○○ Association among its school members. Accordingly, from 2002 to 2005, ○○○ Association received school fees and classical expenses from the applicant for the establishment of ○○ Association, etc. from 2002 to 2005. The ○○○ is the representative director of the Plaintiff company, and the ○○ Association was changing the name of ○○○, its wife, etc. to the name of the representative director of the Plaintiff company. The Plaintiff Company continues to operate the Plaintiff Company, etc., and the Plaintiff Company was a private incorporated association with its business purposes. The Plaintiff’s ○○ Association informed the Plaintiff as a consulting company that is able to give advice on the issues of this case’s personal account deposit to ○○ Association’s account, and the Plaintiff’s assertion that it was paid to the account without any specific reasons to the Plaintiff’s deposit account.

3. Conclusion

Therefore, each of the dispositions of the defendant in this case is legitimate, and all of the claims of the plaintiff in this case are dismissed. It is so decided as per Disposition.