Seocho-2017- Busan District Court-2775 (Law No. 1624, 2016)

No value-added tax shall be included in the omitted sales amount, but the taxpayer shall assert and prove the expenses to be included in the deductible expenses.

The value-added tax base is legitimate for determining the total amount omitted from sales as the value of supply, and the inclusion of expenses in deductible expenses is not sufficient to recognize that the evidence submitted by the taxpayer alone has omitted the purchase cost.

Article 19 (Scope of Deductible Expenses)

2016Guhap22057 Revocation of Disposition of Imposition of Value-Added Tax, etc.

○○○ Incorporated Company

○ Head of tax office

November 02, 2017

November 30, 2017

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

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

Cheong-gu Office

Of value-added tax (including additional tax), 23,41,047 won, 26,367,344 won, of value-added tax for the first period of December 1, 2013 201, 201 26,367,367,367 won, of value-added tax for the second period of two years, 201 26,300 won (including additional tax), 26,641,270 won, of value-added tax for the first period of one year, 288,641,367 won, value-added tax for the second period of two years, 332,797,090 won (including additional tax) for the second period of two years, 2013, 261, 301, 2616, 207, 297, 2016, 3016, 2016, 297, 2016, 2016, 201636, 27

1. Details of the disposition;

A. The plaintiff is a corporate entity that engages in the wholesale and retail business of petroleum products by dredging and supplying oil for maritime vessels (marine oil) purchased from oil refineries to the ship of a construction company for dredging and underwater construction.

B. From August 29, 2013 to November 20, 2013, the director of the regional regional tax office of Do, Do, Do, and Do, the head of the regional tax office conducted a tax investigation on the Plaintiff, and conducted a tax investigation on the Plaintiff from August 29, 2013 to November 20, 2013, “the Plaintiff purchased sea oil leaked from Russian vessel, etc. and sold it to its customers without a purchase tax invoice and notified the Defendant of the amount equivalent to KRW 5,468,725, 725, 7,495, 212,81 (hereinafter “the instant omitted amount”) of the purchase tax invoice to secure the purchase tax invoice to be used to reduce the tax burden, such as the value-added tax on the oil, purchased it without a purchase tax invoice, and then sold it directly to the gas station without a sale tax invoice, and determined the difference between the illegal distribution of oil and the normal oil, and notified the Defendant of the amount equivalent to KRW 565,725,7505.25.7

C. Accordingly, the Defendant calculated the omitted sales amount as the supply value and notified taxation data of this case, and notified the Plaintiff on December 1, 2011, value-added tax of 263,919,750 won for the first term of 201, value-added tax of 201, value-added tax of 312,985,280 won for the second term of 201, value-added tax of 288,641,270 won for the second term of 2012, value-added tax of 332,797,090 won for the second term of 2012, value-added tax of 251,452,850 won for the first term of 2013 (including additional tax; hereinafter referred to as “value-added tax”) and notified the amount of income for 20 years and 310 won for the second term of 20 years, 2013, 31, 2016.

D. The Plaintiff appealed and filed an appeal with the Tax Tribunal on May 9, 2014 through an objection on March 3, 2014. The Tax Tribunal rendered the disposition of the value-added tax and the disposition of the corporate tax on February 24, 2016, which conducted a reinvestigation of the Plaintiff’s inventory and sales during the value-added tax period from January 201 to January 2013, 201, and the total amount of oil sales exceeds the inventory and sales volume, the excess portion shall be deemed as the purchase of non-data at sea and thus, the tax Tribunal dismissed the request for a trial by applying the unit price ratio by kind (MGO 62.5%, B-A 53.68%, B-C 51.7%, and B-C 51.7%, etc.) to the purchase of non-data at sea.

E. From March 14, 2016 to May 6, 2016, the Defendant, according to the decision of the Tax Tribunal, conducted a reinvestigation and demanded the Plaintiff to submit data, such as inventory and sales volume. The Plaintiff submitted relevant data. On May 16, 2016, the Defendant notified the Plaintiff that the initial decision should be concluded as justifiable because it is impossible to verify the inventory and sales volume according to the decision of the Tax Tribunal, such as the submission of evidentiary documents to ascertain the actual sales volume and inventory volume.

F. On the other hand, the Plaintiff, △△, and △△△ was convicted on February 18, 2014 of the charges of violating the Act on the Aggravated Punishment, etc. of Specific Crimes (hereinafter referred to as “related criminal cases”), including the facts constituting the crime of omitting sales in the instant case, by the Do District Court 2013 high-level 571, and was sentenced to the conviction on February 18, 2014 by the above court. Both of them appealed from the △△ High Court 2014No150, but all of the appeals were dismissed on July 2, 2014, and the said judgment became final and conclusive on July 10, 2014.

[Ground of recognition] Facts without dispute, Gap's statements in Gap's 1-6, 11, 21-24, 27, 30, 31, 45, Eul's evidence Nos. 1-4, 7, 11, and the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

(1) Claim as to part of the disposition of value-added tax of this case and the corporate tax of this case

Since the Plaintiff decided not to receive the value-added tax separately from the omitted sales amount in this case, it constitutes a case where the omitted sales amount in this case includes or is unclear whether the value-added tax was included. In addition, it is a tax practice to view that the value-added tax is included in the actual transaction of non-data transaction.

Therefore, under Article 29(7) of the Value-Added Tax Act and Article 13-48-1 of the General Rule of the same Act, the amount calculated by multiplying the omitted sales of this case by 10/110 shall be deemed the value of supply. However, the Defendant rendered each disposition of this case by making the total amount omitted sales of this case as the value of supply. As such, the disposition of imposing corporate tax for the business year 201, 66,192,675, 70,212,214 (including additional tax) among the disposition of this case, including the amount claimed in the disposition of value-added tax, and the disposition of imposing corporate tax for the business year 201, 2012, 267,769,720, and 318,567,212 of the income amount attributed to year 2012 is unlawful.

(2) Claim on disposition of corporate tax, etc. of this case

(A) Although the Defendant stated that 30% of the amount of profit at the time of normal sale of the marine oil illegally distributed at the time of the tax investigation, the Defendant confirmed 70% of the omitted sales amount of this case, excluding the amount equivalent to 30% of the above 30%, by misunderstanding that the Plaintiff provided the above marine oil to △△△, etc. as the land oil. However, the Plaintiff’s purchase price corresponding to the omitted sales amount is the normal purchase price of the oil and the sales amount corresponding to the omitted sales amount of the marine oil at the time of the normal sale of the oil at the time of the marine level. However, even though the Defendant erred in recognizing 70% of the omitted sales amount, which is the price of the oil without the land, as the omitted sales amount of the oil at the time of the investigation, and led to undermining the purchase price at the marine oil at the time of marine level. The Defendant’s disposition, such as the corporate tax of this case, based on the premise

(B) After the decision of the Tax Tribunal on the re-audit, the Defendant maintained the original disposition on the ground that the documents were not submitted, even though it is possible to grasp the actual sales volume and inventory quantity of the Plaintiff based on the data submitted by the Plaintiff. This is against the binding force of the decision of the Tax Tribunal on re-audit.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

(1) As to the assertion on part of the instant disposition and the instant corporate tax, etc.

(A) Whether the omitted sales amount of this case includes value added tax

1) According to the former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013; hereinafter the same shall apply), the tax base of value-added tax on the supply of goods shall be the aggregate of the value of supply, including the consideration, in a case where the payment is made in cash (Article 13(1)). If the value-added tax is not included in the amount of value-added tax received in return for the supply of goods, the payment constitutes the tax base as the value of supply. General Rule 13-48-1 of the Value-Added Tax Act provides that where the value-added tax is not indicated separately on the amount received in return for the supply of the goods by the entrepreneur and the amount of value-added tax is unclear, the amount equivalent to 1

2) In light of the following circumstances acknowledged by comprehensively taking account of the aforementioned evidence and the purport of the entire pleadings, the amount omitted in sales in this case is not included in value added tax, and thus, it is lawful for the Defendant to set the value added tax base based on the total omitted sales amount as the value of supply.

A) At the time of investigating the Plaintiff’s tax investigation, △△△, etc. stated that “The investigator’s inquiry about the management of value-added tax is an amount that is not included in value-added tax and that there is no implied value-added tax,” and that this was the purport that △△△, etc. was exempted from value-added tax.

B) The Plaintiff was supplied with oil in normal form from the oil refinery and sold non-data at the price of 90% to 88% of the supplied amount. This is because, in the process that the Plaintiff purchased tax-free oil, etc. embezzled by the crew on a foreign vessel, etc. at a price lower than that of the Plaintiff and distributed it through normal oil, the purchase tax invoice corresponding thereto was required. Accordingly, the Plaintiff’s sale of non-data was established based on the amount computed by subtracting the value-added tax from the beginning, and the price was paid in cash.

C) Inasmuch as the instant amount omitted from sales is an amount that is not included in value-added tax in light of the statement, content, motive, etc. of the said gambling sales transaction, it is reasonable to view that it becomes the tax base of value-added tax as the value of supply under Article 13(1) of

D) The Plaintiff asserts that the amount of the instant omitted sales did not separately indicate the value of supply and the amount of tax on the account book of non-data sales, etc., and thus, the amount calculated by multiplying the omitted sales amount by 100/110 pursuant to the General Rule 13-48-1 of the Value-Added Tax Act is the tax base. However, as seen earlier, since the Plaintiff excluded the value-added tax from the omitted sales amount at the time of selling non-data, it is reasonable to deem that the value of supply and the amount of tax received for the sales was separately indicated (i.e., it is indicated separately as

(B) Whether there exists a practice in the value-added tax base for non-data transactions

Where it is unclear whether the amount of value-added tax is included in the amount of transactions without data submitted by the Plaintiff, the tax review and determination, etc. shall be limited to the amount calculated by multiplying such amount by 100/110 as the value of supply, and the tax base shall be limited to the amount of sales, and there is no evidence that the practice to regard the amount of sales without data as the value of supply

(2) As to the assertion on disposition of corporate tax, etc. of this case

(A) Whether the Defendant’s purchase cost’s ratification contravenes the principle of substantial taxation, underlying taxation, good faith, and no taxation without law

1) Relevant legal principles

Unless there exist special circumstances, such as where a tax authority finds any income omitted in the initial return of a corporation by the method of on-site investigation, it shall be deemed that the corresponding purchase cost, etc. was separately paid as deductible expenses, and barring special circumstances, such as account books or other documentary evidence revealed that the corresponding purchase cost, etc. was separately paid. In such cases, if a taxpayer who seeks to obtain a deduction on the ground that he/she omitted a return on the expenses corresponding to the omission income, seeks to obtain a deduction on the ground that he/she had failed to report on the expenses corresponding to the omission income, he/she shall assert and prove the omission by himself/herself (see, e.g., Supreme Court Decisions 2002Du2673, Nov. 27, 2003; 201Du28076, Apr. 2

2) Determination

A) Since there is no dispute between the parties concerned as to the omitted amount in the sales revenue of this case, the Plaintiff’s omitted amount in the sales revenue of this case, etc., which was sold without the sales tax invoice of this case, is deemed to have already been included in the total deductible expenses corresponding to the total revenue, barring any special circumstance, and the Defendant confirmed the amount obtained by deducting the amount equivalent to the oil tax from the omitted amount of the sales revenue of this case as the purchase cost (refer to the portion in the business year 201, the part in the business year 2012, and the evidence No. 3) and made the disposition of the corporate tax of this case, the Plaintiff, who is a taxpayer, to

B) As to this issue, the Plaintiff asserts that the method of calculating the purchase volume of non-data on the sea according to the decision of the Tax Tribunal is as listed below, and that the relevant data was submitted to the Defendant or the investigating agency before and after the re-audit decision of the Tax Tribunal, or prepared by the investigating agency, it can calculate the purchase volume of non-data on the basis of this, and that the purchase cost may also be claimed.

Total sales [The sales of coastal petroleumless materials (Evidence 8) + sales of coastal petroleum (A. 9)

HS evidence or Gap evidence 29) + Quantity of stock (=number of stock at the end of the season - basic stock quantity) - land

Quantity of oil purchased (all normal reports, evidence No. 10) - Normally reported sea

Quantity of oil purchased (Evidence 10) = Quantity of oil purchased on the sea without data

However, in light of the following circumstances, comprehensively taking into account each of the evidence mentioned above, Gap evidence Nos. 7-10, 25, 26, 29, 30, 32-34, Eul evidence Nos. 5, 6, 8-10, 12, and 13, and the overall purport of the arguments and arguments, it is difficult to accurately calculate the Plaintiff’s quantity of non-data purchased at sea.

① After the re-audit decision, the Defendant requested the Plaintiff to submit relevant data on inventory items, and the Plaintiff submitted one copy (No. 33) of the table on the current status of receipt and payment of goods in which stocks were recorded in the year from 2011 to 2013. However, the aforementioned evidence merely contains a simple acceptance of inventory quantity, unit price, etc. by type of the relevant year, and there is no specific basis to support it. At the time of April 7, 2016, the Defendant directly confirmed the Plaintiff’s inventory by type of oil (items 1 below) and submitted by the Plaintiff from January 1, 2016 to April 7, 2016, based on the sales and purchase quantity data submitted by the Plaintiff from January 31, 2016 to December 31, 2015, compared the total inventory quantity on the Plaintiff’s account book with the total inventory quantity. Therefore, it is difficult to accurately calculate the inventory quantity based on the Plaintiff’s total inventory quantity.

(unit: liter)

Category Potable

Actual inventory amount 1

("16.4.7)

Purchase ②

('16.1.1~4.7)

Sales III

('16.1.1~4.7)

Basic Inventory

Jinsan ("16.1.1)

(4) = (1) + (2)

(5) Books.

Basic Inventory

("16.1)

Difference

(6) ==N-No.

Non-carbonate

0

40,408

1,992

-38,416

15,548

53,964

Indoor light oil

120,000

624,000

317,953

-186,047

3,798

189,845

transit

254,200

3,334,985

3,325,349

244,564

571,363

326,799

BA (mita)

75,800

402,761

485,665

158,704

75,600

-83,104

BC (mitacU)

150,000

219,859

9,000

60,859

317,600

378,459

miterB

0

906,491

462,000

44,491

0

44,491

mitac mitda

0

10,000

455,000

345,000

0

-345,000

Total

600,000

5,638,504

5,056,959

18,455

983,909

965,454

As to this, the Plaintiff asserts that it is difficult for the Plaintiff to believe that it did not reflect all elements, such as the quantity of stock shipped from oil oil oil oil refineries but not stored in oil tanks, the quantity of stock stored in other places, etc. However, the existence of such circumstance should be proved by the Plaintiff in light of the difficulty of proof or the equity of the parties, etc. Therefore, it is difficult to accept the above assertion unless there is any evidence to prove it.

② The Plaintiff asserts that the inventory quantity may be calculated by assuming the horses and the basic inventory quantity either equal to or equal to the horses or the basic inventory quantity, or “0, disadvantageous to the Plaintiff.” However, there is no evidence to deem that the last and the basic inventory quantity are equal to the last and the basic inventory quantity, and as long as there is no reliable evidence regarding the basic inventory quantity, it is difficult to calculate the inventory quantity by setting the last and the total inventory quantity at zero.

③ From the first investigation conducted by the prosecution on the amount omitted in the sales of this case, △△△△△△ was naturally increased oil due to the motive for selling the oil to this△△△△△△, the question of the place of normal trading tax invoices, etc. by the prosecutor’s influence, and as a result, a small error occurred in the measurement, which led to the remaining oil and customers, and some of the recovered oil did not have been delivered, and the delivery of the oil again was not made, so that the oil would be returned to some of the employees of the business partners who delivered the oil, and the oil would remain in stock (hereinafter referred to as “unfair stock quantity”). In light of the characteristics of the increase in the quantity of the oil to be purchased, △△△△△△△△△△△△△△△△△△, the fact that there was no change in the quantity of the oil to purchase the oil at the expense of purchasing the oil at the expense of purchasing the oil at the expense of KRW 5,9-10, and that there was no change in the quantity of the oil at the expense of the maritime market.

C) As such, the calculation method and data presented by the Plaintiff cannot be calculated on the basis of the quantity of marine non-owned materials sold and the purchase cost therefrom. The evidence submitted by the Plaintiff alone is insufficient to acknowledge that the purchase cost higher than the amount ratified by the Defendant was omitted, and there is no other evidence to acknowledge otherwise. Therefore, it cannot be deemed unlawful for the Defendant to ratification the amount obtained by deducting the amount equivalent to the tax amount from the omitted sales amount of the instant case as the purchase cost. There is no circumstance to deem that the Defendant’s disposition of the corporate tax, etc. of this case, based on this

(B) Whether the defendant refused re-examination or violated the binding force of the re-examination decision

1) In full view of the overall purport of the statements and arguments in Gap evidence Nos. 11, 29-31, 33, and Eul evidence Nos. 1, 8-10, the defendant following the decision of the Tax Tribunal's re-examination was found to have investigated the quantity of marine oil free to purchase during the period from March 14, 2016 to May 6, 2016, and there is no other evidence to deem that the defendant refused re-examination according to the decision of the Tax Tribunal.

2) Re-assessment decision that is conducted in practice as a type of the decision on a request for adjudgment, etc. is a modified decision that leads to the outcome of re-audit by the disposition authority on the matters pointed out in the decision of the ruling authority and takes the contents of the subsequent disposition as part of the decision on the request for adjudgment, etc. Accordingly, the disposition authority may conduct re-audit in accordance with the purport of the re-audit decision and make a subsequent disposition that supplements the contents thereof (see Supreme Court Decision 2015Du37549, May 11, 2017).

However, the decision of the Tax Tribunal in this case is that, in case where the defendant conducts a reinvestigation of the plaintiff's inventory and sales volume, and the total sales volume of oil exceeds the inventory and sales volume, the excess portion shall be deemed as the purchase of non-data at sea and thus, the tax base and tax amount shall be corrected according to the results of the assessment by applying the unit price per kind to the purchase volume of non-data at sea. Thus, in order to correct the original disposition according to the above decision, the defendant shall be able to calculate the purchase volume of non-data at sea on the ground that the confirmation of inventory and sales volume and the premise that the total sales volume of oil exceeds the inventory and purchase volume.

However, in full view of the aforementioned evidence and the purport of the entire pleadings, even if a reinvestigation pursuant to the purport of the Defendant’s re-audit decision, it is difficult to accurately calculate the quantity of marine non-data purchased through the method presented by the Tax Tribunal due to the existence of abnormal inventory quantity for which the quantity is unknown, and thus, it constitutes a case where a subsequent disposition to supplement the content thereof cannot be made. Therefore, it cannot be deemed that the Defendant, as a result of a re-audit, deemed that it was impossible to calculate the quantity of marine non-data purchased through the re-audit decision

(3) Sub-decisions

Therefore, the plaintiff's assertion cannot be accepted, and each of the dispositions of this case is legitimate.

3. Conclusion

Therefore, all of the plaintiff's claims are dismissed as it is without merit. It is so decided as per Disposition.