Aypt Korea Co., Ltd. (Attorneys Kim Gyeong-chul et al., Counsel for defendant-appellant)

Head of Yeongdeungpo Tax Office

March 16, 2010

1. The Defendant’s imposition disposition of KRW 27,88,120 of the corporate tax for the year 2004 against the Plaintiff on June 16, 2009 is revoked.

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

The same shall apply to the order.

1. Details of the disposition;

A. The Plaintiff Company purchased the total value of KRW 500,840,000 from five companies, including the Plaintiff Company, in the first half of 2004, from five companies, including the Plaintiff Company, and purchased the total value of KRW 766,802,00 from five companies, including the Korea Communications Internet Corporation, in the second half of 2004 (hereinafter collectively referred to as “each of the above suppliers, etc.”).

B. In order to prevent the annual sales of Vietnam Co., Ltd., Ltd., a company listed on the KOSDAQ (hereinafter “Vastex”) from being less than 3 billion won and being designated as administrative issues, the Plaintiff Company cooperates with the Plaintiff Company in expanding the number of external sales of the Vastex in the middle of the transaction of the Plaintiff Company by placing the Vastex in the middle documents (e.g., the board box, etc. ? (Vastex) ? the Plaintiff Company).

C. In the above transaction process, the tax invoice for the transaction between the Plaintiff Company was prepared in double as if the goods were supplied to the Plaintiff Company from the ber, etc., unlike actual ones, from the ber, to the ber, etc. (hereinafter, the purchase tax invoice prepared by the Plaintiff Company as if the goods were supplied from ber was supplied by the ber), and the Plaintiff Company filed a return of value-added tax and corporate tax for 2004 minutes on the basis of the instant tax invoice.

(d) The Financial Supervisory Service and the Securities Futures Commission conducted an accounting investigation of the business year 2004 of the Vietnam, thereby identifying the aforementioned disguised transaction and filing a complaint with the prosecution.

E. The Defendant notified the Plaintiff company of the aforementioned disguised transaction, and deducted the input tax amount on the instant tax invoice from value added tax for 2004 for the year of 204. Under Article 76(5) of the Corporate Tax Act on June 16, 2009, the Defendant imposed an additional tax on the Plaintiff company upon the Plaintiff company (hereinafter referred to as the “instant disposition”). As corporate tax for 2004 pro rata in accordance with Article 76(5) of the Corporate Tax Act, the amount of supply and value added tax for the instant tax invoice plus KRW 500,840,000 + KRW 766,802,00 + KRW 126,764,200 + KRW 27,888,120 (= KRW 1,394,406,000 x 0.02).

F. On September 1, 2009, the Plaintiff Company filed a petition for review seeking revocation with the Commissioner of the National Tax Service on September 1, 2009, but was dismissed on October 12, 2009.

[Ground of recognition] The fact that there is no dispute, Gap 1, 2, Eul 1-1, 2, 4, Eul 2 and 3-2, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff company's assertion

The Plaintiff Company received evidentiary documents concerning the transaction of the instant tax invoice, but only the supplier entered them differently from the facts in the contents of the evidence. Additional tax on the receipt of evidentiary documents is applicable only to the case where the Plaintiff did not receive evidentiary documents concerning the actual transaction, and does not apply to the act of receiving evidentiary documents different from the contents of the actual transaction. Thus, the instant disposition on a different premise is unlawful.

B. Defendant’s assertion

Inasmuch as the instant tax invoice is written differently from the facts on the part of the supplier, which is an essential entry, and thus does not constitute a regular disbursement evidence, it does not constitute a regular disbursement evidence. The transaction in which the Plaintiff Company received a false tax invoice, different from the facts, and the transaction in which the goods were actually supplied between the Plaintiff Company and the Plaintiff Company, is a separate transaction, and the Defendant actually traded between the Plaintiff Company and the Plaintiff Company, but did not receive documentary evidence.

(b) Relevant Acts;

The entries in the attached Table-related Acts shall be as follows.

(c) Markets:

Article 76(5) of the former Corporate Tax Act (amended by Act No. 9898, Dec. 31, 2009; hereinafter “instant provision”) provides that a business operator may collect an amount by adding an amount equivalent to 2/100 of the unpaid amount in cases where he/she receives goods or services from a business operator and fails to receive evidential documents provided for in each subparagraph of Article 116(2) of the Corporate Tax Act, and the same does not apply to cases where a business operator receives evidentiary documents different from the actual amount.

The purport of the provision of this case is to enhance transparency of the details of the corporation's expenditure and induce the other party's business operator to cultivate the tax base, and it is difficult to achieve such legislative purpose merely by imposing the duty of bona fide return on the other party business operator subject to the training of tax base. Thus, in light of the fact that the corporation being supplied with goods or services receives regular expenditure documents and imposes sanctions to additionally pay an amount equivalent to a certain percentage of the amount not received in relation to the breach of duty (see Constitutional Court Order 2004Hun-Ga7, Nov. 24, 2005; 2006Hun-Ba88, May 31, 2007). The additional tax pursuant to the provision of this case shall be applied in cases where the transaction was actually conducted, but it did not receive the documentary evidence, and it cannot be applied to the act of accepting documentary evidence different from the actual transaction as in this case.

Although the Defendant asserts that the provision of this case applies since evidentiary documents have not been received between the Plaintiff Company and the Plaintiff Company that actually made the transaction, in light of the entire process of the transaction as seen earlier and the developments leading up to the receipt of the tax invoice, it cannot be deemed that the Plaintiff Company issued the purchase tax invoice under the name of the beer, which was put in the middle, but did not receive the evidentiary documents on the goods supplied by the beer, etc., so it cannot be deemed that the provision of this case is applicable.

Therefore, the instant disposition that applied the instant provision to the Plaintiff Company on a different premise is unlawful.

3. Conclusion

The claim of the Plaintiff Company shall be accepted with due reason.

[Attachment]

Judges Lee Jae-ho (Presiding Judge)