Daejeon District Court-2013-Gu 100742 ( March 23, 2014)

It is necessary to determine whether each customer has a different tax invoice from the facts and whether the fiduciary duty has been negligent.

The actual supplier and the supplier on a tax invoice shall not deduct or refund the input tax amount unless there is any special circumstance that the supplier was unaware of the fact that the supplier was not aware of the fact that the supplier was unaware of the name of the tax invoice, and that the supplier was not negligent in not knowing the fact that the supplier was not aware of the fact that the supplier was unaware of the name of the tax invoice.

Article 16 of the Value-Added Tax Act

Daejeon High Court 2014Nu11364

Plaintiff, respondent, etc.

Economic Zone

O Head of tax office

Daejeon District Court 2013Guhap10742

2015.06.11

2015.23

1. Details of the disposition;

A. Status of the parties

(1) As from July 4, 2006, AA Industry Co., Ltd. (hereinafter referred to as "A") had been engaged in the non-ferrous metal manufacturing business at the OEOOOOOO in Chungcheongnam-nam OCO, the decision was made on January 17, 2012 by the OO district court 20OO jointOO to appoint a receiver for the decision on January 26, 2012 and the last BB was registered as the receiver.

(2) The Plaintiff was holding 5% of the AA shares from 2005 to 2011, and the status of holding AA shares during the said period is as follows.

(b) taxation on A;

(1) On January 201, 201, AA purchased closed Dong, etc. from each of the buyers listed in the table below (hereinafter “each of the instant transaction parties”), and received a tax invoice corresponding to each of the purchase details (hereinafter “each of the instant tax invoices”). On January 201, A deducted the input tax amount under each of the instant tax invoices from the output tax amount, and reported the value-added tax for the pertinent taxable period to the Defendant by deducting the input tax amount under each of the instant tax invoices from the output tax amount.

(2) On March 6, 2012, the Defendant denied the relevant input tax deduction on the ground that the tax invoice that AA received from each of the aforementioned transaction parties is a tax invoice that is different from the fact, since each of the instant transaction parties constitutes a disguised business entity that issued false tax invoices without real transactions (including so-called "data sales") and issued a correction and notification of the value-added tax OO (including additional tax) for the first period of January 201 (hereinafter referred to as "the first disposition").

C. Designation of secondary taxpayer and taxation on the Plaintiff;

AA was in arrears with the value-added tax pursuant to the first disposition of this case, and the Defendant, based on Article 39 subparagraph 2 of the former Framework Act on National Taxes (amended by Act No. 11845, May 28, 2013) on the ground that the Plaintiff constitutes an oligopolistic shareholder of AA based on O.O.O., the date on which the said liability for value-added tax was established, was designated as the secondary taxpayer; according to the Plaintiff’s share ratio, the Plaintiff notified the secondary taxpayer for the OO of the amount of value-added tax in arrears for the first year of 2011 among the amount of value-added tax in arrears for the first year of 201 according to the Plaintiff’s share ratio (hereinafter “instant disposition”).

(d) Procedures of the previous trial; and

In response to the instant disposition, the Plaintiff filed an appeal with the Tax Tribunal on 20O.O.O.O., but the Tax Tribunal dismissed the Plaintiff’s appeal on 20O.O.O., respectively.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 6, Eul evidence Nos. 1, 2, 10, 11 (which include each number; hereinafter the same shall apply) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

(1) Violation of the first disposition of this case

AA, as indicated in each of the instant tax invoices, was supplied by each of the instant transaction parties and paid the price normally. Therefore, each of the instant tax invoices is not different from the facts.

Even if each of the transaction parties of this case falls under so-called data and thus falls under a tax invoice different from the fact, AA was unaware of such fact at the time of transaction, and was visited and confirmed by each transaction office at the time of transaction, and paid the price to each transaction party’s account under the name of each transaction party, and written a measurement confirmation stating the measurement date, vehicle number, vehicle name, weight, figures volume, etc. at each transaction time, and written the driver’s signature and telephone number on the confirmation document. Thus, AA was not negligent in failing to know it.

- 5-

Even if AA’s good faith and negligence are not recognized, since AA’s failure to report the value-added tax base by improper means does not constitute a case where AA underreporting the tax base by improper means, the portion of the penalty tax for unfair underreporting among the first disposition of this case is unlawful. Therefore, the first disposition of this case is unlawful and the disposition of this case premised on

(2) Violation of the disposition of this case

Even if the first disposition of this case is lawful, since the Plaintiff’s shares 2,000 shares of the Plaintiff’s name was entrusted by the largestB around May 27, 1995, and the actual owner is the largestB, the instant disposition based on the premise that the Plaintiff is the actual owner of the shares is unlawful and thus, should be revoked.

B. Relevant statutes

It is as shown in the attached Form.

C. Whether the first disposition of this case is unlawful

(1) Whether each of the instant tax invoices is false

(A) Relevant legal principles

Article 17(2)2 of the Value-Added Tax Act provides that an input tax amount shall not be deducted from the output tax amount in cases where the entries of a tax invoice are different from the fact. The meaning that the entries of a tax invoice are different from the fact refers to cases where the necessary entries of a tax invoice do not coincide with the actual subjects, values, and timing of the supply of the goods or services, notwithstanding the formal entries of a transaction contract, etc. prepared between the parties to the goods or services (see, e.g., Supreme Court Decision 96Nu617, Dec. 10, 196).

(B) Facts of recognition

In full view of Gap evidence 6, Eul evidence 3-1, Eul evidence 4-6, Eul evidence 7-1, Eul evidence 8-1, Eul evidence 8-1, Eul evidence 15-1, and Eul evidence 2, the following facts are acknowledged.

① Each transaction partner of the instant case closed his/her business without reporting or paying value-added tax.

② Although the strongO registered as the representative director ofCC (hereinafter referred to as “CC”) had never been engaged in the scrap metal-related business before, it reported thatCC had engaged in sales and purchase transactions in size of 00O.O.O.O. and 200 won until the closure of business, and as a result of the tax investigation, it became final and conclusive as data without any substantive substance.

③ Although Song Ho-ho (DM) had only been working for a motor vehicle maintenance business in around 2008, it was not verified that it had been engaged in a type of business related to scrap metal (However, under a tax investigation conducted on or around 200O.O., it stated that Song-ho (DM) was registered as a business operator on 20O.O.O., and reported that it was traded on the scale of OO.O. and purchase OO., until the closure of O.O., and that it was reported as having been traded on the scale of 200O.O., and that the purchase data corresponding to the sales tax invoice was not submitted in the course of the tax investigation (i.e., that it is impossible to disclose it), most of the sales proceeds were deposited into the account of the principal of Songho-ho (i.e., that it was deposited into the account of the principal of Songho-ho.).

④ Although it was not confirmed that the Plaintiff had been engaged in the business related to the purchase of waste, other than the experience of simple restaurants and skins, it was reported that the Plaintiff was engaged in the transaction of the size of KRW KRW KRW KRW KRW 200 and KRW 200,000 after completing the business registration. During the tax investigation, the Plaintiff failed to submit the purchase data corresponding to the sales tax invoice other than the details purchased from the FF non-ferrous metal in the process of the tax investigation. The Plaintiff was a company accused of the FF non-metallic metal mado data.

⑤ Although it is not confirmed that he/she had been engaged in the closed-dong distribution business, he/she filed a report on the closure of 200O.O.O. and reported on the closure of 200O.O.O. in arrears after business registration. Although he/she reported that he/she was engaged in a transaction of the size of O0 won during the above period of business, he/she failed to submit purchase data corresponding to the sales tax invoice in the course of tax investigation.

【O.O. 200.O. 200. O. 200. O. 2000. O. 2000. O. 200. O. 200. O. 200. 200. 200. 200. 200. 200. 206. 30. 206. 206. 206. 206. 206. 206. 206. 206. 206. 206. 3. 3. 3. 3. 4. 6. 6. 6. 6. 6. 6. 6. 6.

7. AA and each customer of the instant case’s transaction period, frequency, scale, etc. are as follows:

The same shall apply.

(C) Determination

In full view of all the circumstances revealed in the above facts, each of the transaction parties of this case is "data, not a company that purchases normally closed Dong, etc. and sells it again," and it is reasonable to deem that the actual closing Dong, etc. to A in connection with the transaction of each of the tax invoices of this case is a third party, not a transaction party of this case. Thus, each of the tax invoices of this case entered in the name of each transaction party of this case by a supplier of closed Dong, etc. received by AA, shall be deemed to constitute a false tax invoice, i.e.,

(2) Whether AA’s good faith and negligence are recognized

(A) Relevant legal principles

The actual supplier and the supplier on a tax invoice may not deduct or refund the input tax amount unless there is any special circumstance that the supplier was unaware of the fact that the supplier was unaware of the nominal name of the tax invoice, and that the supplier was not negligent in not knowing the nominal name (see, e.g., Supreme Court Decision 2002Du2277, Jun. 28, 2002).

However, in the case of waste resources, such as waste Dong, there is no obligation to actively investigate whether the other party is a disguised business entity due to the nature of the distribution structure and transaction. Thus, there is sufficient reason to suspect that the other party is a disguised business entity in light of the facts revealed in the process of collecting data to determine whether the other party is a qualified business entity. However, the other party is negligent in not knowing that it is a disguised business entity (see, e.g., Supreme Court Decision 97Nu7660, Sept. 30, 1997).

(B) Facts of recognition

The following facts are acknowledged in full view of the evidence adopted earlier and the statements and images stated in Gap's evidence 10 to 30, 34 through 54, 58 through 61, 63 through 80, 83 through 121, 127 through 131, and the whole purport of the pleadings.

① AA received a delivery proposal from each of the instant transaction partners, and received a business registration certificate, passbook copy, identification card copy, and the name of the representative before commencing the transaction, and confirmed the receipt. In addition, AA’s new OO director or leastB representative visited and confirmed the site of each of the instant transaction partners before commencing the transaction, he/she directly visited the site of the instant transaction partners, interviews the representatives, and keep the pictures on the spot, such as signboards.

② On January 21, 201, when the first transaction with AA was made, it was not only a company that started business on January 10, 201, which had been 11 days prior to the date of the first transaction, but also the Gangwon-O, its representative, had not been engaged in the closed-dong distribution business, but also AA commenced the transaction with AA. In addition, on January 10, 201, each of the transaction parties of the instant case, the ChoO (GG resources) was a company that started business on January 3, 201, which was 7 days prior to the date of the first transaction with A and the first transaction and was not verified that the OO, its representative, had been engaged in the closed-dong distribution business prior to the date of the first transaction. However, AA commenced the transaction with the KO.

③ On the other hand, the SongO (D metal), SongO (E), and LeeO (HO) among the customers of the instant case were all enterprises that started their business with AA for about three months and six months before the first transaction with AA (On the other hand, SongO (D metal) was stated in the process of the tax investigation that it had been engaged in the pre-registered scrap metal business since 2008, and LeeO (HH company) was working as an employee for several years in the field of scrap metal).

④ At each time waste movement, etc. is supplied by each of the transaction parties of this case, AA prepared a written confirmation of measurement by confirming the actual weight by classifying the waste movement, etc. from each of the transaction parties of this case, and determining the supply price through the procedure to determine the quantity of figures, and preparing a written confirmation of measurement, stating the date of measurement, the vehicle number, the name of the business entity, the measurement table stating heavy weight, and the entry and exit of the vehicle.

(5) AA is relatively short of the date of issuance of a tax invoice by measurement.

On the close day, the money was remitted to the passbook in the name of each business partner of this case.

(C) Determination

1) Trade parts with SongO (D metal), SongO (E), and LeeO (H) (A metal’s good faith and without fault)

A) In full view of the following circumstances revealed in the above facts, i.e., (i) AA has made efforts to confirm whether the said transaction partner actually engaged in the business of closing, etc. before commencing the transaction with the said transaction partner; (ii) AA has made efforts to confirm whether the actual goods have been transported from the said transaction partner even in the process of being supplied with closed, etc. from the said transaction partner; (iii) AA has normally remitted the price to the said transaction partner’s name; and (iv) AA has no evidence to presume that there was no abnormal transaction, such as that the unit price for closing, etc. supplied from the said transaction partner is significantly less than the ordinary transaction price. In full view of such facts, AA was unaware of the fact that the name of each supplier of the instant tax invoice was different from the actual supplier; and there was no negligence in failing to know such fact.

B) In light of the fact that “closed Dong is short of supply as high-priced waste resources, and the large metal has been engaged in waste-free transactions for a considerable period of time, and thus, it would have been well aware of the structure of supply of waste-free agreements, distribution routes, forms of transaction, transaction circumstances in data, and risks, all of the transaction partners would not initiate transactions with AA and have been registered before several months, and there was a relatively short amount of transactions with AA, and there was no actual transaction with BO(E), unlike the lease agreement submitted in the case of BO(E), there was no doubt as to whether A’s directors’ new directors’ OO et al. properly visited and investigated the above transaction sites.” In light of the above, AA did not fulfill its duty of care in the transaction.

그러나 ㉠ 이 사건 거래대상인 폐동과 같은 폐자원의 경우 소규모 고철상들이 수집한 물건들을 중간상이 사들여 AA과 같은 금속 제조업체에 매도하는 방식으로 거래가 이루어지므로, AA의 경우 자신과 직접 거래하는 중간상이 정상적인 업체인지를 확인하는 것에서 더 나아가 그 중간상이 폐동 등을 매입한 매입처(소규모 고철상들)를 일일이 확인하여 이른바 피고가 주장하는 '폐동 매입경로'를 확인하는 것은 현실적으로 어렵고, 거래처들의 영업비밀로서 이를 공개하지 않을 가능성이 높은 점, ㉡ 또한 폐동의 거래는 운송비의 절감과 거래의 편의상 중간도매상들이 각지에서 폐동을 수집하여 이를 자기의 사업장에 상・하차하지 않고 직접 폐동을 싣고 가서 AA과 같은 납품처에서 계근과 대금 수령 및 세금계산서의 교부 등을 동시에 하는 경우가 적지 않으므로 야적장이나 계근대가 없다고 하여 폐동의 공급자가 될 수 없다고 단정할 것은 아닌 점, ㉢ 폐동의 거래시장은 수요에 비해 공급이 부족한 공급자 우위의 시장인 점, ㉣ 달리 AA이 위 거래처들의 거래적격자 해당 여부를 판단하기 위한 자료를 수집하는 과정에서 밝혀진 사실관계에 비추어 위 거래처들이 위장사업자라고 의심할 만한 충분한 사정이 있었다고 볼 자료가 없는 점 등을 고려해 볼 때, AA이 앞서 취한 조치들 외에 추가적으로 위 거래처 업주들의 이전 경력이나 폐동의 이동경로를 구체적으로 조사・확인을 하지 않았다는 사정만을 이유로 거래상 과실이 있었다고 단정할 것은 아니라고 판단되므로, 피고가 주장하는 위 사유들은 AA의 선의・무과실을 인정하는 데에 방해가 되지 아니한다.

C) Therefore, the part of the first disposition of this case, which denied the input tax deduction under each tax invoice received by AA from BO (DM), BO (OM), and HO (HO), is unlawful, and the Plaintiff’s assertion on this part is with merit.

(3) It is recognized that AA actually paid the price for the closure of business and supplied the same to the accounts of the above clients, as it could have been known that the above business entity did not know that A had been engaged in good faith and without fault in the transaction with the above business entity (the part where A had not been aware of the business entity's failure to engage in the transaction). However, it is recognized that AA had no other relevant facts such as the fact that it had been discovered that there was a lack of prior to the date of measurement, vehicle number, and vehicle entry into the above business entity, and that it had been supplied to the above business entity's account. However, it is recognized that there was no other evidence that there was a lack of prior to the commencement of the business by the 19O, O.O., and that there was no other reason to believe that A had been a disguised supplier's prior to the date of the transaction with the above business entity's 10 OO.O., 200, 1000, 200.

Therefore, the part of the first disposition of this case, which denied the deduction of input tax pursuant to each tax invoice received by AA fromCC and SOO (GG resources), is legitimate, except for the portion of unfair underreporting additional tax, and the plaintiff's allegation in this part is without merit.

(3) Whether the portion of the first disposition of this case relating to the illegal underreporting was legitimate

(A) In light of the language, structure, etc. of relevant provisions, such as Article 47-3(2)1 of the former Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 201; hereinafter the “former Framework Act on National Taxes”), even if a taxpayer obtained a false certification and under-reported the tax base, the taxpayer cannot be deemed to fall under the case where a taxpayer under-reported the tax base by improper means if he/she did not know that such certification was false, and the taxpayer did not know that he/she was false due to gross negligence. Moreover, if a taxpayer received a tax invoice different from a supplier under the tax invoice, and received the input tax deduction or refund, such act constitutes “where a taxpayer under-reported the tax base by improper means” under Article 47-3(2)1 of the former Framework Act on National Taxes, other than recognizing that the taxpayer was entitled to the deduction or refund of the input tax amount under a false tax invoice, the person who issued the tax invoice, other than the fact, does not constitute the tax base and amount of value-added tax.

The amount of tax paid is declared and paid, or the entire amount of the output tax on the tax invoice is declared and paid.

Then, there should be awareness that a taxpayer would receive input tax deduction by evading the liability for the payment of value-added tax on the relevant tax invoice by means of a refund, etc. (see Supreme Court Decision 2014Du11618, Jan. 15, 2015).

(B) In light of the following circumstances acknowledged as a whole in light of the overall purport of the pleadings, which are: (a) AA appears to have been actually supplied at the volume of supply and price specified in each of the instant tax invoices at the time specified in the instant tax invoices; and (b) subsequent payment of the purchase price and the total value-added tax thereon through the account of each of the instant transaction parties, even though AA received a tax invoice different from the facts from each of the instant transaction parties; (b) the evidence submitted by the Defendant alone is insufficient to deem that AA either reported and paid the tax base and tax amount of value-added tax excluding the amount of output tax under each of the instant tax invoices, or reported and paid the entire amount of output tax under each of the said tax invoices, or received the deduction of the input tax amount under each of the said tax invoices by evading the liability for payment of value-added tax on each of the said tax invoices after filing a request for correction.

Therefore, Article 47-3 (1) of the former Framework Act on National Taxes should be imposed with respect to AA, which is not an unfair underreporting penalty tax under Article 47-3 (2) of the same Act. Therefore, the portion exceeding the amount of general underreporting penalty tax under Article 47-3 (1) of the same Act, which is not an unfair underreporting penalty tax, is unlawful (the part related to tax invoice received from (D metal), (E), and H from (H) of the first disposition of this case, is wholly unlawful, and thus, this part of the judgment has a substantial meaning in the part related to tax invoices received fromCC and ChoO (GG resources) in the first disposition of this case).

(4) The calculation of the reasonable value-added tax amount on the first disposition of this case

As seen earlier, among the first disposition of this case, ① the portion of the tax imposed by denying the input tax deduction under each tax invoice received by AA (Dmetallic), BO (E), and HO (H) and the portion of the tax imposed by denying the input tax deduction under each tax invoice received by AA (GG resources) and the portion in excess of the amount where a general under-reported penalty tax was imposed, not an unfair under-reported penalty tax, is illegal. The legitimate portion of the first disposition of this case (the principal, erroneous payment, tax invoices, non-performance of tax invoices, and general under-reported penalty tax) is the legitimate portion of the tax imposed by denying the deduction of input tax amount under each tax invoice received by A fromCC, CO (G resources) as shown below (the amount less than 10 won under Article 10 of the National Tax Collection Regulations, hereinafter the same shall apply).

(5) Sub-decisions

Therefore, the part of the first disposition of this case exceeding 909,550,200 won is unlawful, and this part of the plaintiff's assertion is justified within the scope of the above recognition.

D. Whether the plaintiff's shares AA under title trust was held in a title trust

(1) The fact of ownership of shares is to be proved by the tax authority’s data, such as the list of shareholders, the statement of stock transfer or the register of corporate register, etc. However, even if it appears to be a single shareholder in light of the above data, where there are circumstances, such as where the actual shareholder was stolen or registered in a name other than the real shareholder’s name, the actual shareholder is not deemed to be a shareholder, but the nominal owner who asserts that he is not a shareholder should prove that he is not a shareholder (Supreme Court Decision 2003Du1615 Decided July 9, 204).

(2) The facts that the Plaintiff held 5% of the shares AA in the instant case are identical to those set forth in paragraph (1). Therefore, it is insufficient to recognize that the Plaintiff is a shareholder who actually holds 5% of the shares AA in the Plaintiff’s name on the sole basis of the evidence Nos. 9-1, 2, and 132, and there is no other evidence to acknowledge otherwise.

(3) Therefore, the Plaintiff’s assertion on this part is without merit.

E. The scope of calculating and revoking a reasonable tax amount on the disposition of this case

(1) Determination of the legality of a disposition in a lawsuit seeking revocation of taxation is based on whether it exceeds a legitimate tax amount. The parties concerned may submit objective tax base and tax amount, as well as arguments and materials supporting such tax amount until the closing of arguments in the fact-finding court. When a legitimate tax amount to be imposed lawfully is calculated based on such materials, only the portion exceeding the reasonable tax amount should be revoked (see, e.g., Supreme Court Decision 94Nu13527, Apr. 28

(2) As to the instant disposition, the instant disposition was imposed on the Plaintiff as an oligopolistic shareholder on the ground that A was in arrears with value-added tax pursuant to the first disposition of this case. As seen earlier, the part exceeding the reasonable amount of tax OO of the first disposition of this case against A is unlawful. As such, the instant disposition against the Plaintiff is lawful only for the part premised on a legitimate tax amount among the first disposition of this case.

(3) Therefore, the part of the instant disposition, which exceeds the reasonable amount of tax, should be revoked as it is unlawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is accepted within the above scope of recognition and the remaining claim is dismissed as it is without merit. Since the judgment of the court of first instance is unfair with a different conclusion, the defendant's appeal is partially accepted and the judgment of the court of first instance is modified as above, it is so decided as per Disposition.