The plaintiff filed the lawsuit of this case after the lapse of 90 days from the date of service of the decision of the Tax Tribunal.

The lawsuit of this case is illegal to have been filed after the expiration of the period for filing the lawsuit, and the disposition of this case is legitimate even if it is judged on the merits at home.

Article 56 of the Framework Act on National Taxes

2016Guhap5147 Such revocation as Value-Added Tax, etc.

○ ○

The director of the North Incheon National Tax Office

November 10, 2016

December 22, 2016

1. All of the instant lawsuits are dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of global income tax of KRW 31,736,418 in total, and global income tax of KRW 31,736,418 in 2010 against the Plaintiff on November 25, 2014 is revoked.

1. Basic facts

A. From May 13, 2009 to December 31, 2012, the Plaintiff run a wood wholesale and retail business with the trade name called A timber in Bupyeong-gu Incheon Metropolitan Government.

B. As a result of the investigation of corporate tax on B timber and CCopans (hereinafter “B timber, etc.”) operated by the freeboard Co., Ltd., the Defendant discovered the fact that the Defendant reported value-added tax by omitting sales despite the supply of timber equivalent to KRW 138,168,00 (excluding value-added tax) to the Plaintiff.

C. On February 10, 2015, the Defendant: (a) purchased timber equivalent to KRW 138,168,00 in total from B timber, etc. from the second to second to 2013; and (b) determined that the Plaintiff did not prepare a tax invoice, account book, etc.; and (c) on February 10, 2015, the Defendant imposed value-added tax as follows (hereinafter “instant disposition”).

D. The Plaintiff dissatisfied with the instant disposition and filed an objection against the Defendant on March 6, 2015, but the Defendant dismissed the said objection on April 9, 2015. The Plaintiff filed a request for examination with the Commissioner of the National Tax Service on July 6, 2015, but the Commissioner of the National Tax Service rendered a decision to dismiss the said request on November 24, 2015 (hereinafter “instant request for examination”), and the Plaintiff received the said decision on December 19, 2015.

[Ground of recognition] Facts without dispute, entry between B and 5, purport of the whole pleadings

2. Determination on this safety defense

A. Summary of this defense

(1) The Defendant only imposed value-added tax on the Plaintiff on the instant disposition and did not impose the comprehensive income tax.

(2) Since the Plaintiff filed a lawsuit 90 days after receiving the decision on the instant petition for review, the period for filing the lawsuit was exceeded.

B. Determination

(1) Part on the revocation of the disposition imposing global income tax

Although the Plaintiff filed a claim for revocation of the disposition imposing global income tax that will be imposed after the instant disposition, according to the respective descriptions of Gap 1 and Eul 1 and Eul 3, the Defendant can only recognize the fact that the Plaintiff imposed the second value-added tax in 2010 through 2013, and there is no evidence to prove the fact that the Plaintiff imposed the global income tax. Accordingly, the Plaintiff’s claim for revocation of the disposition imposing global income tax among the instant lawsuit is unlawful as it seeks revocation of the non-existent disposition

(2) Part of the claim for cancellation of the instant disposition

Article 56 (2) of the Framework Act on National Taxes provides that "no administrative litigation against a taxation disposition under this Act shall be filed without going through a request for examination or adjudgment and a decision thereon pursuant to this Act, notwithstanding the main sentence of Article 18 (1), Article 18 (2) and (3) of the Administrative Litigation Act," and the main sentence of Article 56 (3) of the same Act provides that "an administrative litigation under Article 56 (2) shall be filed within 90 days from the date the decision on a request for examination or adjudgment is notified, notwithstanding Article 20 of

As seen earlier, the Plaintiff received, on December 19, 2015, a written decision on the request for review of this case, which must be necessarily required to file an appeal seeking the revocation of the instant disposition, and thus, in order to lawful the instant lawsuit, the Plaintiff should have filed the instant lawsuit within 90 days from the date of filing the lawsuit. As such, it is apparent that the Plaintiff’s lawsuit of this case was filed on March 23, 2016, which was 90 days after the said 90-day lawsuit was filed, the instant lawsuit was filed after the said 90-day period for filing

(3) Sub-decisions

Therefore, all of the instant lawsuits are unlawful.

3. Whether the instant disposition is legitimate: assumptive determination

A. Summary of the plaintiff's assertion

The Plaintiff purchased materials from B timber, etc. that he/she sells them as non-data to seek a re-refluence for the interior of a commercial building, building, etc., and sent them without paying profits to their relatives. The Plaintiff did not purchase or sell them.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

Article 21(2) main sentence of Article 21(2) of the former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013; hereinafter the same shall apply) (Article 57(2) of the former Value-Added Tax Act (amended by Act No. 12113, Dec. 24, 2013; hereinafter referred to as "Article 21(2) of the former Value-Added Tax Act") provides that where the tax authority determines or revises the tax base and amount of tax or the amount of tax to be paid or the amount of tax to be refunded, the tax invoice shall be the basis for tax calculation. In cases where the tax authority determines or revises the tax base and the amount of tax to be paid or the amount of tax to be assessed, the tax invoice shall be the same, and Article 69(1)4 (e) of the former Enforcement Decree of the Value-Added Tax Act (wholly amended by Presidential Decree No. 24638, Jun. 28, 2013); hereinafter the same shall apply).

Meanwhile, in order for the estimation of revenue amount under the proviso of Article 21(2) of the former Value-Added Tax Act and each subparagraph of Article 69(1)4 of the former Enforcement Decree of the Value-Added Tax Act to be deemed legitimate, it is not sufficient to satisfy the requirements for the estimation of revenue amount. The content and method of estimation must be reasonable and reasonable to reflect the actual amount of revenue amount close to the truth in specific cases. If the method of estimation is disputed, the tax authority shall bear the burden of proving rationality and feasibility, but if the tax authority made estimation in accordance with the method and procedure prescribed by the relevant provisions, it is necessary to prove that the reasonableness and feasibility were proved once, and it is not appropriate to reflect the actual amount of revenue amount because the specific contents are considerably unreasonable (see Supreme Court Decisions 97Nu10192, Oct. 24, 1997; 2008Du7687, Oct. 14, 2010).

Based on the above legal principles, the following facts can be acknowledged based on the overall purport of the above facts and arguments: (i) the Plaintiff purchased one-time materials transaction without issuing a tax invoice from B timber, etc. during the taxable period without paying value-added tax; (ii) the Plaintiff appears to have failed to prepare and keep documentary evidence that can calculate the tax base, such as all books on B timber, etc.; and (iii) the Plaintiff asserted that the Plaintiff provided 'profit-free materials from B timber, etc. purchased from B timber, etc. for four years from 2010 to 2013 to relatives without 'profit-free', but even considering the relative relationship, the transaction method according to the empirical rule is proportional and there is no supporting document; and (iv) the Defendant estimated sales by applying the average value added ratio (15.75%) of the same type of business (such as source and construction and wholesale business) to the price purchased from B timber, etc. (15.75%) and thus, it is difficult to deem that the Defendant’s tax base estimation method was reasonable and reasonable.

The plaintiff's assertion is without merit.

4. Conclusion

Since the lawsuit of this case is unlawful, it is so decided as per Disposition by the assent of all participating Justices.

Related Acts and subordinate statutes

/ former Value-Added Tax Act (Amended by Act No. 12113, Dec. 24, 2013)

Article 57 (Determination and Correction)

(1) The head of a tax office, the commissioner of a regional tax office or the Commissioner of the National Tax Service having jurisdiction over the place for tax payment (hereafter referred to as "head of a tax office, etc. having jurisdiction over the place for tax payment" in this Article) shall investigate the tax base and amount

1. Where the preliminary or final return is not filed;

2. Where any error exists in the details of the preliminary or final return or omission thereof;

3. Where, in filing the final tax return, the list of the total tax invoices by customer or seller is not submitted, or all or part of the entries are not entered in the list of the total tax invoices by customer or seller submitted, or entered differently from the fact;

4. Where the value-added tax is likely to be evaded (.......) for other reasons prescribed by Presidential Decree.

(2) Where the head of a tax office, etc. having jurisdiction over the place for tax payment examines, determines or correct tax invoices, import tax invoices, account books, or other amounts to be paid or refunded for each preliminary return period and taxable period under

shall be based on the supporting documents: Provided, That if it falls under any of the following subparagraphs, it may be estimated, as prescribed by Presidential Decree:

1. Where there are no tax invoices, import tax invoices, account books, or other evidential data necessary for calculating the tax base, and the important parts are incomplete;

2. Where details of tax invoices, import tax invoices, account books, or other evidential data are obviously false in light of the scale of facilities, the number of employees, and the market prices of raw materials, commodities, products, or various charges;

3. Where details of tax invoices, import tax invoices, account books, or other evidential data are obviously false in light of the quantity of raw materials used, the amount of power used (...........) and other operating conditions.

(3) If any error or omission is found in the tax base and paid tax amount or refundable tax amount determined or corrected pursuant to paragraphs (1) and (2), the head of the tax office, etc. having jurisdiction over the

/ former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013)

Article 21 (Settlement and Correction)

(1) The head of a tax office, the commissioner of a regional tax office or the Commissioner of the National Tax Service having jurisdiction over the place of business (hereinafter referred to as the "head of a tax office, etc.") shall investigate the taxable period of value-added tax and the tax amount payable or refunded

1. Where the final tax return is not filed;

2. Where there are any mistakes or omissions (.....) in details of the final tax return;

3. Where, in filing the final tax return, the list of the total tax invoices by customer or by seller is not submitted, or all or part of the entries in the submitted list of the total tax invoices by customer or by seller are not entered, or entered differently from the fact;

4. Where the value-added tax is likely to be evaded (.......) for other reasons prescribed by Presidential Decree.

(2) Where the head of a tax office, etc. having jurisdiction over a place of business determines or revises the tax base and amount of tax payable or the amount of tax refundable for each taxable period pursuant to paragraph (1), he/she shall do so based on the tax invoice, account book, and other evidential data: Provided, That he/she may estimate, as prescribed by

1. Where no tax invoices, account books, or other evidential data necessary for calculating the tax base are available or important parts are incomplete;

2. Where the details of a tax invoice, account book, or other evidential data are obviously false in light of the scale of facilities, the number of employees, and the market price of raw materials, commodities, products, or various charges;

3. Where the details of tax invoices, account books, and other evidential data are obviously false in light of the quantity of raw materials used, the quantity of power used (............) and other operating conditions.

(3) Where any error or omission is found in the tax base or refund amount determined or corrected pursuant to paragraphs (1) and (2), the head of the competent tax office, etc. of the workplace shall immediately correct it again.

(1) The former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 25057, Jan. 1, 2014)

§ 104. Method of determination and revision by estimation

(1) Estimations under the proviso to Article 57 (2) of the Act shall be made by the following methods:

1. The method of calculation according to the type and type of authority with another business operator in the same current status as the same type of business, the recording of which is deemed reasonable and the report of which is not made pursuant to Article 57 (1) of the Act in good faith;

2. The method of calculating by applying the market price of the quantity supplied during the relevant taxable period to the output calculated by applying the production water ratio to the input raw materials that have been investigated by the Commissioner of the National Tax Service by type of business (...........)

3. Where the Commissioner of the National Tax Service has business efficiency which determines the relationship between the quantity and value of human and material facilities, such as employees, guest rooms, places of business, vehicles, waterworks and electricity, taking into account the type, area, etc. of business, a method of calculating by applying business efficiency.

4. Calculation according to any of the following standards determined by the Commissioner of the National Tax Service by type of business and by region:

(a) Input quantity per unit of won, which determines the relation between the partial or whole quantity, from among the raw materials and secondary materials input for production, and the quantity of production;

(b) A cost-related ratio which determines the relationship between all or some of the costs and sales among personnel expenses, rent, material expenses, water, mineral, heat, and other operating expenses;

(c) A commodities turnover rate which determines the relationship between the average stored amount during a given period and the sales amount or the sales cost;

(d) A sales profit ratio which determines the ratio of the sales to the gross sales profits for a specified period.

(e) The value-added ratio which determines the sales amount and value-added amount during the period.

5. Where the rates referred to in subparagraphs 2 through 4 can be calculated for a business operator subject to correction and determination of estimation, the method of calculation by applying such rates;

6. With respect to food, accommodation business and service business mainly traded mainly for end-consumers, the method of calculating according to the membership inspection standards determined by the Commissioner of the National Tax Service.

(2) In calculating the amount of tax payable under paragraph (1), the input tax amount to be deducted shall be limited to the portion for which details are clearly stated after submitting a tax invoice issued under Article 32 of the Act to the head of the competent tax office: Provided, That where a tax invoice issued due to a disaster or force majeure ceases to exist, it shall be an input tax amount to be deducted from the amount of tax payable, which is verified by the tax invoice submitted by

(1) Enforcement Decree of the former Value-Added Tax Act (wholly amended by Presidential Decree No. 24638, Jun. 28, 2013)

Article 69 (Methods of Estimation, Determination and Revision)

(1) Estimations under the proviso to Article 21 (2) of the Act shall be made according to the following methods:

1. The method of calculating by way of a type of sphere with other partners in the same business, whose book keeping is deemed to be justifiable and whose report has not been corrected under the provisions of Article 21 (1) of the Act in good faith;

2. Where there exists any production ratio surveyed by the Commissioner of the National Tax Service with respect to input raw materials by industry, the method of calculating by applying the market price of the quantity supplied during the relevant taxation period to the production amount

3. Where the Commissioner of the National Tax Service has business efficiency to determine the quantity and value of human and material facilities (employee, guest rooms, places of business, vehicles, water supply and electricity) related to the business in consideration of the type, area, etc. of business and the relationship of sales, the method of calculating

4. Calculation by any of the following criteria determined by the Commissioner of the National Tax Service for each type of business and each region:

(a) Input quantity per unit of won, which determines the relationship between the partial or whole quantity, from among the raw or secondary materials input for production, and the quantity of production;

(b) A cost-related ratio which determines the relationship between all or part of the expenses and sales among personnel expenses, rent, material expenses, water supply, electricity heat, and other operating expenses;

(c) A commodities turnover rate which determines the relationship between the average stored amount during a fixed period and the sales amount or the sales price;

(d) A sales profit rate which determines the ratio of the sales to the gross sales profit during a fixed period;

(e) The value-added rate determined by the sales amount and value-added amount during a fixed period.

5. Where the ratio referred to in subparagraphs 2 through 4 may be computed on a businessman subject to the estimation, determination and revision, the method of calculation by applying it thereto;

6. For food, accommodation and service business, which are mainly traded for end-consumers, the method of calculating according to the membership inspection criteria determined by the Commissioner of the National Tax Service.

(2) In calculating the payable tax amount under the provisions of paragraph (1), the input tax amount to be deducted shall be limited to those concerning the portion of which entries are obvious after submitting the tax invoice delivered under Article 16 (1) and (3) of the Act to the chief of the competent tax office: Provided, That this shall not apply to the case where the tax invoice delivered due to a calamity or force majeure

【National Tax Basic Act

Article 56 (Relation with Other Acts)

(2) Notwithstanding the main sentence of Article 18 (1), (2) and (3) of the Administrative Litigation Act, any administrative litigation against any illegal disposition prescribed in Article 55 may be instituted without going through a request for evaluation or adjudgment and a decision thereon under this Act.

shall not be effective.

(3) Notwithstanding Article 20 of the Administrative Litigation Act, the administrative litigation under paragraph (2) shall be filed within 90 days after decision on the request for examination or adjudgment is notified: Provided, That where decision is not notified within the period for decision prescribed in Article 65 (2) or Article 81, the administrative litigation may be initiated from the date the prescribed period for decision expires even before the decision is notified.

(5) The period referred to in paragraph (3) shall be an invariable period (.........).