Seoul High Court 2008Nu6938 ( October 30, 2008)

Whether it is a nominal transaction for disguised carbon trade in relation to the transaction of gold bullion

A series of transactions until the import and export of gold bullion is conducted daily, and there is a bomb coal company which does not pay the amount equivalent to the value added tax after purchasing the gold bullion exempted from the interim stage, etc., it is difficult to deem it as a nominal transaction for the actual disguised use of the bombing business as not being supplied

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

Article 17 of the Value-Added Tax Act

The part against the plaintiff is reversed, and that part of the case is remanded to the Seoul High Court.

The defendant's appeal is dismissed.

We examine the grounds of appeal.

1. Plaintiff’s ground of appeal

Article 1(1)1 of the Value-Added Tax Act provides that "the supply of goods as taxable subject to value-added tax" and Article 6(1) provides that "the delivery or transfer of goods shall be a delivery or transfer of goods on all contractual or legal grounds." In light of the characteristics of value-added tax as multi-stage transaction tax, "delivery or transfer" under Article 6(1) of the Value-Added Tax Act includes all acts of causing the transfer of rights to use and consume goods, regardless of the existence of profits actually acquired (see, e.g., Supreme Court Decisions 85Nu286, Sept. 24, 1985; 9Du9247, Mar. 13, 201; 9Du9247, Mar. 13, 2001). In such a case, the issue of whether a specific transaction constitutes the supply of goods as provided for in the Value-Added Tax Act shall be determined by taking into account the purpose and circumstances of each transaction, the ownership of profits, and the denial of the payment relationship between two parties.

However, according to the facts duly confirmed by the court below and the records, the plaintiff purchased gold bullion (hereinafter referred to as "the gold bullion of this case") in total from six business operators, including AB CD trading companies, etc. from March 18, 2003 to September 22, 200 of the same year, and received each tax invoice (hereinafter referred to as "the tax invoice of this case") under the transaction of this case from the supplier of this case on the date of purchase. The plaintiff exported the gold bullion of this case to the importer of Hong Kong on the day of purchase, and accrued profits in the process.

Examining these facts and records in light of the legal principles as seen earlier, the entire transaction between the instant gold bullion and its export is conducted on a daily basis, and it is difficult to conclude that the instant gold bullion, which is one of the instant series of transactions, is not the supply of goods subject to value-added tax, as a nominal transaction for the purpose of forging the actual transaction, even if the instant transaction was received only by issuing a tax invoice or is delivered with the actual gold bullion or paid the price, and thus, it is difficult to deem that the instant tax invoice received from the instant transaction as a different invoice and the actual supplier are written differently from the relevant invoice.

Nevertheless, the lower court determined that the instant tax invoice constituted a different tax invoice from the fact on the ground that the instant transaction was merely a nominal transaction without supplying goods, on the grounds that the instant transaction was included in the entire transaction of this case, in which the so-called wide coal company was opened. In so doing, the lower court erred by misapprehending the legal doctrine on the “supply of goods” and “tax invoice different from the fact,” thereby adversely affecting the conclusion of the judgment.

The ground of appeal pointing this out is with merit.

2. As to the Defendant’s ground of appeal

According to Articles 76 (5) and 116 (2) 2 of the former Corporate Tax Act (amended by Act No. 8141 of Dec. 30, 2006), "the head of the district tax office having jurisdiction over the place of tax payment shall collect an amount calculated by adding an amount equivalent to 2/100 of the unpaid amount as corporate tax in cases where a corporation is supplied goods from a businessman in connection with its business and fails to receive a tax invoice under Article 16 of the Value-Added Tax Act," and Article 16 of the former Value-Added Tax Act (amended by Act No. 8142 of Dec. 30, 2006) provides that "if an entrepreneur registered as a taxpayer supplies goods, he shall deliver a tax invoice stating the registration number and name or title of the supplier, the registration number of the recipient, the value of supply, value-added tax amount, etc."

As seen earlier, so long as it cannot be concluded that the instant transaction is not a supply of goods subject to value-added tax, it is difficult to conclude that the instant tax invoice received accordingly is not a legitimate tax invoice under Article 16 of the former Value-Added Tax Act. Thus, the lower court’s determination that the instant tax invoice was unlawful on the premise that the instant tax invoice is “actually different tax invoice” is unlawful.

The judgment of the court below is not erroneous in the misapprehension of the legal principle as to additional tax which is not received as otherwise alleged in the ground of appeal.

3. Conclusion

Therefore, the part of the judgment of the court below against the plaintiff is reversed, and that part of the case is remanded to the court below for a new trial and determination, and the defendant's appeal is dismissed. It is so decided as per Disposition by the assent of all participating