Examination Corporation-2014-0034 ( December 05, 2014)

Whether the purchase amount under a false tax invoice can be included in the calculation of losses

Considering the fact that there is no objective evidence that the Plaintiff purchased sand in cash with the cash withdrawal of 00 million won, and that payment in cash in excess of 00 million won is very exceptional, but it is not possible to submit receipts or other materials proving the fact of payment, etc., the key amount cannot be included in the calculation of losses.

Article 19 of the Corporate Tax Act; Article 106 of the Enforcement Decree of the Corporate Tax Act

Revocation of a disposition imposing corporate tax, etc.

AA

BB Director of the Tax Office

2017.04.06

2017.04.13

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s notice of change in income amount against the Plaintiff on February 3, 2014 (income type: bonus year: 2008; income amount: 00,000,000; CCC) and the disposition of imposition of corporate tax of 00,000,000 won for the business year of 2008 against the Plaintiff on February 6, 2014 shall be revoked.

1. Details of the instant disposition

(a) Status of the persons concerned;

The plaintiff is a company that operates construction business, such as bowlinging and hosting, with the head office in OOOO OOO-type O. CCC is registered as a director from July 23, 2007, and is the actual representative of the plaintiff.

B. The Plaintiff issued the instant tax invoice and the Plaintiff’s tax return1) concluded a construction contract with BB (hereinafter “DD”) using the trade name of DD involved in the bathing beach development project (hereinafter “instant construction”) and EEE of the EE Co., Ltd., with the following contents.

A) DD. DD: (i) the contract date on July 25, 2007; (ii) the construction price of KRW 0,000,000,000; and (iii) the construction period from July 25, 2007 to June 30, 2008 (it shall be changed to February 28, 2009) the EEE: (i) the contract date August 17, 2007; (ii) the construction price of KRW 0,000,000; and (iii) the construction period from August 20, 2007 to February 29, 2008 (it shall be changed to February 28, 2009):

A) A sales contract (No. 5) dated January 17, 2008: the content that "the plaintiff will purchase sand necessary for the instant construction from GG (the State) to purchase in KRW 000,000 from GG (the State)."

B) On September 19, 2008, the sales contract (No. 12: A: the Plaintiff’s purchase of sand of 00,000 square meters necessary for the instant construction from (oil) HHH to KRW 00,000,000,000,000 necessary for the instant construction.

3) The Plaintiff shall supply the value of sand 00,000 square meters necessary for the instant construction from (oil) HHH to the value of supply.

After receiving three tax invoices (1.00,000,000 won for supply on October 31, 2008, and 000,000,000 won for supply on November 30, 2008, and 00,000,000,000 won for supply on December 31, 2008, and hereinafter referred to as the "tax invoice of this case"), the value-added tax was reported by deducting the input tax amount, and the corporate tax was reported by including the purchase amount of this case in deductible expenses.

C. Imposition of additional tax on the plaintiff

On February 4, 2010, on the ground that the Plaintiff did not trade with HHH and sand and that the instant tax invoice was falsely prepared, the tax invoice imposed an additional tax of KRW 00,000,000 (including additional tax) on the Plaintiff.

D. Disposition of imposing corporate tax on the Plaintiff and notice of change in the amount of income calculated as CCC

From November 29, 2013 to January 7, 2014, the Defendant conducted a partial investigation of corporate tax on the Plaintiff. As a result, the Defendant determined that the instant tax invoice was issued without real transaction; on February 3, 2014, the Defendant issued a notice of change in the amount of income (for each type of income: bonus: year to which the income belongs: 2008; income amount of 00,000,000, and CCC: CCC) to the Plaintiff; and on October 20, 2014, the Defendant imposed KRW 00,000 for the business year to which the income belongs (hereinafter referred to as “instant disposition”).

E. The plaintiff's request and dismissal decision

The Plaintiff filed an objection on May 2, 2014, but was dismissed on May 28, 2014, and filed a request with the Commissioner of the National Tax Service for an examination of the instant disposition on August 25, 2014. The Commissioner of the National Tax Service dismissed the Plaintiff’s request for examination on December 5, 2014. On December 29, 2014, the Plaintiff filed the instant lawsuit on March 24, 2015, within the filing period after receiving the notification of the said dismissal.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff purchased sand equivalent to FF’s KRW 00,000,000, and paid the FF the purchase price in full, and only received the tax invoice from HH. In other words, the instant tax invoice is merely written differently by the issuer, but is not issued for “a false processing transaction.” Therefore, the instant disposition based on the premise that the instant tax invoice was issued for “a processed transaction” is unlawful.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) An actual supplier and a supplier on a tax invoice may not deduct or refund an input tax amount unless there is any special circumstance that the person who received the tax invoice was unaware of the fact that he/she was not aware of the fact of misrepresentation of the name of the tax invoice, and the person who claimed the deduction or refund of the input tax amount is not negligent in not knowing the fact of misrepresentation of the said name (see, e.g., Supreme Court Decision 2009Du1808, Jun. 11, 2009). In addition, if a tax invoice on some of the expenses reported by a taxpayer is proved to have been prepared in falsity without a real transaction by the Defendant who is the tax authority, and the issue of whether it is an actual cost, and if it was proved that the other party to the tax payment was proved to have been false, the taxpayer needs to prove that it was easy to present all the data, such as the account book and documentary evidence, regarding the fact that such expenses were actually paid (see, e.g., Supreme Court Decision 2010Du280766, Apr. 28, 28

2) In light of the following circumstances, it is reasonable to deem that the tax invoice of this case was issued for the so-called "processing Transactions" in the written evidence Nos. 3 and 4, including the above evidence, and the purport of the entire pleadings, and the written evidence Nos. 5 through 14, 21, and 25 are issued for the "counter Trading" whose tax invoice of this case is different from the facts of the supplier, and it is difficult to recognize the fact that expenses such as the stated amount have been actually disbursed. Accordingly, the plaintiff's assertion is rejected.

A) On December 4, 2009, the Plaintiff asserted that “On-the-spot” was supplied with sand from FF that operated GG, but only the instant tax invoice was supplied by HHHH.” (Evidence 3-1). However, on June 2010, JJ stated that the Plaintiff did not supply sand to the Plaintiff (Evidence 3-2). The Plaintiff again asserted that the Plaintiff supplied sand to the Plaintiff was GGGGGG, but the tax official of the OG did not supply sand from GG (Articles 3-3 and 4). The Plaintiff asserted that “the Plaintiff was supplied with sand from FF to the Plaintiff, and that the Plaintiff was supplied with sand from the HL (Article 3-2). The Plaintiff claimed that the Plaintiff supplied sand from the GGG’s construction site.

B) The Plaintiff agreed to be supplied with sand from the FF, the FF demanded LL (ju) to supply sand at the instant construction site, asserted that LL (ju) was supplied with sand from KK, and submitted a confirmation document prepared by the FF and the representative director of LL (ju) KimO to support this (Evidence No. 10, 11). However, on May 4, 2014, the FF submitted a confirmation document that "OO and newO did not supply sand to LL (ju)" from July 1, 2008 to December 31, 2008, when the instant construction was in progress (Evidence No. 4-3).

C) On June 21, 2016, the Plaintiff was sentenced to a fine of KRW 00 million for the criminal facts that the Plaintiff did not receive any service at the 00 district court and received the instant tax invoice from HH, and the judgment became final and conclusive by Supreme Court Decision 000L00000.

In relation to this, on October 0, 2010, CCC stated that “CCC was issued a tax invoice from GGG ( oil) HH instead of GGG on the FF’s proposal (see, e.g., reference materials submitted by the Plaintiff on Oct. 0, 2010) without entering any actual transaction with HH at the investigative agency, and there was a trade of KRW 00 million by leasing the bus line from the EPF’s EF’s L&C maritime shipbuilding, around 2008.”

D) In the trial proceedings in the case of the above sub-paragraph (c), the submission of the opinion that the prosecutor filed a public prosecution on the premise that the tax invoice of this case was issued with respect to the "counter trading in which the supplier of goods was falsely recorded" (Evidence A, No. 23, 24, and 25). However, in light of the following circumstances, it is difficult to view that the tax invoice of this case was prepared on the "counter trading".

(1) "Issuance or issuance of a tax invoice without supplying or being supplied with goods or services" punished by the Punishment of Tax Evaders Act, regardless of processing or disguised transactions.

(Supreme Court Decision 2010Do000 Decided October 20, 201). Therefore, inasmuch as it is found that CCC did not engage in a transaction according to the instant tax invoice or engaged in a transaction different from the instant tax invoice, whether the instant tax invoice was based on the “processed Transaction” or “discipated Transaction” seems not to have been the issues of the said criminal case.

② The criminal facts acknowledged in the final and conclusive judgment (O methodwon 2000No00) of the instant case were submitted to the tax authority in the instant case, even though the actual representative of the Plaintiff did not have received goods or services from HH ( oil) HH, by false representation (see reference materials submitted by the Plaintiff on April 6, 2017).

E) The Plaintiff asserted that the FF purchased sand of KRW 00,000,000 (Additional rent) from FF to KRW 000,000,000,000, and that according to FF’s instructions, the Plaintiff transferred KRW 000,000 to GG (ju), and (1) HH HH to FF, and that the Plaintiff paid the said sand amount in full by delivering KRW 00,000,000 to FF. The Plaintiff did not have any evidence to acknowledge that the Plaintiff paid KRW 00,000,000,000 + KRW 00,000,000 + KRW 00,000,000,000 + KRW 000,000,000,000,000 with each other’s receipts or other 00,000,0000,000,000 with each of the instant receipts or other materials for 00,000,000 of H.1.

3. Conclusion

Therefore, the plaintiff's claim is not correct, so it is dismissed, and it is so decided as per Disposition.

(c)