Seoul Administrative Court 2006Guhap15622 ( October 10, 2007)

National High Court Decision 2006No1371 (Law No. 796, 2006)

If it trades with defective local letters of credit or written approval for purchase, it shall exclude the zero tax rate;

Where sales are made by applying the zero-rate tax rate with knowledge that any defect exists in the issuance of a purchase approval, and there is a special stipulation that impairs the order of collection of the value-added tax, such as where he/she is aware of the fact that he/she uses the defective purchase approval

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

1. In the judgment of the first instance, the part against the defendant ordering revocation shall be revoked next.

2. The Defendant’s disposition of imposition of value-added tax for the first period of January 1999 against the Plaintiff on June 11, 2004 exceeding KRW 1,352,334,173 among the disposition of imposition of value-added tax for the first period of January 1999 shall be revoked.

3. The defendant's remaining appeal is dismissed.

4. 1/10 of the total costs of litigation shall be borne by the Plaintiff, and the remainder by the Defendant.

1. Purport of claim

The Defendant revoked the disposition of imposition of value-added tax of KRW 5,50,137,70 on June 11, 2004 on the part exceeding 13,84,472 won among the disposition of imposition of value-added tax of KRW 13,84,470 on the first quarter of 1999, the part exceeding KRW 2,064,972 won among the disposition of imposition of value-added tax of KRW 306,60 on December 1, 2004, the part of which exceeds KRW 2,064,972 won among the disposition of imposition of value-added tax of KRW 306,60 on the second quarter of 199, the part of the disposition of imposition of value-added tax of KRW 7,968,543,430 on the first quarter of 200, and the part of the disposition of imposition of value-added tax of KRW 2,135,803,790 on the second quarter of 197.

2. Purport of appeal

The part against the defendant in the judgment of the first instance shall be revoked, and all of the plaintiff's claims corresponding to the revoked part shall be dismissed.

1. Details of the disposition;

A. The plaintiff is a corporation engaged in general trade or current wholesale business, etc. from January 1, 1999 to December 12, 2000

31.까지 사이에 아래 표 기재와 같이 주식회사 ◆◆금은을 비롯한 거래업체(이하 '이 사건 각 거래업체'라 한다)에 지금(地金, Gold Bar 또는 Gold Ingot)을 판매하면서(이하 '이 사건 각 거래'라 한다), 이 사건 각 거래업체가 외국환은행장으로부터 발급받은 외화획득용 원료 구매승인서 및 내국신용장(이하 '이 사건 각 구매승인서 등'이라 한다)을 제시하였음을 이유로 이 사건 각 거래가 부가가치세법상 영세율이 적용되는 거래에 해당한다고 보아 이 사건 각 거래업체로부터 부가가치세 상당액을 거래징수하지 않았고, 이 사건 각 거래에 상응하는 부가가치세를 신고 ・ 납부하지 않았다.

B. The Defendant, as well as the Plaintiff’s purchase approval, etc. presented by each of the instant trading companies to the Plaintiff on the ground that there was a defect in the issuance procedures, such as the export approval, etc. issued on the basis of an export contract or issued on the basis of a false date or shipment date, or the issuance after the expiry of the effective date, and that the Plaintiff was well aware of such circumstances, denied the application of zero tax rate under the Value-Added Tax Act, and re-revision the amount of tax to the Plaintiff on June 11, 1999, imposition of Value-Added Tax at KRW 5,500,137,70 (including the imposition of Value-Added Tax at 13,84,472 won in bad faith), ② Value-Added Tax at KRW 306,606,6080 (including the imposition of Value-Added Tax at KRW 306,607,375,205,3705,297,206,307,27075).

C. On September 9, 2004, the Plaintiff filed a petition with the National Tax Tribunal for a trial on the imposition of value-added tax for the first period of January 1999 (2004No405) but was dismissed on June 14, 2006. ② On February 24, 2005, the Plaintiff filed a petition for a trial on the imposition of value-added tax for the second period of February 14, 2009 (2005 No. 1309) with the National Tax Tribunal, but was dismissed on June 14, 2006. ③ On September 27, 2005, the Plaintiff filed an objection against the imposition of value-added tax for the second period of September 27, 200, but was dismissed on March 24, 2006 (206 No. 1371) but was dismissed on June 28, 2006.

[Basis] Evidence Nos. 1-1 through 4, Gap evidence Nos. 5, 9, and 10-1, 2, Eul evidence Nos. 1-1 through 4, Eul evidence Nos. 19-1 through 56, Eul evidence Nos. 20-1 through 80, and the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

(a) A master of the parties;

1) Plaintiff’s assertion

For the following reasons, each disposition of this case denying the application of zero tax rate under the Value-Added Tax Act on the current supply by the Plaintiff is unlawful.

A) The Plaintiff traded each of the instant transactions with the reliance on each purchase approval letter, etc. issued by the head of the foreign exchange bank. Whether the supply was actually exported can not affect the current supplier’s application of the zero tax rate, and even if there was any defect in the issuance of each of the instant purchase approval letter, etc., the Plaintiff cannot be excluded from the subject of the zero-rate tax rate application on the ground that there was a defect in the issuance process, barring special circumstances

B) The judgment of conviction was rendered against the Plaintiff’s employee as a crime of violation of the Act on the Aggravated Punishment, etc. of Specific Crimes (tax) in relation to the transaction. However, in principle, the act performed by the company should be determined based on the representative director’s act. However, it was nothing more than the employee solely in charge of the business, and the employee or the representative director dealing with each of the instant written approval for purchase did not have any defect in the issuance procedure

2) Defendant’s assertion

The Plaintiff was aware that there was a defect in issuing each purchase approval, etc. for the following reasons.

A) The Plaintiff is the largest trading company in Korea, and it was widely known in the industry that the business operators engaged in the transaction have purchased false purchase approval, etc. for export currently and distributed them illegally in Korea. The Plaintiff, upon preparing a false export contract, issued a letter of approval for purchase with the Plaintiff’s own written approval for purchase, made the current purchase agreement applied at zero tax rate and distributed them in Korea.

B) The instant transaction between the Plaintiff and each of the instant traders is based on a defective document or a letter of credit issued even if there is no supporting document for export.

C) At the present time of the Plaintiff, HA was convicted of violating the Act on the Aggravated Punishment, etc. of Specific Crimes (tax) by instituting a charge of tax evasion in collusion with a trade business entity using gold bullion as a trade business entity.

B. Relevant statutes

Attached Form 3 is as shown in the "relevant Acts and subordinate statutes".

(c) Fact of recognition;

1) The Plaintiff is an enterprise with at least 40% of domestic gold transactions, and there was almost no export performance through a letter of approval for purchase issued by a domestic wholesaler prior to the 1999. From March 199 to March 199, the Plaintiff purchased this from a foreign country, and then purchased it from a domestic wholesaler and sold it again to a domestic company with raw materials for export, and then thereafter exported it from the time to the end of July of the same year.

2) The Plaintiff, daily, announced 99% of the international gold price as the purchase price, announced 101% as the sale price, and traded gold with the other party to the transaction in response to the publicly notified price. The Plaintiff, with a view to avoiding the risk of price fluctuation arising from the rapid change of the international gold price. The Plaintiff, with a view to preventing excessive possession of gold stock and securing certain profits, purchased gold stock in advance, and used the method of sales, which makes the purchase match between the purchase and the sale of gold, as its main purpose. Accordingly, the Plaintiff’s daily gold trading volume was enormous and actually purchased and sold within a short time using telephone and facsimile.

3) 원고가 이 사건 각 거래 당시 받은 구매승인서 중 주식회사 ▲▲월드가 교부한 구매승인서 4장(을 제19호증의 6, 7, 10, 31)에는 외국환은행장의 서명 또는 날인이 누락되어 있는데, 이는 이 사건 각 거래 중 1999년 1기 과세기간에 대한 것으로 합계액은 3,184,803,096원이다. 나머지 구매승인서는 재화가 공급된 시기가 속하는 과세기 간 내에 외국환은행장에 의하여 발급되었지만, 아래 표 기재와 같은 하자가 있다. 또한 원고가 이 사건 각 거래업체에게 판매한 지금은 수출되지 않고 모두 국내에서 판매되었으며, 원고가 1999.에 ◆◆금은에게 판매한 지금 중 상당부분은 여러 단계 중간도매상을 거쳐 다시 원고에게 유입되었다.

4) On May 7, 199, the Plaintiff prepared a false export contract on June 8, 199 and June 29 of the same year and illegally submitted a letter of approval for purchase of raw materials for foreign exchange earnings to Korea Light Bank Turury Branch. The Plaintiff purchased the present from ○○ Gad and △△ precious metal.

5) At the time of each of the instant transactions, YA, who was the deputy head of the non-ferrous metal team of the Plaintiff Metal Coal Business Department, appealed on January 31, 2008, and the Seoul High Court (2008 Gohap130) (hereinafter referred to as the “Seoul High Court”) conspired to engage in gold bullion alteration transactions that evade value-added tax by applying the zero-rate tax rate to import from a foreign country or purchase from a domestic company and sell from a domestic company. On July 11, 2008, YA was sentenced to imprisonment of two years and six months and fine of 27 billion won for the crime of violating the Act on the Aggravated Punishment, etc. of Specific Crimes (tax) on July 28, 2008 (208No1864). The Seoul High Court sentenced the suspension of the execution of imprisonment of two years and seven billion won to a fine of 2.7 billion won on November 28, 2008 (hereinafter referred to as the “Seoul High Court”). However, the Supreme Court sentenced on July 28, 2008.

Of the instant transactions, the part relating to each of the instant transactions for which final and conclusive judgment was rendered, is as listed below, and the sum totaling KRW 7,111,271,537 among each of the instant transactions is KRW 7,199.

[Reasons for Recognition] Eul evidence 4-1, 2, Eul evidence 16, 17, Eul evidence 18-1 through 9, Eul evidence 18-1 through 56, Eul evidence 20-1 through 20, Eul evidence 21-1 through 4, Eul evidence 22, and 23-1 through 3, Eul evidence 24-1 through 25-3, Eul evidence 25-1, Eul evidence 28-1, Eul evidence 39-3, Eul evidence 45, 47, and 48, and the purport of the whole pleadings

D. Determination

1) Article 11(1)1 of the Value-Added Tax Act and Article 24(2)1 of the former Enforcement Decree of the Value-Added Tax Act (wholly amended by Presidential Decree No. 17186, Mar. 31, 2001) provide that the zero-rate tax shall apply to the supply of exported goods, and that even if the goods are supplied by an entrepreneur through a local letter of credit or a purchase confirmation as prescribed by the Ordinance of the Ministry of Finance and Economy, the zero-rate tax shall apply to the exported goods. In this case, whether the goods have been actually exported shall not affect the current supplier’s application of zero-rate tax rate. The fact that there are defects such as the absence of any basis for export in the process of issuing a purchase confirmation or the issuance of a false shipment date, or the issuance of a false shipment date after the lapse of the expiry of the expiry date. 207 zero-rate tax rate shall not be deemed null and void. However, in light of the purport of the Supreme Court’s decision that the purchase of goods complies with the purpose of zero-rate tax rate 20 or zero-rate.

2) We examine whether the Plaintiff impliedly consented to the existence of intent to evade taxes using a defective purchase approval letter or a local letter of credit, even though the Plaintiff knew that each of the instant transaction companies had the intent to evade taxes.

Among each of the instant transactions, it is insufficient to recognize that the Plaintiff engaged in each of the instant transactions with either a public invitation or implied consent to evade taxes with each of the instant transaction companies due to the following reasons, or that there was a defect in the process of issuing each of the instant purchase approval, etc. with knowledge that there was a defect in the process of issuing each of the instant purchase approval, etc.

① Since a purchase approval is issued prior to the supply of ordinary goods, there are many cases where a written purchase approval is issued without the date of purchase. Even if the underlying documents and numbers, effective date, loading date, etc. of the stated matters are omitted, it is valid as long as the purchase approval is issued by a legitimate approving authority. On April 12, 2002, the amendment of the former Enforcement Rule of the Value-Added Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 258, Apr. 12, 2002) was made to include the underlying documents, such as a letter of credit, etc., serial number, effective date, and loading date, and each of the instant transactions

② While engaging in each of the instant transactions, the Plaintiff issued a divisional certificate, which is necessary for the final exporter to refund customs duties (No. 41, No. 44-1, No. 44).

Therefore, the disposition of imposition on the remaining portion of the disposition of this case, excluding paragraph (3), is unlawful.

3) Parts that knew of defects in the issuance of a purchase approval or that they conspired with the buyer.

가) 주식회사 ▲▲월드가 교부한 외국환은행장 서명 또는 날인이 누락된 구매 승인서 관련 매출 부분

1999년 1기 과세기간 중 주식회사 ▲▲월드가 교부한 구매승인서 4장(을 제19호증의 6, 7, 10, 31)은 외국환은행장이 한 서명 또는 날인이 없어 유효하게 발급된 구매승인서가 아니라는 사실을 쉽게 알 수 있다. 이 사건 각 처분 중 위 구매승인서 관련 매출액 3,184,803,096원에 대하여 영세율 적용을 부인하는 것이 맞다.

B) The sales related to the judgment of conviction of the AA

At the time of each of the instant transactions, YA, which was the deputy head of the Non-Iron Metal Team Co., Ltd., Ltd., was convicted of evading taxes in collusion with other trading companies of gold bullion trade as prescribed in paragraph (c)(5) of the same Article. YA is an employee who has been entrusted with specific types of business or specific matters as prescribed in Article 15 of the Commercial Act (Evidence A) since it had been on the part of the current transaction (Evidence No. 12). The issue of whether the Plaintiff conspired with the trading company after being aware that there was a defect in the issuance of the purchase approval should be based on YA as to the current transaction portion. Of each of the instant dispositions, it would be reasonable to deny the application of zero-rate tax rate to KRW 7,11,271,537 related to the current transaction portion.

4. Political amount of value-added tax for the first term portion of 1999.

Of the value-added tax base for January 1999, general sales amount is 43,177,42,739 won; zero tax rate sales amount is 1,620,971,895,05 won 4); and zero tax amount is 43,317,742,273 won. From the above output tax amount, the input tax amount is 65,742,923,561 won; and penalty tax is 32,726,710 won (additional tax 13,84,472 won (additional tax 13,84,472 won) + Additional tax to be submitted without a list of tax invoices) 205,921,492 won + Additional tax to be submitted without a list of tax invoices 7) 102,960,746 won + Additional tax amount to be refunded 23,45,78,747,315,3719).

Therefore, the part of the Defendant’s imposition of value-added tax on June 11, 2004 that exceeds KRW 1,352,334,173 of the imposition of value-added tax for the first term of 1999 against the Plaintiff is unlawful.

3. Conclusion

The plaintiff's claim is reasonable within the scope of the above recognition. The judgment of the court of first instance is partially unfair. The part of the judgment of the court of first instance against the defendant who ordered the revocation of imposition exceeding the above legitimate tax amount regarding the imposition of value-added tax for the first period of June 11, 2004, which was made on June 11, 2004, shall be revoked, and only the imposition exceeding the legitimate tax amount shall be revoked