Seoul Administrative Court 2007Guhap13227 ( November 26, 2009)

National Tax Service Review Division 2006-0372 ( December 27, 2006)

It is reasonable to impose tax on the money deposited in the attorney's office fee management account in consideration of the fee fee.

As long as indirect facts are revealed to regard the instant account as the principal account managing attorney’s office fees, inasmuch as the amount deposited in the instant account in light of the empirical rule is deemed as the commission fees, if the Plaintiff fails to properly prove the special circumstances that the amount deposited in the instant account is not related to the commission fees, the Plaintiff did not err in imposing value-added tax on deeming that the fact of taxation requirements was satisfied.

Article 13 of the Value-Added Tax Act

209Nu40751 Revocation of Disposition of Imposition of Value-Added Tax

- Appellants

Ansan

XX Head of tax office

Seoul Administrative Court Decision 2007Guhap13227 Decided November 26, 2009

July 5, 2011

February 23, 2012

1. The remainder of the judgment of the court of first instance excluding the part as referred to in paragraph (1) shall be modified as follows:

2. The Defendant’s imposition disposition of value-added tax for the second period of 2001 against the Plaintiff on September 8, 2006 in excess of 22,116,780 won, in excess of 20,494,318 won, in excess of 14,801,917 won in the imposition disposition of value-added tax for the first period of 2002, in excess of 13,481,917 won in the imposition disposition of value-added tax for the second period of 202, in excess of 13,840,630 won in the imposition disposition of value-added tax for the second period of 202, in excess of 16,864,320 won in the imposition disposition of value-added tax for the first period of 16,864,320 won in the imposition disposition of value-added tax for the second period of 203, in excess of 15,398,178 won in the imposition disposition of value-added tax for the year

3. The plaintiff's remaining claims are dismissed.

4. Of the total litigation costs, 80% is borne by the Plaintiff, and the remainder is borne by the Defendant, respectively.

1. The plaintiff's purport and purport of appeal

A. Purport of claim

The Defendant’s disposition of imposition of value-added tax for the second period of 2001 against the Plaintiff on September 8, 2006, of KRW 24,316,930, value-added tax for the first period of 202,751,980, value-added tax for the second period of 202, value-added tax for 202, KRW 24,404,430, value-added tax for the second period of 203, value-added tax for the first period of 2003, KRW 17,200,740, value-added tax for 14,93,940 for the second period of 203.

B. Purport of appeal

The part of the judgment of the court of first instance, excluding the part of paragraph (1) of the order, shall be revoked. The part of the defendant's imposition of value-added tax for the second period of 2001 against the plaintiff on September 8, 2006, 21,239,579 won, 17,500,454 won in the imposition disposition of value-added tax for the first period of 2002, 16,864,320 won in the imposition disposition of value-added tax for the second period of 201, and 16,209,740 won in the imposition disposition of value-added tax for the second period of 203, and 14,178,730 won in the imposition disposition of value-added tax for the second period of 202, and 16,84,627 won in the imposition disposition of value-added tax for the second period of 203, the imposition disposition of value-added tax for the second year of 2003.

2. The defendant's purport of appeal

The part of the judgment of the court of first instance, excluding the part against the defendant, shall be revoked. The plaintiff's claim corresponding to that part shall be dismissed.

[This part of the judgment of the court of first instance dismissed due to the defendant's ex officio reduction (this part of paragraph (1) is not included in the scope of the judgment of this court according to the fact that the plaintiff and the defendant did not appeal]

1. Details of the disposition;

A. From May 27, 1994, the Plaintiff is an entrepreneur who runs a defense project from Seoul XX-dong 000-0 legal building 504.

B. As a result of the tax investigation conducted on the Plaintiff from March 18, 2006 to April 14, 2006 for the taxable year of 200-203, the head of the Dobong Tax Office determined that the sum of 614,480,122 won (125,345,012 won for the second period of February 2001, 2002, 123,016,960 won for the first period of January 2002, 271, 278,858,830 won for the year of 2003, 119,43,020, 203, 103, 107, 208, 300, 206, 200, 206, 206, 30,000 won for the first period of January 19, 2003, 203).

C. Accordingly, on September 8, 2006, the Defendant imposed on the Plaintiff the value-added tax of 24,316,930 won for the second term in 2001, value-added tax of 1st year in 2002, 22,751,980 won for the first term in 2002, value-added tax of 24,404,430 won for the second term in 202, value-added tax of 17,200,740 won for the first term in 203, value-added tax of 14,93,940 for the second term in 203, respectively.

D. On this ground, the Plaintiff asserted that it was erroneous for the Commissioner of the National Tax Service to have determined that the portion of the input fees unrelated to the fees was omitted in each disposition of imposition stated in the preceding paragraph, and filed a request for a review (Additional 2006-0372) against the Commissioner of the National Tax Service, but the said request was dismissed on December 27, 2006.

E. During the lawsuit of this case, the defendant accepted part of the plaintiff's assertion as stated in the annexed Form 2's non-statement, and revoked part of the omission amount of import of this case and refunded the relevant tax amount as follows (the remaining part of each disposition of this case as stated in the above Paragraph C is "each disposition of this case").

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, 6 evidence, Eul evidence 1 to 8 (including provisional number; hereinafter the same shall apply), the purport of the whole pleadings

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

A. The plaintiff's assertion

(1) It is unreasonable to set the amount deposited in the instant account without any ground on the ground that the Defendant, the disposition agency, should prove it, but the Plaintiff’s explanation was not made.

(2) Most of the omitted revenues of this case were normally reported by the Plaintiff, and only the relationship between the actual client and the depositor was not revealed. Moreover, the remainder was deposited for other reasons, such as monetary transactions between the parties irrelevant to the acceptance of the case, and the transfer of the account for monthly salary for employees, and thus, does not constitute the omitted revenues.

(3) Therefore, each disposition of this case imposing value-added tax on the Plaintiff is unlawful even though there is no taxation requirement.

B. Determination

(1) The burden of proof of taxation requirement

(A) In a case where the tax base and tax amount determined through a written examination is denied and on-site investigation is conducted on the grounds of the omission of the revenue amount, the investigation of the amount deposited in the account of a financial institution and determining the amount of total revenue by the taxpayer constitutes a legitimate on-site investigation (see, e.g., Supreme Court Decisions 2001Du4399, Mar. 11, 2003; 2002Du12786, Dec. 12, 2003; 2003Du14284, Apr. 27, 2004). Generally, the burden of proving the fact of taxation in a lawsuit seeking revocation of the tax imposition is deemed to be the imposing authority unless the other party proves that the other party was not eligible to apply the relevant empirical rule in light of the empirical rule in the specific litigation process, it cannot be readily concluded that the pertinent tax disposition was an unlawful disposition that failed to meet the requirements for taxation (see, e.g., Supreme Court Decisions 200Du366636, Jul. 26, 2006298.

(B) In the instant case, in light of various circumstances indicated in the record, such as the fact that most of the money deposited in the instant account falls under the fee related to the instant case, and that some of the depositors are the Plaintiff, but the possibility that the Plaintiff would have deposited in the instant account after receiving the fee in cash cannot be ruled out, so long as indirect facts are found to be sufficient to deem the instant account as the Plaintiff to be the principal account managing the attorney’s office fee, it cannot be deemed that there was any error in each disposition of the instant case imposing value-added tax, on the premise that the money deposited in the instant account falls under the fee in light of the empirical rule, unless the Plaintiff sufficiently proves that the money deposited in the instant account falls under the fee, on the premise that it is not related to the fee, unless

Therefore, this part of the Plaintiff’s assertion on a different premise is without merit.

(2) Concerning the omission of import of the instant case

(A) In full view of the evidence indicated in the “based ground for recognition” column for Attached Table 4, evidence Nos. 7, evidence Nos. 3 through 5, each of the records Nos. 3 through 5, and the purport of the entire arguments and arguments in this court, it shall be deemed that the circumstance was proved that the “amount of cancellation of income omitted” in Attached Table 4 (the corresponding sequence Nos. 2) has been performed in a normal import declaration or deposited without relation to the acceptance of the case. The detailed grounds for judgment on each of the above items shall be substituted by the detailed matters set forth in Attached Table 4 (the person who requested the report, the relation, and the details of the report), but the following grounds for

① Attached Nos 4 and 175: 5 million won deposited in the instant account on December 15, 2001 in the name of KimA on December 15, 2001, the Plaintiff lent KRW 15 million to the wife KimA, his wife, and was paid KRW 1.5 million from KimA to October 31, 2001 on monthly interest basis from April 24, 200 to October 31, 2001, and was deposited as part of the loan.

② Attached 4 No. 201: The KRW 15 million deposited into the instant account in the name of B on March 12, 2002, appears to be the money deposited as a collateral to apply for a stay of compulsory execution according to the judgment against the Plaintiff’s damages claim case requested by NAB, the husband of DaCC on the high-employee villages.

③ Attached Nos 4 203: 5 million won deposited in the instant account on March 12, 2002 in the name of thisCC is presumed to be a loan in light of the fact that the Plaintiff repaid it through another bank account on the same day.

④ Attached 4 Nos 222: In relation to the instant case, the fact that deposit in the instant account was made on June 5, 2002 by five million won in the name of the maximum EE, which is the wife of DuD on June 5, 2002, but as long as the deposit was returned on July 5, 2002, the amount equivalent to the above amount does not constitute the omitted income amount.

⑤ Attached Nos 4 230: The fact that deposit was made in the name of KimF on July 18, 2002 in the account of this case on the constitutional complaint case on July 18, 2002, but as long as one million won was returned on October 4, 2002, the amount equivalent to the above amount does not constitute the omitted income amount.

④ Attached Nos 4 249: Of the KRW 26.5 million deposited into the instant account in the name of GG on October 18, 2002, KRW 20 million appears to have been transferred to GG under the pretext of payment in accordance with the Seoul Family Court Decision 2002Du5329, 2002dhap1505 decided in lieu of the final conciliation of the instant case (YG is deemed to have paid KRW 20 million to GGH as consolation money and division of property).

7) Attached Nos 4 267: 5 million won deposited in the account of this case on February 13, 2003 in the name of Kim KK was paid to the Plaintiff as commission fees when the Plaintiff accepted the case from Kim KK, and as long as it is acknowledged that the Plaintiff returned the above money on February 18, 2003 after the Plaintiff resigned from the above case, the above amount does not constitute the omitted income amount.

① Attached Nos 4 298: 70,000 won deposited in the instant account on June 20, 2003 in the name of KimLL: the Plaintiff lent 100,000 won to KimL on October 23, 2002, but appears to have been remitted under the pretext of partial repayment of loan.

① Attached Nos 4 309: 2.2 million won deposited into the instant account in the name of KimM on August 23, 2003, as the fee for criminal case of YangO, and only the said money is deemed to have been deposited into the retainer (the Defendant asserted that the Defendant confirmed that KRW 12.2 million was paid to the Plaintiff through telephone conversations with KimM, but there is no evidence to acknowledge this).

(10) Attached Nos 4 310: It appears to be a loan in light of the fact that the Plaintiff paid the same amount to leapP in installments from August 29, 2003 to October 15, 2003, which was deposited in the instant account on August 23, 2003.

⑪ 별지4 순번 330 : 이 사건 계좌에 2003. 11. 25. 유QQ의 동서인 이RR 명의로 입금된 40만 원은 원고가 유QQ에게 대여하였다가 대여금 상환의 명목으로 송금받은 돈으로 보인다.

(B) It is difficult to view that the remaining part, other than the part recognized as the "amount omitted" in the preceding paragraph, was submitted only by the data submitted to obtain a normal import declaration or that the pertinent amount was deposited without relation to the acceptance of the case (it is difficult to accept the second part of the Plaintiff's assertion that the amount omitted from the original total amount deposited into the instant account less the Plaintiff's revenue return, etc. (No. 3 through 5) and other amount verified through comparison (see, e.g., subparagraph 2) and the amount obtained by deducting the amount of revenue returned and other amount verified by proving the source from the Plaintiff's revenue return, etc. (see, e., attached Table 2).

(C) According to the separate sheet No. 4, the sum of 116,169,115 won (the sum of 8,363,180 won for the second term in 2001, 30,771,935 won for the first term in 2002, 47,590,000 won for the second term in 2002, and 10,181,000 won for the first term in 203, 2003, and 19,263,000 won for the second term in 203) shall be deducted from the omitted amount for the revenue of this case. The amount of legitimate tax calculated by reflecting it shall be as stated in the separate sheet No. 1. 3.

3. Conclusion

Therefore, the plaintiff's claim is justified within the above scope of recognition and the remaining claims are dismissed as they are without merit. Since the part of the judgment of the court of first instance excluding the part of Paragraph (1) of the order is partially different, it is so decided as per Disposition by the court below (it is so decided as per Disposition by the assent of all participating Justices on the bench). The plaintiff's application for resumption of pleading is not accepted in light of a thorough examination of all the submitted materials and reflects the conclusion.