Early High Court Decision 2015J 3837 (Law No. 12, 2016)

Whether the claim for this case is legitimate

The defendant's refusal notice of this case is "the notification of rejection of the plaintiff's refusal of refund" and it cannot be viewed as a specific and direct disposition that affect the plaintiff's existence or scope of the right to claim refund of value-added tax of this case, and it does not constitute a disposition

Incheon District Court 2016Guhap52594 Revocation of Disposition Rejecting Value-Added Tax Correction

MaO

O Head of tax office

2017.06.29

2017.09.07

1. The instant lawsuit shall be dismissed.

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

Cheong-gu Office

On July 10, 2015, the Defendant’s disposition rejecting an application for rectification of value-added tax for the second period of 2014 against the Plaintiff shall be revoked.

1. Basic facts

A. In 2014, the Plaintiff issued 79 copies of the tax invoice stating that “the Plaintiff supplied copper scrap, etc. equivalent to KRW 3,890,913,410 (hereinafter “instant tax invoice”) to 11 companies, such as OO Co., Ltd. (hereinafter “instant companies”), and filed a return of the second value-added tax for the Defendant in 2014, on the amount of KRW 395,172,631 calculated on the basis of the instant tax invoice, etc., as output tax amount.

B. Meanwhile, on October 27, 2014 and January 26, 2015, the instant company paid the output tax amount under the instant tax invoice in accordance with the special case for payment of value-added tax by the purchaser of scrap scrap under Article 106-9(3) of the former Restriction of Special Taxation Act (amended by Act No. 13560, Dec. 15, 2015).

C. From March 16, 2015 to June 4, 2015, the Central Regional Tax Office conducted a tax offense investigation with the Plaintiff, and notified the Defendant of the relevant taxation data by deeming that the instant tax invoice constituted a real-free processing tax invoice. Accordingly, the Defendant: (a) deducted the Plaintiff’s sales revenue on the instant tax invoice from KRW 3,951,726,310 to KRW 60,812,90; (b) reduced the output tax amount from KRW 395,172,631 to KRW 6,00 from KRW 395,172,631 to KRW 6,081,290 from KRW 6,549,544, respectively; and (c) accordingly, (hereinafter referred to as “instant decision of correction”).

D. On July 3, 2015, the Plaintiff issued a request for correction (hereinafter “instant request for correction”) to the effect that “the sales on the instant tax invoice shall be deemed as the processed sales, and that the tax base and the amount of tax already paid shall be refunded at KRW 389,091,341 (hereinafter “the instant value-added tax”). However, on July 10, 2015, the Defendant issued a notice of refusal of the said request for correction on the ground that “the value-added tax declared and paid by the Plaintiff, who is the parties to the instant tax invoice, cannot be refundable” on the grounds that “the Plaintiff, as the parties to the instant tax invoice, cannot be refunded with the value-added tax returned and paid by the processing tax invoice” (hereinafter “instant notice of refusal”).

E. On July 21, 2015, the Plaintiff appealed to the Tax Tribunal for the revocation of the instant rejection notice. However, the Tax Tribunal dismissed the said claim on April 12, 2016.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 6, 8, 10, Eul evidence Nos. 1 and 2, the purport of the whole pleadings

2. Judgment on the defendant's main defense

A. Summary of the defendant's assertion

The instant claim for correction is nothing more than seeking refund of the value-added tax already reduced through the instant decision of correction. As such, the Defendant’s notice of rejection is not a rejection disposition against a claim for correction of value-added tax, but a simple notification of rejection decision. However, the Plaintiff is disputing the instant notification of rejection that is not recognized as a disposition. Thus, the instant lawsuit is unlawful due to its lack of qualification as an appeal litigation.

B. Determination

Articles 51(1) and 52 of the Framework Act on National Taxes merely provide for the procedures for refund of the tax authority as an internal administrative procedure of the national tax refund and additional dues for which the claim for refund has become final and conclusive. Thus, the claim for refund is not finalized only by the determination of the national tax refund (including additional dues). Thus, the determination of the national tax refund decision or the refusal of refund to the request for the determination is not a disposition that has a specific and direct effect on the existence or scope of the tax payer’s claim for refund, and thus cannot be deemed a disposition subject to appeal litigation (see, e.g., Supreme Court Decision 2001Du8780, Nov. 8, 2002). Meanwhile, in light of the content, form, legislative intent, etc. of the provisions related to the tax refund under the Value-Added Tax Act, it is reasonable to deem that the State’s obligation to pay the refund to the taxpayer is a public law obligation specifically determined by the Value-Added Tax Act and specially recognized from the policy point of view of tax policy. Thus, the taxpayer’s claim for refund against the State against the taxpayer should comply with the procedure of value-added.

According to the facts and the purport of the entire argument in Paragraph (1) above, it is recognized that: (a) the Defendant rendered the instant decision of correction with the purport of reducing the value-added tax imposed upon the Plaintiff by deducting sales recorded in the instant tax invoice from the Plaintiff’s base of value-added tax in 2014; (b) thereafter, the Plaintiff filed the instant request for correction with the purport of seeking refund of the value-added tax that was reduced according to the instant decision of correction; and (c) accordingly, the Defendant notified the instant refusal to the effect that the value-added tax declared and paid by the processing

Examining the above facts in light of the relevant legal principles as seen earlier, the defendant's notice of rejection of this case is added.

It is not a rejection disposition against the claim for the refund of value-added tax of this case, not a rejection disposition against the claim for the refund of value-added tax of this case, but merely merely a notification of the plaintiff's refusal to refund of the value-added tax of this case that has already been reduced by the decision for the correction of the correction of value-added tax of this case. Thus, it cannot be viewed that the plaintiff's claim for refund of value-added tax of this case has a specific and direct effect on the existence or scope of the right to claim the refund of value-added tax of this case. (On the other hand, the plaintiff does not constitute a "disposition" which is the object of appeal litigation (the plaintiff's claim for refund of value-added tax of this case, March 28, 2017 and June 23, 2017). However, according to the purport of the statement and the whole argument in Gap evidence No. 3, the defendant already corrected input tax amount of 389,091,341 won, which the plaintiff claimed for the refund of input tax amount of this case.

Therefore, the defendant's defense of this point out of the fact that the plaintiff seeks the money equivalent to the above amount of the refund against the state as a party lawsuit is justified.

3. Conclusion

Therefore, since the lawsuit of this case is unlawful, it is decided to dismiss it. It is so decided as per Disposition.