Cho High Court Decision 2010Du3210 ( December 02, 2010)

A report on a suspicion of tax evasion likely to be destroyed may be omitted in the prior notice procedure.

"Where prior notification is deemed that the purpose of investigation cannot be achieved due to destruction of evidence," the prior notification procedure may be omitted, and where a tax investigation is conducted on the basis of information on suspicion of tax evasion, it constitutes a ground for objection and it cannot be recognized that the scope of investigation has been extended.

2010Guhap36688 Disposition of revocation of Disposition of Imposition of Value-Added Tax

Park AA

○ Head of tax office

June 10, 201

August 12, 201

1. The plaintiff's claim is dismissed.

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

The imposition of each value-added tax of KRW 33,384,070 on the Plaintiff on July 16, 2010 and KRW 1,046,221 on February 2008 shall be revoked.

1. Details of the disposition;

A. As a result of the Plaintiff’s tax investigation conducted with respect to the Plaintiff from April 7, 2010 to April 26, 2010, the Defendant found that the Plaintiff omitted the return of the value-added tax for the first and second years in 2008, and notified the Plaintiff of each value-added tax amount of KRW 33,384,070 on July 16, 2010 (hereinafter “instant disposition”).

B. On September 9, 2010, the Plaintiff filed an appeal with the Tax Tribunal on September 9, 2010, and filed the instant lawsuit on September 17, 2010, and the Tax Tribunal dismissed the Plaintiff’s appeal on December 2, 2010.

[Ground of recognition] Unsatisfy, Gap's entry of Gap's 1.3 (including virtual number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The instant disposition is unlawful due to the following procedural defects.

1) In conducting a tax investigation against the Plaintiff, the Defendant failed to comply with the prior notice procedure of the tax investigation under Article 81-7(1) of the Framework Act on National Taxes.

2) The Defendant initially conducted a tax investigation only for the tax year 2006 and 2008, and extended the scope of investigation by 2007. Thus, the Defendant omitted the investigation even though it had been notified of the reason and scope under Article 81-9(2) of the Framework Act on National Taxes.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) As to the assertion of defects in the prior notice procedure

According to the proviso of Article 81-7(1) of the Framework Act on National Taxes, “Where it is deemed that the purpose of the investigation cannot be achieved due to destruction of evidence” may be omitted. In this case, it appears that a tax investigation was conducted based on the Plaintiff’s information on the suspicion of tax evasion, and that it falls under the grounds of the above proviso. Even if it is not a domestic case, it does not seem that the degree of impact on the illegality of the disposition of this case, which is consistent with objective income, is not a defect to the extent that the illegality of the disposition of this case, which is consistent with objective income, is

2) As to the assertion of breach of duty to notify documents

First, as alleged by the Plaintiff, there is no evidence to acknowledge that the Defendant extended the scope of investigation of the value-added tax for the year 2007. Thus, this part of the Plaintiff’s assertion is without merit without further determination.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit.