The imposition of penalty tax is legitimate because of poor management and issuance of a written order for release of tax-free oil to persons other than fishermen.

The issuance of a delivery order to a person other than the fishermen due to the failure to verify the relevant documentary evidence, such as failure to verify the relevant documentary evidence, and the issuance of a delivery order to the persons other than the fishermen, and there is no justifiable reason to believe that there is no reason to believe that there

Value-added tax, etc. on petroleum products for farming, forestry, fishery and coastal passenger ships under Article 106-2 of the Restriction of Special Taxation Act;

2015Guhap23661 Disposition of revocation of Disposition of Imposition of Value-Added Tax

○○○ Cooperative and other 5

00. Head of tax office and 2

September 19, 2018

November 28, 2018

1. The plaintiffs' claims against the defendants are all dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

Cheong-gu Office

The disposition imposing additional tax as stated in the attached Table 1 that the Defendants issued against the Plaintiffs shall be revoked.

1. Details of the disposition;

A. The Plaintiffs are regional SS cooperatives established under the SS Cooperatives Act as cooperative organizations of fishermen and fishery product processors.

B. Meanwhile, according to Article 106-2 of the former Restriction of Special Taxation Act (amended by Act No. 11614, Jan. 1, 2013; hereinafter the same), fishermen are exempted from value-added tax, individual consumption tax, traffic, energy, and environment tax, education tax, and automobile tax (hereinafter “value-added tax, etc.”) on petroleum products to be used in fisheries (hereinafter “the aforementioned petroleum products”) (hereinafter “tax-free oil”), as a tax-free oil management agency, the Plaintiffs purchased tax-free petroleum from refined oil, and supplied them to fishermen within the control area through the gas cooperative oil stations and supply agency oil.

C. Meanwhile, as a result of the Plaintiffs’ inspection of the supply and management of duty-free petroleum to fishermen (the target year: January 1, 2008 through December 31, 2012) in accordance with a plan to process data on suspicion of illegal distribution of duty-free petroleum for fishing from September 16, 2013 to December 4, 2013, the Defendants issued a certificate of purchase or delivery of duty-free petroleum to the fishermen (Article 106-2(4) of the former Restriction of Special Taxation Act; hereinafter “tax-free petroleum purchase card, etc.”) to the Plaintiffs: (a) the Plaintiffs issued a certificate of purchase or delivery of duty-free petroleum (Article 106-2(4) of the former Restriction of Special Taxation Act; hereinafter “tax-free petroleum purchase card, etc.”) to the fishermen who were either departing from Korea or died; and (b) the fact that the Defendants issued the purchase card, etc. of duty-free petroleum

D. Accordingly, the Defendants issued an erroneous issuance of a tax-free petroleum purchase card, etc. due to the management failure by the Plaintiffs under Article 106-2(11)2 of the former Restriction of Special Taxation Act (hereinafter “instant provision”), imposing penalty tax equivalent to 20% of the value-added tax reduced or exempted on the Plaintiffs under Article 106-2(11)2 of the former Restriction of Special Taxation Act (hereinafter “instant disposition”).

E. Although the Plaintiffs filed a tax appeal on the instant disposition with the Tax Tribunal, the Plaintiffs were dismissed on July 29, 2014.

Facts without any dispute, Gap's 1 through 12, Eul's 1 through 10 (including each number), the purport of the whole pleadings, and the purport of the whole pleadings.

2. Relevant statutes;

Attached Form 2 shall be as listed in attached Table 2.

3. The plaintiffs' assertion

A. Summary of the assertion

The plaintiffs' assertion should be narrowly interpreted, and ② it is unfair to regard it as a failure to manage it in violation of the old Guidelines for Oil Supply Business (amended by Act No. 1050, Oct. 5, 2012; hereinafter referred to as the "former Guidelines for Business") which is the plaintiffs' internal rules, and ③ there is an independent illegal cause for 1 to 5 disposal.

B. Restricted assertion of the instant provision

Considering the following circumstances, in order for the Defendants to impose penalty taxes on the Plaintiffs pursuant to the instant provisions, “the result of illegal circulation of the relevant duty-free oil due to the Plaintiffs’ failure to manage” ought to be actually caused. However, given that the duty-free oil supplied by the Plaintiffs was used only for the fishing industry and was not distributed unlawfully, the instant disposition is unlawful.

A) The instant provision was newly established on December 29, 2001 by Act No. 6538, to strengthen sanctions against unions, which are institutions responsible for managing tax-free petroleum, involved in illegal distribution in order to prevent illegal distribution of tax-free oil.

However, unlike the general penalty tax imposed as a sanction on taxpayers' neglecting their duty to cooperate in tax, the penalty tax under the provisions of this case gives farmers' cooperatives public responsibility for management, which is the management of duty-free oil, and imposes it as a sanction or sanction on farmers and fishermen's cooperatives, so the requirements for the provisions of this case shall be interpreted narrowly in consideration of the legislative intent above.

B) According to Article 106-2(9) of the former Restriction of Special Taxation Act, an additional tax shall be levied only on fishermen who use duty-free oil for purposes other than fishing. Thus, the instant provision shall also apply only where duty-free oil is used for purposes other than fishing.

C. The argument on the criteria for determining ‘management poor'

According to the provisions of this case, "management poor" is the requirement for the imposition of additional tax. The former business guidelines, which the Defendants mainly based on the disposition of this case, are merely the internal regulations of the plaintiffs, and there is no legal nature. Therefore, even if the plaintiffs failed to perform their duties as prescribed in the former business guidelines, it cannot be deemed that such failure constitutes "management poor" under the provisions of this case.

(d) Claims on the grounds of paragraphs 1 through 5.

1) Summary of the plaintiffs' assertion

According to the provisions of this case, the penalty tax can be imposed when the plaintiffs' "management failure" is recognized, and if there are justifiable grounds for not being able to mislead the plaintiffs' failure to perform their duties, penalty tax may not be imposed.

However, with respect to the grounds for dispositions Nos. 1 through 5, the disposition of this case is unlawful, since it is not possible to recognize the management insolvency of the plaintiffs as follows, or there is a justifiable reason that is not attributable to the plaintiffs' negligence.

(ii)issuance of delivery instructions in the name of fishermen departing from Korea;

According to Article 23 of the former Guidelines for Business, if the captain, head of agency, chief of office, the spouse of the owner of the ship, or the lineal ascendant or descendant(hereinafter referred to as the "captain, etc.") is delegated by the owner of the ship, the owner may be provided with tax exemption on behalf of the owner of the ship

Accordingly, fishermen applied for the provision of tax-free oil by entrusting the captain with the authority to apply for tax-free oil when they depart from Korea, and the plaintiffs confirmed whether they were delegated or not through the power of delegation, the mandatory identification card, etc. and issued the delivery order.

In such a case, in principle, a delivery order shall be issued in the name of the mandatary who applied for the supply of tax-free oil in the name of the person who applied for the provision of the goods. However, although the issuance of a delivery order was made in the name of the fishermen departing from the Republic of Korea, other than the mandatory, due to the failure to perform duties or failure of the employees belonging to the Plaintiffs, the Plaintiffs issued the delivery order after faithfully verifying the copies

(iii)issuance of delivery instructions in the name of the deceased fishermen;

Although the plaintiffs were issued a delivery order in the name of the deceased fishermen, the plaintiffs did not report the death of the fishermen and continue to operate the fishing with the deceased's registered vessel pursuant to Article 106-2 (3) of the former Restriction of Special Taxation Act, and the plaintiffs did not know the death of the fishermen. Thus, when the fishermen submitted a letter of delegation in the name of the deceased fishermen and applied for the issuance of delivery order

(iv)issuance of delivery instructions to abandoned ships;

Even if a fishermen cancel the registration of a fishing vessel pursuant to Article 19(1) of the Fishing Vessels Act, unless the fishermen report the changes to the fishing vessel to the Plaintiffs pursuant to Article 106-2(3) of the former Restriction of Special Taxation Act, the Plaintiffs cannot confirm the same. Therefore, when a fishermen apply for issuance of a delivery order to a closed vessel without the above report, the Plaintiffs did not have any choice to issue

(v)issuance of an order for release to the vessel mooring;

Even if fishermen are on mooring pursuant to Article 2 (1) 1 of the Enforcement Decree of the Ship Safety Act, unless they report the change to the plaintiffs pursuant to Article 106-2 (3) of the former Restriction of Special Taxation Act, the plaintiffs cannot confirm the same. Thus, when fishermen apply for issuance of delivery order to a vessel moored without the above report, they did not have any choice but to issue it as the plaintiffs.

(vi)issuance of delivery instructions to ships which did not receive a ship inspection;

A) Article 106-2(1)1 of the former Restriction of Special Taxation Act does not exclude a ship which has not undergone a ship inspection under the Ship Safety Act from the target of tax-free oil supply. Thus, it cannot be deemed unlawful on the ground that the Plaintiffs issued an order for delivery of a ship for an attempted ship inspection.

B) In addition, it is practically impossible to confirm that a fishermen’s vessel applied for issuance at each time the Plaintiffs issued a delivery order is a vessel that has completed the entire ship inspection under the Ship Safety Act.

4. Determination

(a) A statutory system;

Before determining the plaintiffs' assertion, the laws and regulations on the tax exemption for agricultural and fishery oil will first be examined.

Article 106-2 of the Restriction of Special Taxation Act provides for the exemption of value-added tax on oil used for agriculture and fisheries for the purpose of supporting the economic stability of agricultural and fishing villages.

According to the delegation of the above provision, the special provisions on the application of zero-rate tax rate and tax exemption for machinery and materials and petroleum for agriculture, livestock, forestry, and fishery (amended by Presidential Decree No. 24369, Feb. 15, 2013; hereinafter referred to as the "former special provisions") were enacted.

In addition, the old Ministry for Food, Agriculture, Forestry and Fisheries (former Ministry of Maritime Affairs and Fisheries) designated as a tax-free petroleum distribution supervisory agency pursuant to Article 26 of the former Special Cases of the Act established the guidelines for the supply and follow-up management of tax-free petroleum for fisheries (amended by Ordinance of the Ministry for Food, Agriculture, Forestry and Fisheries No. 355, Feb. 25, 2013; hereinafter referred to as the "Gu guidelines for supply management").Finally, the SSS Federation designated as a tax-free petroleum management agency pursuant to Article 4 of the former Guidelines for Supply and Management

In this article, the plaintiffs' arguments are examined in mind of the above legal system.

B. Determination as to the limited interpretation of the instant provision

In full view of the following facts and circumstances, as long as the Plaintiffs issued a shipment order to a person who fails to meet the requirements for issuing the shipment order due to insufficient management, it shall be deemed that additional tax may be imposed pursuant to the instant provision regardless of whether the duty-free oil supplied was actually distributed unlawfully. Accordingly, the Plaintiffs’ assertion in this part is rejected.

A. The instant provision provides that (1) If a tax-free petroleum purchase card, etc. is issued erroneously to farmers, fishermen, etc. or a tax-free petroleum purchase card, etc. is issued to persons other than farmers, fishermen, etc. due to poor management, such as not verifying relevant documentary evidence.

Therefore, in light of the principle of no taxation without law, the interpretation of tax laws and regulations shall be strictly interpreted according to the statutory text, barring special circumstances, and it shall not be permitted to expand or analogically interpret without reasonable grounds (see, e.g., Supreme Court en banc Decision 2000Du7131, Mar. 15, 2001). As asserted by the Plaintiffs, the fact that the tax-free oil supplied by the pertinent tax-free oil purchase card, etc. is actually illegally distributed cannot be added as the requirements of the instant provision.

B. In addition, the tax-free oil system under Article 106-2 of the former Restriction of Special Taxation Act provides for the fishermen to increase their income by reducing or exempting the value-added tax, etc. on petroleum products supplied for the use of fishing machinery, vessels, and facilities, while increasing fishing productivity by facilitating the distribution of fishing machinery, vessels, and facilities, and at the same time preparing for the shortage of fishing villages labor (see, e.g., Constitutional Court Order 2009Hun-Ba171, Dec. 28, 2010). In order to achieve the above legislative intent, appropriate management of the supply, use, etc. of duty-free oil should be conducted.

Therefore, the former Restriction of Special Taxation Act designates the plaintiffs whose members are fishermen as tax-free petroleum management organizations, and grants the plaintiffs the authority to request the administrative agencies to issue the order of delivery and to request the fishermen's death data, etc. (Article 106-2(20) of the former Restriction of Special Taxation Act). In addition, when there is a reason for additional collection such as additional tax, the authority to suspend the issuance and use of the tax-free petroleum purchase card (Article 106-2(18) of the former Restriction of Special Taxation Act).

The Plaintiffs, the management agency of duty-free petroleum, have a duty to faithfully exercise authority under relevant provisions, such as the former Restriction of Special Taxation Act, to prevent illegal circulation or use of duty-free oil. In order to ensure the fulfillment of such duty, the Plaintiffs’ means to punish the Plaintiffs when they failed to exercise or exercise such authority properly in violation of relevant provisions, such as the Restriction of Special Taxation Act, should be secured. Thus, the legislative intent of the instant provision is to ensure this.

C. If a duty-free oil supplied to fishermen, etc. is considered to have been illegally distributed as additional requirements under the instant provision, in light of the fact that it is difficult to confirm whether the already supplied duty-free oil was unlawfully distributed or not, even if a duty-free oil management agency, such as the plaintiffs, issues a delivery order in violation of the procedures stipulated in the relevant Acts and subordinate statutes, sanctions are practically difficult, and as a result, the legislative intent of the instant provision cannot be sufficiently achieved.

C. Whether the violation of the former business guidelines can be seen as "management poor"

The business guidelines of the Gu shall be established in accordance with Article 106-2(21) of the Restriction of Special Taxation Act, the special provisions of the Gu, and the guidelines for the supply management of the Gu, and the detailed guidelines necessary for the provision of tax-free petroleum shall be prescribed.

Therefore, even if the former business guidelines are internal business process guidelines prepared by the SS Cooperatives Federation, and correspond to administrative rules, the upper statutes stipulate the methods, procedures, etc. for the supply of duty-free petroleum and the follow-up management. Thus, the Plaintiffs are obligated to comply with the above provisions to supply and manage duty-free oil, and the circumstances that the Plaintiffs issued a delivery order, etc. in violation of the above guidelines should be considered as a matter of course in determining whether they constitute “management poor” (see, e.g., Supreme Court Decision 2008Du21669, Nov. 29, 2012). Therefore, the Plaintiff’s assertion on this part is without merit.

D. Determination on the grounds for disposition Nos. 1 through 5

1) In light of the following facts and circumstances acknowledged by adding the overall purport of the pleadings to the respective statements in the 1, 2, 4, 6, and 7 certificates issued by the fishermen and deceased fishermen who depart from the Republic of Korea (the reasons for dispositions 1, 2), the Plaintiffs should have issued the ex-factory order after thoroughly verifying the delegation relationship, etc. when issuing the ex-factory order under the name of the fishermen who left Korea or died abroad, but the Plaintiffs were deemed to have issued the ex-factory order due to defective management, such as failing to verify the evidentiary documents, such as the proxy or the authority’s identification card, etc., and thus, the Plaintiffs’ allegation in this part is rejected.

(1) There is no provision that fishermen may be supplied with tax-free oil by entrusting a third party with the issuance of an order for delivery to a third party. However, Article 18 of the former Guidelines for Supply Management provides that "A cooperative may allow a third party to delegate the power for receipt of oil only when the head of the Suhyup Economic Group, such as a person in remote remote areas, determines that delegation of the authority for receipt of tax-free oil may be inevitable." Article 23 subparagraph 3 of the former Guidelines for Business provides that "the captain, the head of the agency, the head of the office, the spouse of the owner or the lineal ascendant or descendant of the owner may be delegated the authority for receipt of tax-free oil from the owner of the ship."

(2) A written order for delivery constitutes a certificate that grants the authority to accept duty-free oil. Thus, when issuing a written order for delivery, the procedure to confirm the person himself/herself is essential to prevent illegal distribution. Accordingly, the Plaintiffs should comply with the procedure for verifying the person himself/herself and issue a written order.

(3) According to Article 35(2) of the former Business Rule, when issuing a delivery order to a mandatory, the Plaintiffs shall confirm the power of attorney (not less than three months for the delegation period) or family relation certificate, and attach a copy of the delegated person’s identification card to the back of the delivery order.

(4) However, the Plaintiffs violated Article 35(2) of the former Business Guidelines by failing to verify the power of attorney or family relation certificate when issuing a written order for shipping out of Korea or deceased fishermen’s name, and failing to attach the copy of the delegated person’s identification card to the back of the written order for shipping out, etc. [Although the Plaintiffs asserted that they faithfully performed the above obligations on the basis of evidence Nos. 7 and 8 (including the serial number), the above evidence is not deemed to have faithfully complied with the procedures stipulated in Article 35(2) of the former Business Guidelines, on the ground that the period of delegation is unclear (Evidence No. 7-2) and its preparation is unclear.

(5) In addition, the Plaintiffs may request administrative agencies, etc. to provide data on the death, etc. of fishermen (Article 106-2(20) of the former Restriction of Special Taxation Act). Notwithstanding the fact that information on the death, etc. of fishermen can be identified by being regularly provided with data, the Plaintiffs did not take all such measures.

(ii)issuance of a written order for shipment to the closed vessel and to the vessel fixed on board (for reasons of measure 3, 4);

Considering the following facts and circumstances that are acknowledged by adding the whole purport of the pleadings to the statements in the Evidence Nos. 4, 6, and 7, the Plaintiffs should be deemed to have issued a delivery order without properly verifying whether the vessel was closed and moored due to the poor management. Therefore, the Plaintiffs’ assertion on this part is rejected.

(1) The owner of a fishing vessel shall register his/her fishing vessel in the fishing vessel registry (Article 13(1) of the Fishing Vessels Act), and, if the use of a fishing vessel is impossible due to its destruction, sinking, scrapping, aging, damage, etc., he/she shall apply for the cancellation of the registration within 30 days (Article 19(1) of the Fishing Vessels Act). The owner of a fishing vessel whose registration has been cancelled shall remove the fishing vessel license plate attached to the fishing vessel without delay and return the vessel license plate and the certificate of the nationality to the competent administrative agency (Article 19(3)

(2) Although the Plaintiffs are required to verify fishermen’s vessel registration certificates, English facts, etc., and to issue a shipment order with the relevant vessels specified (Article 106-2(6) of the former Restriction of Special Taxation Act, Article 20(2) of the former Special Provisions on Supply Management, Article 15 of the former Rules on Supply Management, and Article 35(3) of the former Rules on Supply Management), the Plaintiffs issued a shipment order to the abandoned vessels and the vessels.

(3) Even if the fishermen did not report the closure and mooring of the vessel and were issued a shipment instruction without knowing the fact, the Plaintiffs did not take all such measures despite having been able to determine the actual operation of the vessel by receiving the aforementioned documents from fishermen on a regular basis, and issued a shipment instruction through a large number of times on the closed vessels and mooring vessels. Thus, the Plaintiffs’ failure to manage the vessel is recognized.

(4) The fishermen were supplied with duty-free oil in the oil stations managed by the Plaintiffs (Article 3 and 4 of the former Business Guidelines); employees of the oil stations must verify whether the fishing vessels specified in the delivery order are the same as those actually being supplied with the fishing vessels (Article 33 subparag. 2 of the former Business Guidelines); and therefore, the Plaintiffs were able to verify whether the issuance of the delivery order was made to the abandoned vessels and the vessels on board through the oil stations.

(iii)issuance of a shipping instruction to a vessel which has not undergone a ship inspection (as stated in Disposition 5);

In light of the following facts and circumstances acknowledged by adding the overall purport of arguments to the statements in the Evidence Nos. 4, 6, and 7, the vessel which did not undergo an inspection under the Ship Safety Act cannot be used for navigation, and the supply of tax-free oil is prohibited. The Plaintiffs are deemed to have issued a wrong delivery order to the vessel that did not undergo a ship inspection by neglecting the confirmation of the ship inspection certificate, and thus, the Plaintiffs do not accept this part of the Plaintiffs’ assertion.

(1) When a ship is used for navigation for the first time or when the term of validity of a ship inspection certificate expires, a shipowner shall undergo an inspection by the Minister of Maritime Affairs and Fisheries (Article 8 of the Ship Safety Act). In addition, a shipowner shall undergo a temporary inspection in certain cases, such as remodelling or repair of a ship facility or alteration

The details of such ship inspection are all entered in the ship inspection certificate (Article 8(2) and Article 10(2) of the Ship Safety Act), a ship without a ship inspection certificate or a ship inspection certificate, the validity of which is suspended, shall not be used for navigation (Article 17(1) of the Ship Safety Act).

(2) When a fisherman is issued with a tax-free petroleum supply card, he/she shall submit a copy of the vessel inspection certificate to the plaintiffs (Article 21(1)1(d) of the former Business Guidelines), and the term of validity of the tax-free petroleum supply card is the expiration date of the term of validity of the fishery license certificate and the date of arrival of the certificate of vessel inspection (Article 22(5)1 of the former Business Guidelines).

(3) Upon receipt of a written order for the delivery of duty-free petroleum supply card, the Plaintiffs must verify whether the term of validity of the duty-free petroleum supply card has expired (Article 35(1)3 of the former Business Guidelines); and in the case of regular inspection of vessels, the expiration date can be easily confirmed by using the duty-free petroleum supply card. Thus, if the Plaintiffs issued a written order for the delivery of a vessel with an excessive term of validity, the Plaintiffs’ failure to perform the duty of confirmation is deemed insufficient management.

(4) On the other hand, in the case of a provisional inspection, the owner of a ship, etc. shall request a ship inspection and undergo an inspection from the competent administrative agency when the grounds prescribed by the law arise. Therefore, it is difficult to promptly understand whether the owner of the ship, etc. has received a provisional inspection until the fishermen report

However, in light of the fact that the Plaintiffs were able to regularly verify the temporary inspection through inquiry by the Korea Ship Safety Technology Authority, but did not take such measures from 2009 to 2012, which is the subject period of the instant disposition (Article 50(2) of the former Business Rule provides that the appropriateness of documents submitted, such as ship inspection certificates, shall be checked at least once a year), the management failure of the Plaintiffs in verifying the temporary inspection should also be deemed to be recognized.

5. Conclusion

Therefore, all of the plaintiffs' claims are dismissed as it is without merit. It is so decided as per Disposition.