Whether a tax invoice received from data is a real transaction

A promissory note paid by the Plaintiff as the price after receiving the tax invoice from the data shall not be deemed a real transaction, considering the fact that the promissory note paid by the Plaintiff as the price for the data is discounted to the representative after the Plaintiff’s relative name of the Plaintiff’s representative, and the person who issued the

Article 19 (Scope of Deductible Expenses)

Article 19 of the Enforcement Decree of the Corporate Tax Act

1. The plaintiff's appeal is dismissed.

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

The decision of the first instance is revoked. The defendant's imposition of KRW 606,869,390 of corporate tax belonging to the business year of 1998, the imposition of KRW 211,847,290 of corporate tax belonging to the business year of 1999, the imposition of KRW 211,847,290 of corporate tax belonging to the business year of 1999, and the notification of the change in the amount of income of KRW 1,605,214,034 of July 2, 2002, and the notification of the change in the amount of income of KRW 558,110,377 of the year of

1. Circumstances of the imposition disposition;

The following facts are not disputed between the parties, or can be acknowledged in full view of the purport of the whole pleadings in each entry of Gap evidence Nos. 1, 2, Eul evidence Nos. 1, 1, 2, 1 and 2, and Eul evidence Nos. 3 and 4:

A. The Plaintiff, a company established for the purpose of housing construction business, etc., received 10 won from ○○ Trade Co., Ltd. (hereinafter referred to as “○○ Trade”) during the 1998 business year as shown in the attached Table of Tax Invoice from total supply value of 1,459,285,486 won. During the 1999 business year, 7 Chapter 507,373,070 won in total of supply value from ○○○○○ Co., Ltd. (hereinafter referred to as “○○○○○”) during the 1999 business year (hereinafter referred to as “the tax invoice in this case, including the above tax invoice for ○○ Trade and the issuance of ○○○○○”), and reported 287,281 won as corporate tax for the business year of 198, and paid 200 won as corporate tax for the year of 31, 199.

B. As a result of conducting a tax investigation on ○○ Trade, the head of ○○ Tax Office revealed that ○ Trade simply issues a processed tax invoice without a real transaction. Each of the above tax invoices in the name of ○ Trade was also issued without a real transaction with the Plaintiff, and notified the Defendant of such fact. In addition, the Defendant, ○○○○, who is the tax office having jurisdiction over ○○○○, also stated that ○○○○ was also data, shall include the supply value of each of the above tax invoices received by the Plaintiff from ○○○○○○○○○○○, as deductible expenses, and shall be included in gross income on July 1, 2002, the amount of supply on the said tax invoices received by the Plaintiff from ○○○○○○○○○ and ○○○○○○○, and the corporate tax amount of 606,869,390 won for the business year of 199 and the corporate tax amount of 211,847,290 won for the business year of 1905.7.

2. Determination on the main safety defense regarding the part of the notice of change in the amount of the instant income

A. The defendant's assertion

The defendant argues that the disposition of income under the Corporate Tax Act or the notice of change in the amount of income is unlawful in the lawsuit of this case seeking the cancellation of the notice of change in the amount of income in this case, since it does not cause any change on the existence of the tax liability of the withholding agent or on the law, it does not constitute an independent administrative disposition that is subject to appeal litigation, since it does not cause any change on the existence of the tax liability of the withholding agent or on the law, the tax liability is automatically established and confirmed at the time of paying the amount of income.

B. Determination

In light of the following facts: (a) where the tax authority’s disposition of income and the notice of change in the amount of income is given, if the tax authority’s disposition of income and the notice of change in the amount of income are deemed to have been paid to the person to whom the income recorded in the notice was given on the date of receipt of the notice of change in the amount of income, the tax withholding agent is deemed to have established at the same time, and at the same time the tax withholding liability is determined; (b) the tax withholding agent bears the duty to pay the withheld amount according to the details of the disposition of income stated in the notice of change in the amount of income to the head of the competent tax office, etc. by the 10th day of the following month; and (c) if the tax withholding agent fails to comply with such obligation, the notice of change in amount of income is subject to penalty as well as criminal punishment; and (d) it is reasonable to view that it is a tax disposition directly affecting the tax liability of the tax

3. Judgment on the merits

A. The plaintiff's assertion

The Plaintiff, while constructing a new apartment construction project by entering into a subcontract with ○○ Construction Co., Ltd., and doing so, purchased and executed construction materials equivalent to the amount indicated in the tax invoice from ○○○○○ who actually operated ○○○○○○○○○○○○○, etc., and on the ground that the Defendant was accused of or punished by ○○○ and ○○○○○○○’s material, the Plaintiff asserts that the transaction with the Plaintiff is a wholly processed transaction, and that it is unlawful to conclude that the transaction with the Plaintiff was a wholly processed transaction, and to notify changes in the amount of income, and thus, it should be revoked.

B. Relevant statutes

Before the Specialized Corporate Tax Act was amended (amended by Act No. 5581 of Dec. 28, 1998)

Article 9 (Income for Each Business Year)

(1) The income of a domestic corporation for each fiscal year shall be the amount obtained by deducting the total amount of losses which falls or comes to fall under the fiscal year from the total amount of earnings which falls or comes to fall under the fiscal year.

(2) The term “gross income” in paragraph (1) means the amount of profits generated by transactions which increase the net assets of the concerned corporation, except for capital input or financing and those as provided in this Act.

(3) The term "deductible expenses" in paragraph (1) means the amount of losses incurred by transactions which reduce the net assets of the corporation, except as otherwise provided for in this Act, such as refund of capital or shares, appropriation of surplus funds, and transactions

Article 32 (Determination and Correction)

(2) Where a domestic corporation files a report under Article 26, the chief of the district tax office having jurisdiction over the place of tax payment or the Commissioner of the competent Regional Tax Office shall correct the tax base and amount of corporate tax on the income

1. Where there are errors or omissions in the contents of the report;

(3) Where the chief of the district tax office having jurisdiction over the place of tax payment or the Commissioner of the competent Regional Tax Office determines or revises the tax base and amount of corporate tax on income for each business year pursuant to paragraphs (1) and (2), he shall make it based on the account books and other documentary evidence: Provided, That where it is impossible to calculate the amount of income using account books

(5) In filing a report on the corporate tax base under Article 26, or determining or revising the corporate tax base under paragraphs (1) through (4), the amount included in the calculation of earnings shall be disposed of as bonus, dividends, other outflow in company, reserve, etc. according to the person to whom the corporate tax is reverted, as prescribed by Presidential Decree.

The former Corporate Tax Act was amended by Act No. 5581 of Dec. 28, 1998 and was amended by Act No. 6293 of Dec. 29, 2000)

Article 19 (Scope of Deductible Expenses)

(1) Deductible expenses shall be the amount of losses incurred by transactions which reduce the net assets of the corporation, excluding return of capital or financing, disposition of surplus funds, and what is provided in this Act.

(2) The losses under the provisions of paragraph (1) shall be losses or expenses generated in connection with the business of a corporation which are generally accepted as normal or directly related to profit, except as otherwise prescribed by this Act and other Acts and subordinate statutes.

(3) Matters necessary for the Act and the types of losses under the provisions of paragraphs (1) and (2) shall be prescribed by the Presidential Decree.

Article 66 (Settlement and Correction)

(2) Where a domestic corporation makes a report under Article 60 falls under any of the following subparagraphs, the superintendent of the district tax office having jurisdiction over the place of tax payment or the Commissioner of the competent Regional Tax Office shall correct the tax base and

1. Where there are errors or omissions in the contents of the report;

(3) Where the tax base and amount of corporate tax are determined or revised under paragraphs (1) and (2), the chief of the district tax office or the director of the competent regional tax office having jurisdiction over the place of tax payment shall be based on the books and other documentary evidence: Provided, That where the income is unable to be calculated by books and other documentary evidence for the reasons

(4) If any error or omission is found in the decision or rectification of the tax base and amount of corporate tax, the superintendent of the competent district tax office or the director of the competent regional tax office having jurisdiction over the place of tax payment

(c) Fact of recognition;

The following facts may be acknowledged in full view of the evidence as mentioned above and the evidence as follows: Gap evidence 4-1 through 17, 12-1 through 10, 12-21, 7-1 through 14, 16, 17, 19, Gap evidence 10-1 through 29, Eul evidence 5, 7, 10, 11-1 through 8, Eul evidence 12-1 through 12, Eul evidence 13, 14, 15-1, 2, and Eul evidence 16 through 22, and the whole fact-finding facts-finding with respect to 00,000, 000, 000, 00, 000, 00, 000, 00, 00, 00, 00, 00, 00, 00, and 00

(1) On August 10, 1999, the Plaintiff, from ○○○ Construction Co., Ltd., to ○○○○○○○○○ apartment construction project, performed the mold construction project on a contractual basis of a contract amount of KRW 4 billion to KRW 4 billion, on a contractual basis, with ○○○○ Co., Ltd., ○○○○○ Co., Ltd., ○○○○○○○ Co., Ltd., ○○○○○○○○○○ Co., Ltd., ○○○○○○○ Co., Ltd., ○○○○○ Construction Co., Ltd., ○○○○

(2) Upon filing a report on the corporate tax related to the business, the Plaintiff reported the sales for the fiscal year 1998 to KRW 20,763,94,681, KRW 20,101,847,631, KRW 1999, KRW 10,490, KRW 282, KRW 658, and KRW 10,221,826,644, respectively, and reported the sales for the fiscal year 1998 to KRW 1,459, KRW 285, KRW 486, and KRW 507,373,070, out of the sales for the fiscal year 1998, KRW 1,45, KRW 486, and KRW 507,07,070, out of the sales for the fiscal year 198.

(3) Around June 2001, the head of the ○○ Tax Office stated that the head of the ○○○ Tax Office conducted a tax investigation on ○○ trade (the representative of ○○○ was ○○○), which is an actual operator. An employee of ○○ Trade, worked from October 1997 to October 198, 200, that ○○○ was only selling disposable and promotions, and that ○○ was never selling construction materials at all, and around 198. Around 198, the head of the ○○○ Tax Office stated that the ○○○○ Tax Office, which was the actual manager of ○○ trade, did not change the ○○○○○ Trade and issued a tax invoice to change ○○○○○○○, and that ○○○○○○○ was a real manager, and that ○○○○○○ was not aware of the fact that ○○○○ Trade and the ○○○○ Building Co., Ltd., Ltd., without reporting that ○○○○○ was an actual building materials.

As a result of the tax investigation based on the above statements and related data, the head of ○○ Tax Office received a tax invoice of KRW 46,316,10,000 from 10 companies for a period from January 1, 1998 to December 31, 1998, which is equivalent to KRW 2,316,10,000, among which 31,905,310,000, which was received from 8 companies, were processed tax invoices of KRW 1,905,310,00, which were issued without real transaction. The above company issued tax invoices of KRW 48,428,520,00, which were issued by 14 companies including the Plaintiff during the same period. Of these, the above company filed a tax invoice of KRW 2,428,520,00, the total amount of supply value, 2,005,963,000, which was issued by 4 companies, and filed a tax invoice of KRW 19,5,20065,81.

(4) On the other hand, on January 1, 2002, the Defendant conducted a tax investigation on ○○○○○○○ (the representative was Park○○○○), in which ○○○○ was a de facto operator, and received a tax invoice of KRW 2,141,751,00 from the purchaser for a period from January 1, 199 to December 31, 199. Of these, ○○○○○○ received a tax invoice of KRW 2,141,751,000 in total of the supply value from the purchaser. Of these, the tax invoice of KRW 1,981,47,00 in total of the supply value was issued without real transaction. Dur the same period, the Defendant filed an accusation of KRW 2,185,213,00 in total of the supply value in the sales place including the Plaintiff, and the Defendant filed an accusation of KRW 1,437,594,00 in total of the supply value to the Plaintiff.

(6) With respect to an accusation filed by the head of ○○ Tax Office on the charge of issuing processed tax invoices in the course of operating ○○ trade, ○○○ District Court, which was the first instance court on February 11, 2003, sentenced one year of imprisonment, two years of suspension of execution, probation, and 240 hours of community service order to the crime of violating the Punishment of Tax Evaders Act. While filing an appeal against the above judgment, ○○ District Court, which was the appellate court on July 22, 2003, was sentenced to one year of imprisonment and two years of suspended execution. On December 12, 2003, 2003, ○○ District Court, which was the appellate court, was sentenced to one year of imprisonment and one year of suspended execution, was sentenced to a judgment of dismissal of final appeal, and became final and conclusive.

D. Determination

(1) In a lawsuit seeking revocation on the grounds of illegality of taxation disposition, the tax authority bears the burden of proving the legality of disposition and the existence of the taxation requirement fact. Therefore, the tax authority, in principle, bears the burden of proving the amount of expenses to be included in deductible expenses, which serve as the basis for determining the amount of income, which is the corporate tax base. However, in a case where the taxpayer argues that some of the expenses reported by the taxpayer are actual expenses or is false or that the reported amount was spent for other expenses of the same amount, the taxpayer needs to prove the existence and amount of other expenses (see Supreme Court Decision 94Nu5816, Oct. 28, 1994).

In this case, ○○○○, who is the actual operator of ○○ trade, was convicted of having committed a crime of violating the Punishment of Tax Evaders Act in relation to the issuance of false tax invoices in the name of ○○ trade, and the judgment became final and conclusive; 1,087,69,39,390 out of the total value of the tax invoices received by the Plaintiff from ○○○ trade was recognized in the criminal judgment as a false tax invoice issued without a real transaction; 1,087,669,39,390 out of the total value of the tax invoices received by the Plaintiff from ○○○○○○○ trade; 2.5% of the tax invoices received by ○○○○○○○○ in the business year 1999 (=1,981,47,000, 2,751,000) out of the tax invoices received from the purchaser in the business year 199, and thus, it was necessary to establish that the Plaintiff actually received the tax invoices from ○○○○○.

(2) Accordingly, the Plaintiff asserted that: (a) purchased building materials from ap○○○, and then delivered them with a promissory note; and (b) compared the Plaintiff’s ratio of the amount of the building materials purchased from ap○○○○, the Plaintiff purchased the building materials from ap○○ in light of the fact that it was impossible for the Plaintiff to purchase them from ap○○○ in view of the fact that it was impossible for the Plaintiff to purchase them.

Therefore, according to the Plaintiff’s evidence Nos. 1 through 39, and No. 1 to 4-1 to 5-2, each of the Plaintiff’s evidence Nos. 1 to 2, and the fact that the Plaintiff issued 39 copies of the Promissory Notes No. 1 to 4-1 to 7, and each of the above evidence No. 1 to 5-1 to 3-2, it is difficult to acknowledge that the Plaintiff’s evidence No. 1 to 4-1 to 6-1 to 7, and that the Plaintiff’s evidence No. 1 to 1 to 3-6-1 to 6-1 to 3-1 to 7, and that it was difficult to find that the Plaintiff paid the above amount of the Promissory Notes No. 2 to 1 to 4-1 to 6-1 to 1 to 3-2, and that it was difficult to find that the Plaintiff paid the amount of the 1 to 3-1 to 3-1 to 1 to 6-2, respectively.

Next, according to the Plaintiff’s report on corporate tax, the Plaintiff’s above assertion: (a) based on the following facts: (b) materials price reported to be supplied by ○○○ in the fiscal year of 1998 falls under KRW 20,101,847,631 won in the year of 20,101,847,631 won in the year of 199; and (c) materials price reported to be supplied by ○○○ in the fiscal year of 1999 falls under KRW 507,373,070 in the amount of KRW 10,221,826,644 in the amount of KRW 4.9% in the amount of KRW 507,373,07 in the year of 199; and (b) as seen above, it is reasonable to deem that the materials price reported to be supplied by ○○○ does not reach 10% in the total amount of KRW 10% in the amount of total sales price. Therefore, the Plaintiff’s also have merit.

(3) Accordingly, the Defendant’s disposition of this case, which denied the value of supply of the tax invoice of this case, and determined the tax base and tax amount of the corporate tax of this case, and accordingly, the notice of change in the income amount to Kim○, the representative director of the Plaintiff is lawful

4. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and the judgment of the court of first instance is unfair by rejecting the part seeking the cancellation of the notification of change in income amount in the lawsuit of this case, but it is recognized that the court of first instance has been examined to the extent that it can render a judgment on the merits. Thus, it is not remanded to the court of first instance, but it is decided to render a judgment on the merits. However, in the case of appeal filed only by the plaintiff to the plaintiff who is the appellant in accordance with the principle of prohibition of disadvantageous change, it is not possible to revoke the judgment of the court of first instance, which is disadvantageous

Schedule of Tax Invoice

(unit: Won)

No.

Mack Hack

Suppliers

Value of Supply

1

April 30, 1998

○ ○ Trade

52,630,000

2

April 30, 1998

○ ○ Trade

37,000,000

3

April 30, 1998

○ ○ Trade

202,860,000

4

July 31, 1998

○ ○ Trade

287,884,130

5

August 31, 1998

○ ○ Trade

133,459,430

6

September 31, 1998

○ ○ Trade

214,394,050

7

on October 30, 1998

○ ○ Trade

49,504,500

8

October 31, 1998

○ ○ Trade

260,117,000

9

November 30, 1998

○ ○ Trade

109,937,280

10

December 31, 1998

○ ○ Trade

111,49,096

Sub-committees

1,459,285,486

11

April 30, 1999

○○○○

86,422,780

12

May 31, 1999

○○○○

69,709,000

13

July 31, 1999

○○○○

97,183,000

14

August 31, 1999

○○○○

7,558,260

15

September 30, 1999

○○○○

69,106,150

16

October 30, 1999

○○○○

36,429,430

17

October 30, 1999

○○○○

70,964,450

Sub-committees

507,373,070