The Plaintiff’s receipt of the instant tax invoice constitutes good faith and negligence.

The instant tax invoice received by the Plaintiff is false tax invoices, good faith, and negligence.

2016-Revocation of imposition, including value-added tax, 201-2190

AA Corporation

O Head of tax office

oly 2017.18

2, 2017.08

1. On December 1, 2015, the Defendant’s imposition of value-added tax of KRW 278,568,520 for the first term of 2014 against the Plaintiff on December 1, 2015, value-added tax of KRW 374,984,180 for the second term of 2014 (including additional tax), and corporate tax of KRW 50,000 for the business year 2014 (additional tax for lack of evidence) shall be revoked.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. On June 1, 1995, the Plaintiff is a legal entity entity that runs scrap metal, non-ferrous iron, and solid wholesale business after opening ○○ ○○ ○○-ro on her behalf.

B. The Plaintiff received a purchase tax invoice of KRW 3,793,829,480 (hereinafter “each of the instant tax invoices”) from GG in the course of purchase of copper scrap from GG Co., Ltd. (hereinafter “GG”) during the period of one year in 2014 and two years in 2014, and filed a return and payment of value-added tax to the Defendant after deducting it from the output tax amount as follows:

C. On July 8, 2014 to November 17, 2014, the director of the Central District Tax Office confirmed that GG received and issued false tax invoices without real transactions during the taxable period of value-added tax for the first period of value-added tax, and confirmed them as data.

D. On September 8, 2015 to November 20, 2015, the Defendant notified of the results of the survey on data on GG, and conducted a corporate integration survey on the Plaintiff on November 20, 2015, confirmed that each of the instant tax invoices was a disguised transaction, which was issued by GGs that the Plaintiff purchased the copper scrap with the data without the actual purchase (verification of the actual purchase price) and was issued by the Plaintiff.

E. On December 1, 2015, the Defendant issued a revised notice of each of the instant tax invoices to the Plaintiff on December 1, 2015, respectively (hereinafter “each of the instant dispositions”) of KRW 278,568,520, value-added tax for the first term of 2014, value-added tax for the second term of 2014 (including additional tax), and KRW 50,000,000 (additional tax for lack of evidence) for corporate tax for the business year 2014, and KRW 50,000 for corporate tax for the business year 2014.

F. On December 22, 2015, the Plaintiff appealed and filed an appeal with the Tax Tribunal on February 5, 2016. On June 30, 2016, the Tax Tribunal rendered a decision of reinvestigation on the ground that the Plaintiff was unable to know that the Plaintiff was an actual supplier under each of the instant tax invoices, but it is necessary to confirm whether the Plaintiff was a bona fide supplier or a negligence.

G. On July 25, 2016 to September 4, 2016, the Defendant conducted a reinvestigation on the Plaintiff, and deemed that the Plaintiff could not be deemed to have fulfilled its duty of care as a bona fide trading party for the following reasons, etc., and thereafter, notified the Plaintiff that the Defendant maintained each disposition of this case.

Facts that there is no dispute for recognition, Gap No. 1, 2, and Eul No. 1 through 4 (including virtual numbers), respectively.

Statement, the purport of the whole pleading

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

A. The plaintiff's assertion

1) The Plaintiff was supplied with each of the instant tax invoices that was actually discontinued by GG, and thus, each of the instant tax invoices is not a false tax invoice.

2) Unless otherwise, the Plaintiff did not have traded with a disguised company, etc. while running a business for at least 20 years after the commencement date of the business. The Plaintiff received business performance documents, field photographs, business registration certificates, settlement account copies, loan contracts, etc. from GG’s representative director after the change in July 2014, and confirmed the opposite contractual party by receiving the relevant documents again, and the payment system of the value-added tax for copper scrap was enforced on January 1, 2014. The transaction between the Plaintiff and GG was traded with the exclusive account for copper scrap. The Plaintiff and the Plaintiff did not conclude that the time for issuing the electronic tax invoice issued by the transaction party purchased by GG from the Plaintiff is not a normal transaction. The Plaintiff did not know that DG’s representative DD and TT were not an economic and business ability, and the Plaintiff and the representative director did not know that the Plaintiff did not actually receive a disposition of non-prosecution under the Punishment of Tax Evaders Act. The Plaintiff did not have any negligence related to each of the instant tax invoices.

3) Therefore, each of the instant dispositions is unlawful.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

(c) Fact of recognition;

1) Investigation results, etc. of value-added tax on the suspect of data related to GG

(A) the inspection of the workplace and the representative;

(1)Y Development Co., Ltd. started operation on November 3, 2008, 2008, using ○○-ro in Bupyeong-si, Seocheon-si as its place of business, real estate sale, etc. After which, on January 6, 2014, changed its trade name to GG, to ○-dong in Ansan-si, and the representative director of the place of business to DD, and operated a scrap metal wholesale business, etc. on June 30, 2014, and then changed the representative director to TT. On February 9, 2015.

(2) As a result of the verification of the site location of GG at the time of commencement of the investigation, GG leased and used the site size of 470 square meters near the entrance of ○○ IC at KRW 10 million, monthly rent of KRW 11 million, monthly rent of KRW 100,000, KRW 200, KRW 100, KRW 100, KRW 100, KRW 100, KRW 100, KRW 2,000 in the workplace, measuring the weight of scrap

(3) ADD owns a multi-household 475-18 101, 00 ○○○○-dong ○○○○, ○○○-dong 475-18 101. Along with the absence of any other income in addition to daily work and small business income, DD and TT requires considerable business funds due to the absence of any other income. According to D and TT’s statements, the actual operator is HH and the person who received and delivered the tax invoice related to the closed Dong is confirmed as the person who received and delivered the tax invoice.

(4) The representative director DDD and TT of the GG had registered its business under the circumstances where its equity capital was almost nonexistent, and most of the sales payments paid on the tax invoice was transferred to the purchase price under the circumstances where the sales office and the purchaser of the closed Dong were determined, and no balance was available to purchase the closed Dong due to the absence of funds.

(B)an investigation into the purchaser;

(1) GG appears to have purchased KRW 3,197 million from ○ Metal during the taxable period of the value-added tax in January 2014, 773 million from ○○ Metal, KRW 16,886 million from ○○ Logistics, and KRW 7.3 million from other companies.

(2) The representative CCC’s representative of ○ Metal confirmed that there was no work experience related to scrap metal and waste metal, and that there was no financial ability and property, and that the details of the purchase of ○ Metal were not verified at all, and that the transaction amount deposited from the seller shows abnormal financing flow, such as cash withdrawal within a short time, etc. As such, the amount of the tax invoice issued by ○ Metal was determined as a typical carbon company as the total amount of the tax invoice issued by ○ Metal was determined as a false tax invoice without a real transaction. The entire tax invoice for ○○ Logistics was determined as a false tax invoice for the same reasons as ○○ Logistics’s representative’s ability, details of purchase, and cash flow.

(C)an investigation of the seller;

(1) The representative of ○○ Logistics stated that, upon sending an electronic tax invoice from GG, MP issued the same amount of all the descriptions, such as quantity, unit price, supply price, and amount of tax based on the electronic tax invoice, and confirmed the fact that the time of issuing the electronic tax invoice issued by ○○ Logistics and ○ Metal to GG is later than the time of issuing it to the seller.

(2) From April 4, 2014, GG received the processed tax invoice of KRW 5,80,000,000 in supply value, and issued the tax invoice of KRW 1,491,00 from ○ Logistics until June 30, 2016 to the Plaintiff, including the issuance and delivery of the processed tax invoice of KRW 5,96,00,000,000 in supply value to the Plaintiff on the same day, although not having been supplied with the closed Dong from ○ Logistics, and issued the tax invoice of KRW 1,534,00 in supply value to the Plaintiff.

2) The corporate integration result of the Plaintiff

A) Inspection of places of business

(1) 원고의 사무실은 컨테이너(2층)로 1층에는 경리 및 직원이 거주하고 있고, 2층은 사장실이 위치하고 있으며, 직원은 운송담당 ZZZ(원고 대표이사 JJJ의 동생), 분류담당 QQQ(JJJ의 동생), 경리담당 NNN 3명으로 확인되고, JJJ은 실사업자로 확인되었다.

(2) At the time of the date of the investigation and arrival, there were 1 container stuffs, 1 valleys (50 tons), 3 vehicles (5.5 tons truck, 5 tons truck, 1.2 tons), etc. at the site of 584 square meters (17 square meters), and the lessor of the workplace was confirmed by the JJ of the Plaintiff’s representative director.

B) Investigations into business operators, etc.

(1) In December 1986, JJ opened a scrap metal business with the trade name of ○○ Non-Iron (Seoul ○○○dong) and AAmetallic (Seoul ○○dong), and continued to operate a scrap metal business on June 1, 1995.

(2) As to the suspicion that the Plaintiff and the Plaintiff’s representative director submitted false tax invoices by seller in relation to each of the instant tax invoices during the first and second taxable periods of value-added tax on January 2014, the JJ received the disposition of non-prosecution (○○○ Office’s ○○ Office’s ○○ Office’s ○○ Office’s ○○○○○○○○○○○○○○ Office in 2016) on the following grounds.

C) investigation into the buyer;

(1) GG purchased waste Dongs from three companies of ○○ Logistics, ○○ Industry, and ○ Metal, and sold the same volume of waste Dongs, etc. to the Plaintiff on the date of purchase. The majority of the time when each company issued an electronic tax invoice to GG is delayed than the time when the company issued the electronic tax invoice to the Plaintiff.

(2) The ○○ industry confirmed that the sales of GG in the taxable period of the value-added tax for the 2014 Value-Added Tax for the ○○ Industry, a massive coal company, was completely processed on the grounds that there is no evidence related to purchase, there is no room for using the place of business as an open-end box, no rent was paid, no high-end scrap metal was accumulated in the place of business, no scrap metal was found, and the representative ○○○ was a person who has no property and business experience.

(3) Based on the fact that ○ metal does not have any documentary evidence related to purchase, there is no scam of business at the place of business, the representative ○○○ does not have any career engaging in the steel business, and appears to have no ability to mobilize operating funds, the sales of ○ metal for GG in the taxable period of value-added tax for the second half of 2014 was confirmed to be completely processed.

Facts that there is no dispute for recognition, Gap evidence 13 (including paper numbers), Eul evidence 2, 4, and 5 respectively.

Second, the purport of the whole pleading

D. Determination

1) Whether each of the tax invoices of this case is false

A) Article 39(1)1 of the Value-Added Tax Act provides that input tax amounts in cases where the entry items on a list of total tax invoices by seller are different from the fact, shall not be deducted from the output tax amount. It means that the entry items are different from the fact. In light of the purport of Article 14(1) of the Framework Act on National Taxes stipulating that if the ownership of income, profit, calculation, act or transaction subject to taxation is nominal, and there is another person to whom it actually belongs, the person to whom it actually belongs shall be liable to pay taxes and the relevant tax laws shall apply to the input tax amount (see, e.g., Supreme Court Decision 96Nu617, Dec. 10, 196).

B) According to the above facts, GG 1 purchased copper scrap, etc. from three companies of ○○ Industries and ○ Metals, and issued each of the instant tax invoices to the Plaintiff on the date of purchase. ② The representative DD, etc. of GG 2 were identified as HH, and GG 2 appears to have transferred most of the amount received as sales price on the tax invoice under the status of the seller and the purchaser. ③ The Plaintiff’s representative of ○○○○○○○○○ Industries did not have any relevant work experience, financial capacity, purchase of ○○○○○○○○ Industries and ○○○ Metal Industries, and the Plaintiff’s purchase of ○○○○○ Industries cannot be deemed as having been conducted on the grounds that there were no criminal charges of violation of the provisions of the former Punishment of Tax Evaders Act, based on the fact that the Plaintiff’s sales price was 100,000,000 won, and there were no criminal charges of violation of the provisions of the former Punishment of Tax Evaders Act.

2) Whether the Plaintiff constitutes good faith and negligence

A) An actual supplier and a supplier on a tax invoice may not deduct or refund an input tax amount unless there is any negligence on the part of the person who receives another tax invoice in the name of the supplier, and the person who claims the deduction or refund of the input tax amount is obliged to prove the fact that there is no negligence on the part of the supplier that he/she was unaware of the above fact (see, e.g., Supreme Court Decision 2002Du2277, Jun. 28, 2002). However, in full view of the following: (a) the details of the issuance and issuance of the tax invoice; (b) the price of the goods or services supplied; (c) the specific route and process of the goods or services supplied; and (d) whether the recipient confirmed the place of business or business facilities of the nominal supplier; (b) the actual supplier is not a supplier; and (c) the supplier under the tax invoice may not be readily concluded that the recipient was negligent in not knowing the fact of the actual name of the supplier (see, e.g., Supreme Court Decision 2013Du536375, Jul. 275, 2013).

Meanwhile, in the case of waste resources, such as waste Dong, it cannot be deemed that the other party is a disguised business entity due to the nature of the distribution structure and transaction. Thus, there are sufficient circumstances to suspect that the other party is a disguised business entity in light of the facts revealed in the process of collecting data to determine whether the other party is a qualified business entity. However, the other party was negligent in not knowing that it is a disguised business entity (see, e.g., Supreme Court Decision 97Nu7660, Sept. 30, 1997).

B) In light of the following circumstances, it is reasonable to conclude that GG was not a disguised business operator and that there was sufficient reason to suspect that the Plaintiff was a disguised transaction of copper scrap, etc. under each of the tax invoices of this case, and that the Plaintiff was not at fault on the part of the Plaintiff, and that there was no negligence on the part of the Plaintiff, inasmuch as the Plaintiff did not know that the transaction of copper scrap, etc. under each of the tax invoices of this case was a disguised transaction, and that there was no negligence on the part of the Plaintiff. Accordingly, the input tax amount under each of the tax invoices of this case should be deducted from the output tax amount of each of the relevant taxable periods.

① In the case of GG, the Plaintiff had a place of business of 470 square meters with an office and a relay. At the time of commencement of the transaction with GG, the Plaintiff appears to have made considerable efforts to verify whether the transaction partner is normally engaged in the transaction by visiting the actual place of business at the time of commencement of the transaction with the GG and confirming the site, including a business registration certificate, a copy of corporate register, a copy of identification card, a copy of the account for copper scrap, and a contract for lease of the workplace, etc., and confirming whether the transaction partner is the representative of the transaction partner.

② In most cases, when the Plaintiff trades copper scrap from GG, the Plaintiff used the Plaintiff’s vehicle to transport the volume. According to the fact-finding confirmation on the preparation of the Z, the details of payment of the Z tolls, etc., which was in charge of the transport of the transaction volume, such details are confirmed.

(3) After transporting copper scrap to the Plaintiff’s workplace, the Plaintiff affixed a photograph and measured it, prepared a measurement certificate and sent it to GG. Based on this, the Plaintiff paid the price through the account for copper scrap after obtaining each of the tax invoices from GG. The evidence presented by the Defendant and the circumstances of its assertion alone do not deem that there was a special circumstance to suspect that the Plaintiff was not GG at the time of the transaction.

④ Moreover, there was no circumstance suggesting that the Plaintiff, inasmuch as the Plaintiff transferred the transaction price to the account in the name of GG, received part of the transferred transaction price, or the unit price of copper scrap was lower than the general market price, was abnormal transaction between the Plaintiff and the GG. Moreover, the Plaintiff’s transaction with companies other than GG among the purchasing places was revealed to be a normal transaction. In such a situation, even if the Plaintiff knew or could have known of the fact that the name was used in the name of GG was used, it seems that there was no motive to engage in such transaction when taking account of the risk of double payment of value-added tax due to the denial of the input tax deduction in the future.

(5) In the case of copper scrap, it is difficult to verify whether an enterprise directly traded with it is a normal business entity, and further, to verify the purchase process of the purchasing entity. In light of the purpose of the administrative litigation system and the function of protecting the rights and interests of the people through judicial authority, it is not readily concluded that the Plaintiff was negligent in the transaction only on the ground that the Plaintiff did not conduct any further investigation and confirmation, in addition to the aforesaid fin situation, as to whether the Plaintiff is a disguised business entity.

④ The Plaintiff and the Plaintiff’s representative director JJ were suspected of submitting false tax invoices by seller during the period of the value-added tax period of January 2014 and February 29, 2016. However, the Plaintiff and the Plaintiff’s representative director were subject to a non-prosecution disposition on February 29, 2016.

3) Furthermore, in order to facilitate the exercise of taxation rights and the realization of tax claims, additional tax under tax laws is an administrative sanction imposed as prescribed by individual tax laws in cases where a taxpayer violates various obligations, such as a tax return and tax payment, without justifiable grounds, and such a sanction cannot be imposed in cases where there is a justifiable reason for not being able to impose an obligation on the taxpayer, such as when there are circumstances that the taxpayer could reasonably recognize his/her obligation, or when there are circumstances that it is unreasonable for the taxpayer to expect the fulfillment of his/her obligation, etc. (see, e.g., Supreme Court Decisions 2008Du2330, Feb. 10, 201; 201Du1622, Apr. 28, 2011). In full view of the aforementioned circumstances, the Plaintiff cannot be deemed to have justifiable grounds for failing to impose corporate tax on the supplier in the process of receiving each of the instant tax invoices, even if each of the instant tax invoices falls under the category of additional tax for business year (see, e.g., Supreme Court Decision 2014>

3. Conclusion

Therefore, the plaintiff's claim is justified, and it is so decided as per Disposition.