Seoul Administrative Court 2012Guhap32154 ( December 27, 2013)

The Plaintiff entered into the instant transaction and knew or could have known that the issued tax invoice was false.

The Plaintiff was aware or could have known that the instant transaction was a transaction without any movement of real property, on the grounds that the instant transaction was conducted and no written contract was prepared, and no return was made once during the course of the transaction.

Article 17 of the Value-Added Tax Act

2013Nu29256 Revocation of Disposition of Imposition of Value-Added Tax

AAA Corporation

Head of Seocho Tax Office

Seoul Administrative Court Decision 2012Guhap32154 decided September 27, 2013

June 17, 2014

July 15, 2014

1. Revocation of a judgment of the first instance;

2. The plaintiff's claim is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

1. Purport of claim

The defendant's decision that the imposition of the first value-added tax for the plaintiff on September 1, 2011 and the second value-added tax for the second time in 2010 shall be revoked entirely.

2. Purport of appeal

Judgment like the Disposition

1. Details of the disposition;

This Court's explanation is based on Article 8 (2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act, since the reasoning of the judgment of the court of first instance is the same as that of the judgment of the court of first instance.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) The Plaintiff asserts that the disposition of this case is unlawful, since the Plaintiff’s transaction indicated in the tax invoice of this case did not know at all about the processing trader, and there was no circumstance to suspect it, and thus, there is a justifiable ground that the Plaintiff could not charge the Plaintiff’s negligence with respect to the duty to perform the duty, and even if not, the disposition of this case cannot be said to have neglected the duty to confirm the transfer of goods with respect to Chapter 2 of the tax invoice, which was discarded by the Plaintiff on the ground that the Plaintiff did not confirm the delivery of goods in the tax invoice of this case, and thus, the part imposing additional tax is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

The following facts can be acknowledged in full view of the evidence, Gap's evidence, Gap's evidence as mentioned above, Gap's evidence as mentioned above, Gap's evidence as mentioned above, Gap's evidence as mentioned above, 11 to 13, 16, 18, 22 through 25, and Eul's testimony as a whole

(1) LCC is not a representative on the registry of D3 companies, a distributor, but is an actual operator, and D3 companies have concluded an entrustment contract with the small and medium enterprise distribution center in which the government invested with the aim of developing markets for products manufactured by small and medium enterprises and promoting business management since 2005 on the purchase, supply, etc. of products and performed by proxy such business.

(2) In order to raise funds to compensate for damages equivalent to KRW OOOO won by investing in the home shopping business, and to raise funds to pay for its debts, D3 companies run by them are fully entrusted with the purchase business and sales business from the small and medium enterprise distribution center. On the basis that the distribution flow of goods is processed by specialized distribution companies, such as D3 companies, EEM test ? the small and medium enterprise distribution center / D3 companies, and D3 companies, and used the circular transaction to pay for the purchase of goods in advance from specialized distribution companies without the actual distribution of goods and to pay for the purchase of goods, etc., and then continuously expanding the above processing transaction and thus, they began the above processing transaction.

(3) During that process, LCC proposed that D3, a staff member in charge of the Plaintiff, participate in the middle of trading with the small and medium enterprise distribution center. The Plaintiff received or issued the instant tax invoice between the small and medium enterprise distribution center and D3 companies without concluding an explicit contract in response thereto. On January 31, 2010, the Plaintiff first issued the tax invoice from the small and medium enterprise distribution center on March 24, 2010, and issued the tax invoice to D3 companies for the first time after confirming the receipt of the goods from D3 companies on March 24, 2010.

(4) The instant transaction is classified as follows. First, when the Plaintiff receives specifications and tax invoices from the Small and Medium Business Distribution Center (before that, D3 companies have ordered the goods to the Small and Medium Business Distribution Center, and the Plaintiff did not directly order the goods), the Plaintiff requested the Plaintiff to issue sales tax invoices to the effect that D3 companies received the goods, and the Plaintiff issued tax invoices to D3 companies, and the Plaintiff paid to D3 companies the remainder after deducting fees (0.1%) from the Plaintiff when D3 companies pay to the Plaintiff. On the other hand, the Plaintiff did not perform the duties of receiving or examining the goods.

(5) Although the Plaintiff’s sales profit from the above fee in the business year 2010 was limited to the Plaintiff’s sales profit, a pharmaceutical director reported by the Plaintiff to sell D3 companies during the pertinent business year is the amount corresponding to half of the total sales revenue of 2010, including the Plaintiff’s sales revenue of approximately KRW 10,000, KRW 2,000,000, and KRW 2,000,000.

(6) Meanwhile, the Plaintiff is a company for the purpose of electronic commercial transactions such as pharmaceutical products, non-pharmaceutical products, food, cosmetics, etc. (other than electronic commercial transactions, Internet healthcare business, information technology consulting, and drug wholesale business are also aimed at the same purpose). Most of the goods subject to the instant transaction are general consumer products not included in the Plaintiff’s e-commerce purpose, and there was no specific specification or model name indication in the transaction list.

(7) On October 2010, the doorCC sent a public notice to the Plaintiff on December 5, 2010 that “The small and medium enterprise distribution center requested the Plaintiff to pay the price for the supply of goods for the transaction on October 2010. On December 9, 2010, the Plaintiff sent to the small and medium enterprise distribution center a simple market for the purchase transaction and is a MP business operator who recognizes the relevant fees as sales and who did not receive the goods from the purchasing enterprise. Therefore, there is no obligation to pay the Plaintiff the price for the relevant goods. The transaction statement presented by the small and medium enterprise distribution center is not a product receipt, but the Plaintiff cannot confirm whether the goods are delivered or taken over, and then, the tax invoice was discarded on October 2010, and the value-added tax and the value-added tax were excluded.”

(1) Relevant legal principles

Under the tax law, penalty taxes are administrative sanctions imposed in accordance with the provisions of the tax law in cases where a taxpayer violates a return, tax liability, etc. under the tax law without justifiable grounds in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, and the taxpayer’s intention and negligence is not considered. However, in cases where a taxpayer cannot be found to have failed to know his/her duty, due to justifiable reasons, such as a circumstance where the taxpayer is deemed to be legitimate, or it is unreasonable to expect the party to fulfill his/her duty, etc. (see, e.g., Supreme Court Decision 2004Du930, Nov. 25, 2005).

Meanwhile, in light of the above legal principles, the Plaintiff’s tax invoice was issued as tax receipts for the Plaintiff’s supply of goods or services, and the Plaintiff’s actual transaction of the goods was 00 million won and thus, could threaten the underlying taxation system if the tax invoice was not issued or the goods were supplied as well as the income tax. Therefore, in light of the fact that the Plaintiff’s actual transaction of the goods was 10 million won and that there were no reasonable grounds for the issuance of the tax invoice, it would be difficult to determine whether to impose additional tax on the Plaintiff in light of the pertinent transaction’s function and additional tax as stated in Article 48(1) of the Framework Act on National Taxes. (2) The Plaintiff did not appear to have been able to receive 30 billion won and no other sales request from the Small and Medium Business Distribution Center in the form of electronic commerce, i.e., the Plaintiff was able to receive 10 billion won and no other sales request from the Plaintiff.

(3) Meanwhile, the Plaintiff asserts that the imposition of additional tax on the part of the tax invoice on the tax invoice of Chapter II discarded as above is unlawful. However, Article 22(3)3 of the former Value-Added Tax Act is a provision imposing additional tax in cases where a tax invoice is issued without being supplied with goods. As seen earlier, the Plaintiff cannot be deemed to have any justifiable ground for not imposing additional tax on the Plaintiff in the process of issuing the tax invoice without supplying the goods from the small and medium enterprise distribution center. Thus, even if the Plaintiff subsequently abolished the tax invoice, the obligation to pay additional tax already established cannot be deemed retroactively extinguished. Therefore, the Plaintiff’s assertion on this part is groundless.

(4) The Plaintiff asserts that the Defendant’s assertion of the instant transaction as a purchase brokerage, not a purchase agency, is not clear to the purport of the assertion, and that it is not permissible as a change in the grounds for disposition beyond the identity of the taxation disposition.

The purport of the Defendant’s assertion is that the instant transaction was conducted without the actual supply of goods, and during the process of proving it, it appears that the instant transaction did not correspond to the Plaintiff’s purchase agency, i.e., the actual supply of goods, as alleged by the Plaintiff. Moreover, the Defendant’s assertion that the instant transaction constitutes a purchase intermediary is obviously meaningful that the Plaintiff’s transaction was conducted during the process of the supply from the Small and Medium Enterprise Distribution Center to D3 companies, and therefore, it is apparent that the Defendant did not add or change the reason for disposition.”

Therefore, the plaintiff's claim of this case is dismissed due to the lack of reason, and the judgment of the court of first instance with different conclusions is unfair, and the plaintiff's claim is dismissed. It is so decided as per Disposition.