Seoul Administrative Court 2013Guhap60576 ( October 27, 2014)

Where the input tax amount of gold bullion exporter is deducted under the good faith principle, five years of exclusion period shall be applied.

Even if there is a range of gold bullion companies in the course of a series of gold bullion transactions, as well as actual gold bullion has been distributed and exported, and since evidential documents such as tax invoices have been issued properly at each transaction stage, the Plaintiff’s act of receiving a refund or deduction of value-added tax under the tax invoice of this case does not constitute a case where national tax is deducted or refunded due to fraud

The exclusion period for national tax assessment under Article 26-2 of the Framework Act on National Taxes

2014Nu53256 Revocation of Disposition of Imposition of Value-Added Tax

AAA Commercial Corporation

O Head of tax office

October 7, 2014

November 11, 2014

1. The defendant's appeal is dismissed.

2. The defendant shall bear the costs of appeal.

1. Purport of claim

The defendant's decision that the imposition of the first value-added tax of 2004 against the plaintiff on July 10, 2012 and the second value-added tax of 2004 is revoked.

2. Purport of appeal

The judgment of the first instance that revoked the judgment and dismissed the plaintiff's claim.

1. Details of the disposition;

The court's explanation on this part is the same as the corresponding part of the judgment of the court of first instance. Thus, this part of the judgment is accepted in accordance with Article 8 (2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

2. Whether the instant disposition is lawful

A. The parties' assertion

(1) The plaintiff's assertion

“The instant gold bullion transaction shall be subject to the five-year exclusion period under Article 26(1)3 of the former Framework Act on National Taxes (amended by Act No. 10405, Dec. 27, 2010; hereinafter “former Framework Act on National Taxes”). As such, the instant disposition was made after the five-year exclusion period expires, and is unlawful.” (2) Defendant’s assertion

A) The Plaintiff constitutes an exporter who intends to abuse the input tax deduction and refund system by taking advantage of the malicious business operator’s illegal transactions aimed at evading value-added tax, and thus, is not allowed to deduct the Plaintiff’s input tax amount in accordance with the good faith principle, and the provisions of the Framework Act on National Taxes concerning exclusion period for imposition

B) Even if the provision of the Framework Act on National Taxes on household affairs applies to the Plaintiff, the starting date of the exclusion period and the exclusion period shall be deemed as follows. Thus, the instant disposition is lawful as it took place before the exclusion period expires.

1) Article 12-3(2)3 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 22038, Feb. 18, 2010; hereinafter “former Enforcement Decree of the Framework Act on National Taxes”) shall be deemed as the initial date for exclusion period where the deducted tax amount is collected due to nonperformance of duty, etc. [Article 12-3(2)3 of the former Enforcement Decree of the Framework Act on National Taxes [Article 12-3(3) of the former Enforcement Decree of the Framework Act on National Taxes [Article 12-3(2) of the former Enforcement Decree of the Framework Act on National Taxes]], where a malicious entrepreneur takes advantage of an illegal transaction conducted by a malicious entrepreneur for the purpose of evading output tax amount and takes advantage of the system for deducting and refunding input tax amount, the exporter’s deduction and refund of input tax amount, which is not permitted contrary to the principle of good faith, shall be deemed as the initial date

2) The exclusion period of imposition shall apply to the Plaintiff’s act of deducting the input tax amount, falling under “Fraud or other unlawful acts,” and the exclusion period of imposition for ten years is applicable, or the Plaintiff’s act does not submit a tax base return by the statutory filing period.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination by issue

(1) Provisions concerning the exclusion period of imposition

Article 26-2 (1) of the former Framework Act on National Taxes provides that "ten years from the date on which the national tax may be imposed, in cases where the national tax is evaded, refunded or deducted by fraud or other improper means," subparagraph 2 provides that "seven years from the date on which the national tax may be imposed, in cases where the taxpayer fails to file a tax base return by the statutory due date of return," and "five years from the date on which the national tax may be imposed, in cases where the taxpayer does not fall under subparagraphs 1 and 2" in subparagraph 3 of Article 12-3 (1) 1 of the former Enforcement Decree of the Framework Act on National Taxes provides that "in cases where the tax base and tax amount are reported, the following day of the deadline for filing the tax base and tax amount of the national tax or the deadline for submitting the tax return shall be the date on which the national tax may be imposed, and Article 19 (1) of the former Value-Added Tax Act provides that "from 25 months to 13 months from the date on which the tax base and tax amount of each taxable period or tax amount of the value-added tax for the tax for each taxable period are reported."

(2) Determination on whether the exclusion period under the principle of good faith is excluded from the application

In a series of series of continuous transactions, an exporter attempted to evade value-added tax, and an exporter trades without knowing or without knowing the fact that there was an illegal transaction at the entire stage of the transaction, and claiming for the corresponding input tax deduction and refund, in light of a universal justice officer and ethics officer, it is difficult to pay the corresponding input tax, and thus, the corresponding value-added tax may be imposed in violation of the good faith principle under Article 15 of the former Framework Act on National Taxes (see, e.g., Supreme Court en banc Decision 2009Du13474, Jan. 20, 201). However, in full view of the following circumstances, the provision on the exclusion period of imposition cannot be excluded pursuant to the good faith principle solely on the ground that the deduction and refund of the input tax amount violates the good faith principle (see, e.g., Supreme Court Decisions 2012Du1977, Jan. 16, 2013; 2013Du6817, Aug. 22, 2013).

A) Article 26-2(1) of the former Framework Act on National Taxes provides that when a taxpayer evades a national tax, or receives a refund or deduction by 'Fraud or other unlawful acts', if the taxpayer fails to file a tax base return by the statutory deadline for filing a tax return, the statutory deadline for exclusion shall be applied (Article 26-2(1) of the former Framework Act on National Taxes), and even if there is no provision that excludes the statutory deadline for exclusion, it is likely that the taxpayer may not exercise the right to receive a refund or deduction of the original input tax on the ground that the exercise of the right is abusive, thereby excluding the application of the statutory deadline for exclusion from the application of the statutory deadline for exclusion from the taxation even

B) The principle of trust and good faith under Article 15 of the Framework Act on National Taxes applies to individual cases as it is, in light of the universal sense of justice and ethics, causes unreasonable consequences which could not be easily paid in light of the general sense of justice and ethics, and rather, if there are special circumstances to deem that the same applies to sound legal order, the application of the provisions may be exceptionally restricted or excluded to derive a conclusion consistent with the sense of fairness and universal justice (see, e.g., Supreme Court en banc Decision 2009Du13474, Jan. 20, 201). However, Article 26-2 of the Framework Act on National Taxes provides that the exclusion period of imposition under Article 26-2 of the Framework Act on National Taxes shall be extinguished by the tax liability, unless the tax liability is established within the exclusion period for the authority of the tax authority to determine the tax liability after meeting the requirements for taxation under individual tax law and the disposition of taxation is imposed within the said period. Thus, the exclusion period of imposition of the principle of trust and good faith is entirely different from its sources.

C) According to the legislative intent of the exclusion period as above, taxation disposition, which was conducted after the exclusion period of the imposition of national taxes has expired, constitutes invalid (see, e.g., Supreme Court Decisions 9Du3140, Jun. 22, 1999; 94Da3667, Aug. 26, 1994; 96Nu68, Sept. 24, 1996; 200Du657, Sept. 4, 2002). In principle, taxation disposition, which was conducted after the exclusion period of the imposition of national taxes has expired, may not be subject to any disposition, such as a new decision or a decision of increase, as well as a decision of correction of the reduction.

(3) Determination as to whether the Plaintiff’s act constitutes “Fraud or other unlawful act”

A) Relevant legal principles

"Fraud and other unlawful acts" under Article 26-2 (1) 1 of the former Framework Act on National Taxes refers to deceptive schemes or other active acts that make it impossible or considerably difficult to impose and collect taxes, and it does not constitute mere failure to file a tax return under the tax law or making a false tax return without accompanying any other acts (see Supreme Court Decision 2013Du7667, Dec. 12, 2013). If an exporting company actually distributes gold bullion from the exporting company to the export company and issues documentary evidence, such as tax invoices, etc. at each transaction stage, and if the exporting company acted in collusion with the heavy coal company in advance, it cannot be deemed that the act of refunding value-added taxes by the exporting company itself constitutes the act of receiving a refund of taxes by fraud or other unlawful acts (see Supreme Court Decision 2013Du767, Oct. 11, 2007).

B) Determination

According to the evidence examined above, not only the gold bullion was actually distributed and exported from the importer of the gold bullion of this case to the plaintiff, who is the exporter, but also the documents including tax invoices have been issued properly at each transaction stage. The plaintiff's managing director BB, who was selected as leading the gold bullion transaction of this case by the defendant, was found to have received a non-prosecution disposition since it did not appear to have introduced and arranged the bbomer, etc., and there is no evidence to deem that the above act of refund of value-added tax constitutes a tax refund due to fraud or other unlawful act

(4) Determination as to whether the Plaintiff’s act constitutes Article 26-2(1)2 of the former Framework Act on National Taxes

Article 26-2(1)2 of the Framework Act on National Taxes, which provides for the exclusion period for 7 years, shall apply to a report filed without filing the final return even though a duty to file the final return on tax base exists, and in cases of underreporting, the exclusion period for imposition of 5 years shall apply under Article 26-2(1)3 of the Framework Act on National Taxes (see Supreme Court Decision 2013Du555, Jul. 11, 2013). Therefore, in cases of this case where it is evident that the Plaintiff filed a tax base return by the statutory due date for return of value-added tax after deducting the input tax amount and filing the tax base return by the statutory due date for

(5) Determination on the starting date of the exclusion period of imposition

In full view of the aforementioned provisions, since the initial date of the exclusion period for imposition of value-added tax is the day following the reporting period by each taxable period, the value-added tax for the first period of July 26, 2004 of this case shall start from July 2004, and the second period of the value-added tax for the second period of January 26, 2004 of this case shall start from January 26, 2005. However, there is no basis to regard the initial date of exclusion period for imposition of value-added tax as the date of the Supreme Court en banc Decision 2009Du13474 Decided January 20, 201, which held that the initial date of exclusion period for imposition of value-added tax

(6) Sub-determination

Therefore, the imposition period of five years should apply to the value-added tax related to the transaction of this case under Article 26-2 (1) 3 of the former Framework Act on National Taxes. Thus, the disposition of this case, which was made on July 10, 2004 and July 10, 2012 after five years from January 26, 2005, which was the first day of the imposition period of value-added tax for the first and second years of 2004, respectively, was unlawful.

3. Conclusion

If so, the plaintiff's claim is reasonable, and the judgment of the court of first instance with this conclusion is just.

Since the judgment is justifiable, the defendant's appeal is dismissed. It is so decided as per Disposition.