Supreme Court Decision 2010Du10396 ( October 14, 2011)

Seocho 208west 2464 ( November 11, 2008)

The claim for deduction and refund of the value-added tax related to the illegal transaction of gold bullion is not allowed in violation of the principle of good faith.

It is reasonable to view that the Plaintiff knew or was unaware of the fact that there was a malicious entrepreneur who makes an illegal transaction for the purpose of evading the output tax amount during a series of transactions in gold bullion transactions, and thus, the Plaintiff’s assertion of deduction and refund of the input tax amount is not allowed against the principle of good faith.

2011Nu13172. Revocation of disposition to impose value-added tax and corporate tax

Kim Rad Korea Co., Ltd.

O Head of tax office

Seoul Administrative Court Decision 2009Guhap4548 Decided September 25, 2009

Seoul High Court Decision 2009Nu33678 Decided May 6, 2010

Supreme Court Decision 2010Du10396 Decided April 14, 2011

June 22, 2011

August 31, 2011

1. Of the judgment of the court of first instance, the part of the judgment (Supreme Court Decision 2010Du10396 Decided April 14, 201), which became final and conclusive, excluded the part of the Plaintiff’s claim seeking revocation of the imposition of additional taxes, such as failure to submit a list of total tax invoices, etc., and the part of the claim seeking revocation of the imposition of corporate tax, from among the value-added tax, which is the part in favor of the Plaintiff, shall be revoked. The part of the revocation (the part of the claim by the Defendant on the imposition of value-added tax for the second period of value-added tax of April 4, 2008, which was imposed by the Plaintiff on the Plaintiff on April 4, 2008, which was KRW 139,978,760, and KRW 545,780,830, and KRW 511,750

2. Of the total litigation costs, 80% is borne by the Plaintiff, and the remainder is borne by the Defendant, respectively.

The Defendant’s disposition of imposition of KRW 157,943,180, value-added tax for the first term of 2004, value-added tax for the first term of 2004, KRW 19,760,860,860, corporate tax for the business year of 2003, and KRW 74,864,350, which reverts to the Plaintiff on April 4, 2008, shall be revoked.

Purport of appeal

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

1. Details of the disposition and scope of adjudication of the party concerned after remand;

On September 5, 2003, the Plaintiff is a corporation established for the purpose of importing and exporting precious metals with the representative director. The Plaintiff purchased gold bullion amounting to KRW 4,301,269,020, total supply value, and received tax invoices 24 (hereinafter referred to as the “tax invoice of this case”), and filed a return on refund of value-added tax and a report on tax base for corporate tax on the whole export of the said gold bullion in Hong Kong O O&T Holdings (O&H, hereinafter referred to as “OO”) located in Hong Kong.

(The following table omitted):

On April 4, 2008, the head of the AA Tax Office determined the tax invoice of this case as the "tax invoice different from the facts" on the basis of the results of the tax investigation into XX (State), and on April 4, 2008, the defendant corrected and notified the value-added tax and the corporate tax as follows (hereinafter referred to as the "disposition of this case").

(1) Value-added tax for the second term of 203 157,943,180 won [17,964,420 won for denying the deduction of input tax, and for failing to submit a list of the total tax invoices (hereinafter referred to as "unSubmission, etc."), 17,964,420 won for failure to return, additional tax for failure to return, 8,982,210 won for failure to return, and additional tax for failure to pay in good faith 41,174,450 won];

(2) Value-added tax for the first period of 2004 KRW 545,780,838 (340,304,800, and penalty tax for failure to submit a purchase tax deduction; KRW 34,030,480, and penalty tax for failure to submit a return; KRW 34,030,480, and penalty tax for failure to submit a return for failure to submit a purchase tax amount; KRW 137,415,078)

(3) Corporate tax belonging to the business year 2003 KRW 19,760,862 (additional tax for collecting evidence)

(4) Corporate tax attributed to the business year 2004 KRW 74,864,350 (additional tax for collecting evidence)

The Plaintiff won the instant disposition in the first instance court, and the court of the first instance rejected the Defendant’s appeal. The Supreme Court partially accepted the Defendant’s appeal and reversed and remanded the part on the imposition of value-added tax excluding the penalty tax, such as non-submission of the judgment prior to remand, and dismissed the remainder of the appeal. Therefore, the scope to be tried after remand is limited to the foregoing (i.e., the part on the imposition of value-added tax, (ii) the exemption of input tax, the return of input tax, and the penalty tax not paid due, among the value-added tax stated in paragraph (1). The remainder of the judgment prior to remand (i.e., additional tax, such as non-submission of value-added tax, and

[Ground of recognition] Facts without dispute, Gap 1-3, 17 evidence, Eul 1-4 evidence, the whole purport of the pleading

2. Determination as to whether the tax invoice of this case is "unlawful tax invoice"

The reason why this Court shall be used for this part is the corresponding part (the third 6th 6th -6th 9th ) among the reasons for the judgment of the court of first instance. Pursuant to Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

3. Determination as to the Defendant’s assertion of breach of good faith

A. Defendant’s assertion

In light of the distribution channel of the gold bullion of this case, the defendant's seeking the deduction and refund of the input tax amount is not allowed because it violates the principle of trust and good faith.

(b) Fact of recognition;

The instant gold bullion was imported from a foreign country and distributed as a tax-free gold, and was exported by the Plaintiff to a foreign country. However, even if it was exported in the state of raw materials without any particular processing, the Plaintiff was a total of 6-12 middle wholesalers from the importing company to the Plaintiff.

In the process of distributing the gold bullion of this case, all of the wholesalers (exploiters) who converted the tax-free gold into the taxable gold, did not fulfill the liability to pay value-added taxes by closing the sales of the gold bullion that they purchased at a lower price than the purchase price (However, the sum of the value-added tax amounts added thereto, i.e., the value-added tax is higher than the purchase price), and then did not perform the liability to pay value-added taxes. The Plaintiff and the bombane were involved in the 1-4 wholesale business, such as YD (the accusation was filed against

From the date of import to the date of export, all transactions have been conducted within two days from the date of import (the date of import in large part). A large number of days, within one hour, the payment was completed by the importing company to the exporting company, and the import procedure was carried out in the bonded warehouse of Incheon Airport, and subsequently, the export price was re-exported into the Incheon Airport and took the export procedure within the same day. The export price was lower than the import price and was considerably low compared with the domestic market tax and international market tax.

이AA은 2004. 3. 25. 주식회사 ◇◇앤지를 설립하여 대표이사로 취임한 이래 원고와 비슷한 형태로 금지금 변칙 거래를 하였다는 혐의로 국세청 범칙조사를 받은 후 고발조치되었다.

[Ground of recognition] Facts without dispute, Gap 4, 7, 16 evidence, Eul 5-8 evidence, the whole purport of the pleading

C. Determination

1) Article 15 of the former Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010; hereinafter “Framework Act on National Taxes”) provides that “where a taxpayer performs his/her duties, he/she shall drive away from reliance and faithfully perform his/her duties.” This principle also applies in relation to the legal relationship pertaining to value-added tax (Article 1 and Article 3(1) main text of the Framework Act on National Taxes). Such principle applies as a matter of course to a legal relationship pertaining to value-added tax (see Article 1 and Article 3(1) main text of the Framework Act on National Taxes). In any of the series of continuous transactions, where a malicious entrepreneur is willing to evade value-added tax, and only if he/she fails to pay the value-added tax collected by the exporter, seeking deduction and refund of the input tax amount cannot be said to violate the good faith principle as provided in Article 15 of the Framework Act on National Taxes, if the exporter did not know that there was an illegal transaction.

2) The sales tax invoice of this case is all related to export trade. In light of the transaction behavior, distribution channel, the period, quantity, and value of the Plaintiff’s transaction, and the investigation and punishment of relevant transaction partners, etc., the Plaintiff is deemed to have known or failed to know by gross negligence that there was a malicious business operator in bad faith engaged in illegal transactions for the purpose of evading the output tax amount in the series of transactions in the gold bullion transaction in this case.

The plaintiff's assertion that input tax is deducted and refunded is not allowed in violation of the principle of trust and good faith under Article 15 of the Framework Act on National Taxes.

5. Conclusion

Of the value-added tax for the second quarter of 2003, 139,978,760 won among the value-added tax for the second quarter of 2003 (1340,304,800, additional tax for the first quarter of 2004, 34,030, 34,030,415,078), the claim for cancellation of the above part among the judgment of the first instance, is without merit. The claim for cancellation of the part as to the amount of 51,750,350 won among the value-added tax for the first quarter of 2004 (340,304,80, additional tax for the bad faith in filing a return, 34,030,480, additional tax for the bad faith in filing a return, and 137,415,078 won for the plaintiff's claim corresponding thereto is revoked.