Cho High Court Decision 2008Na3832 (Law No. 9.08, 2009)

It shall not be null and void, such as where the name holder cannot be deemed to be the name holder.

If the facts can only be identified after an accurate investigation, even if the defect is serious, it cannot be deemed apparent in appearance, and thus, even if the tax disposition was rendered by mistake, it cannot be deemed null and void as a matter of course. There is no evidence to acknowledge that the Plaintiff is only the nominal owner. Even if the tax disposition was unlawful, it cannot be deemed null and void as it is impossible to deem that the defect is obviously apparent.

2011Guhap124 Invalidity of Disposition of Value-Added Tax

XX Kim

O Head of tax office

June 23, 2011

July 14, 2011

1. The plaintiff's claim is dismissed.

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

The Defendant confirmed that the disposition of imposition of value-added tax of KRW 47,320,070 for the year 2006 against the Plaintiff on April 10, 2008 is null and void.

1. Details of the disposition;

A. From May 23, 2006 to October 31, 2006, the Plaintiff registered an electronic commerce retail business and operated its business under the trade name of Cheongju-si 1320 from XX Dong 1320, and reported the sales amount to 298,527,000 won at the second value-added tax return in 2006.

B. In the course of conducting the tax investigation with respect to the Plaintiff, the Defendant confirmed that the Plaintiff’s tax invoice of KRW 199,710,000, among the tax invoices received from Nonparty Co., Ltd., the supply value of KRW 199,710,00, was prepared by falsity without any actual transaction, and deducted KRW 6,909,000,000 for the supply value of KRW 19,971,000 for the above input tax amount and KRW 69,909,000 for the supply value received from Nonparty Co., Ltd., and notified the Plaintiff of KRW 47,320,070 for the second taxable year of April 14, 2008 (hereinafter “instant disposition”).

Facts that there is no dispute over the basis of recognition, Gap evidence 1, Eul evidence 1 to Eul evidence 7 (including the number of each branch), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff merely lent the Plaintiff’s business name to Nonparty 0A, but did not actually engage in the e-commerce retail business. Therefore, the instant disposition imposing value-added tax on the Plaintiff, who is only the nominal lender, is null and void.

B. Determination

(1) In order for a taxation disposition to be null and void as a matter of course, the mere fact that there is an illegality in the disposition is insufficient to be the sole reason that there is an obvious and objective reason to believe that the defect is an important violation of laws and regulations, and in determining whether the defect is significant and obvious, the purpose, meaning, function, etc. of the laws and regulations, which form the basis for the pertinent taxation, should be examined in a teleological context, and at the same time, reasonable consideration should be made on the specificity of the body of specific cases. A taxation disposition conducted by a person who does not have any legal relations or factual relations subject to taxation should be deemed to be serious and obvious, but if objective circumstances exist that make it possible to accurately examine the factual relations as to the legal relations or factual relations which are not subject to taxation, if it can only be identified as being subject to taxation, it cannot be deemed to be apparent even if the defect is serious, and thus, it cannot be deemed to be null and void as a matter of course (see Supreme Court Decision 200Da24986, Jul. 10, 20001).

(2) In the instant case, there is no evidence to acknowledge that the Plaintiff was merely a nominal name holder, and that Nonparty 0A et al. actually operated XX information and communications using the Plaintiff’s name.

(3) Furthermore, even if the Plaintiff’s assertion is assumed to be true, since the Plaintiff’s business registration was made in the name of the Plaintiff in the business year subject to the instant disposition in light of the foregoing legal principles, barring any special circumstance, the Defendant, who is the tax authority, has no choice but to impose tax on the Plaintiff on the Plaintiff by deeming that the Plaintiff operated XX information and communications. Therefore, the Defendant’s legal relation subject to taxation or objective circumstance exists, and even if the tax authority imposed tax on the Plaintiff, not the actual business entity, it cannot be said that the defect is objectively apparent.

(4) Therefore, the Plaintiff’s above assertion is without merit, since the Plaintiff’s taxation disposition against the Plaintiff cannot be deemed to be null and void as a matter of course.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.