Cho High Court Decision 2013west 3909 ( October 24, 2014)

The instant tax invoice constitutes a false tax invoice.

The tax invoice of this case constitutes a false tax invoice, and the plaintiff received the tax invoice of this case without being supplied with or supplied with goods. Thus, the defendant's disposition of this case that denies sales and input tax amount and imposes additional tax on the non-faith of tax invoice is legitimate.

Article 16 of the former Value-Added Tax Act

2014Guhap20759 Revocation of Disposition of Imposition of Value-Added Tax

AA Corporation

O Head of tax office

February 27, 2015

March 6, 2015

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

On February 4, 2013, the Defendant revoked the imposition of the value-added tax OOO on the Plaintiff on February 4, 2012.

1. Details of the disposition;

A. BB Electric Cable Co., Ltd. (hereinafter referred to as “BB Electric”) is a company engaged in the business of manufacturing electric wires,CC (hereinafter referred to as “CC”) is a distribution company that engages in the business of processing electric wires, and the Plaintiff is a distribution company that mainly engages in the wholesale and retail business (hereinafter referred to as “each of the above companies”).

B. On May 31, 2012 and June 30, 2012, the Plaintiff purchased high-class copper lines (hereinafter referred to as “SCR”), which are the basic materials for making copper lines from BB electric wires, and received purchase tax invoices of KRW OO in total, and issued the sales tax invoices of KRW OO in total by supplying the above SCR toCC on the same day. The specific details are as follows (hereinafter referred to as the “instant transaction,” and each of the above sales and purchase tax invoices is referred to as “each of the instant tax invoices.” The Plaintiff reported and paid value-added tax for the Defendant for the second period of 2012, including the sales and purchase tax amount.

1) May 31, 2012

BBelectric wire

Receipt of tax invoices for value of 000 won

Receipt of tax invoices for value of 000 won

CC

2) June 30, 2012

BBelectric wire

Receipt of tax invoices for value of 000 won

Receipt of tax invoices for value of 000 won

CC

C. From November 7, 2012 to January 25, 2013, the director of the Seoul Regional Tax Office conducted a tax investigation on the item of value-added tax for each of the instant companies from January 1, 2012 to June 30, 2012, and then notified the Defendant, the director of the DD Tax Office, and the director of the EE Tax Office, the head of the tax office having jurisdiction over each of the instant companies, of the details of such investigation, on the ground that BB cable’s sales tax invoice issued by the Plaintiff during the first taxable period of January 2012, and the sales tax invoice issued by the Plaintiff to the Plaintiff (hereinafter referred to as “instant tax invoice”) constituted a false tax invoice.

D. Accordingly, on February 4, 2013, on the ground that the Defendant received false tax invoices from the Plaintiff without any actual transaction, the Defendant notified the Plaintiff of the correction and notification of the amount of KRW O of the value-added tax (i.e., KRW O of the additional tax (i.e., KRW 2%) refunded from KRW O of the additional tax (i.e., KRW O of the already paid tax amount - KRW O of the corrected tax amount) (hereinafter “instant disposition”).

E. The Plaintiff, who was dissatisfied with the instant disposition, filed an objection on May 7, 2013, but was dismissed on June 9, 2013. On August 29, 2013, the Plaintiff filed an appeal with the Director of the Tax Tribunal for adjudication, but the said appeal was dismissed on July 24, 2014.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3, Eul evidence Nos. 1, 2, and 6 (including paper numbers), the purport of the whole pleadings

2. Determination

A. The plaintiff's assertion

1) According to the goods supply contract concluded between each of the instant companies, goods were actually supplied from BB cable to the Plaintiff, and from the Plaintiff toCC. However, the instant tax invoice does not constitute a false tax invoice, since the goods were delivered directly from BB cable toCC by means of possession alteration, transfer of right to claim the return of object, etc.

2) Even if the instant transaction constitutes a processing transaction, in light of the fact that, even if the instant transaction constitutes a processing transaction, it is a business practice that takes place immediately in the actual condition without going through a distributor or a processing company due to the weight and volume of the good faith, due to the size of weight and volume, and that there exists a decision of the Tax Tribunal which regards the instant case as a normal transaction, and that the instant company and the Error were subject to a disposition that is suspected of having committed a violation of the Punishment of Tax Evaders Act due to the false number of tax invoices, there is justifiable reason

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) The establishment and management status of each of the instant companies

A) BB cable is an electric cable manufacturer that manufactures 8mm electric wires by purchasing SCR or JCR in 197 and then purchases them and thereby manufactures 8mm scR, which is the basic body of electric wires.CC, an investment company, which is an investment company of 100% of BB cable, is established in 1999 and located in the Chungcheong Northern OO, and is located in 8mm old lines by 2.0 to 2.6mm, or is an electric cable processing company that mainly makes 8mm old lines up to 2.0 to 6mm, or sets up several tunnels. OF is serving as the representative director of the two companies.

B) At the time of the instant transaction, the Plaintiff was established in February 2012, and was located in the Seoul OO district, and transferred its headquarters to the same domicile asCC at the same time. The Plaintiff is a distribution company that runs the wholesale and retail business of raw and subsidiary materials related to electric wires and electric wires, and the largestG, the spouse of the OF, is working as the Plaintiff’s representative.

C) BB cable andCC have been engaged in SCR processing trade before the Plaintiff was established. The forms of request from BB Cable sent SCR 2.0mm or 2.6mm from BB Cable toCC to increase the winter line and put it back to a number of brake lines made more increased or more increased. The forms of request fromCC to BB cable sent BB Cable to BB Cable with 8.0mm from SCR 2.0mm or 2.6mm from SCR 2.6mm.

(d)the details of transactions sold by BB Electric Cable toCC in 2010 and 2011 are set out in the following table:

(unit: ,000 won)

OO

2) The flow and survey content of the instant transaction

A) On May 2012, the Plaintiff purchased SCR 2.0mm and 2.6mm and 50,618 kg. 485,391,300 kg. The Plaintiff purchased the SCR from BB Electric, and took the form of supplying the said SCR to OO, and the real goods were delivered from BB Electric toCC directly.

B) Around June 2012, the Plaintiff purchased SCR 2.0mm and 2.6mm and 49,712 kilogram from BB Electric, and took the form of supplying the said SCR to OO. The real goods were delivered from BB Electric to CC. The CC paid the purchase price to the Plaintiff with the aforementioned money borrowed. The CC paid the purchase price to BB Electric, and the Plaintiff paid the purchase price with the said money.

C) In the tax investigation, OF, the representative director of BB Electric Cable andCC, and the representative representative of the Plaintiff, the Plaintiff stated in the tax investigation as follows.

Person who has made a statement

Contents of Statement

F

The transaction between ○○ BB Cable and the transaction between the Plaintiff and the Plaintiff that sells the scrap from the process of processing and selling it asCC is the transaction between the Plaintiff and the Plaintiff and the sales of it as the BB Cable. In the former case, the Plaintiff intended to obtain a loan for purchase fund due to the aggravation of the funding status of theCC through SCR transaction, but if BB Cable and EF are directly engaged in the cB cable, the financial institution did not provide a loan for purchase fund between related parties. Therefore, theCC established the Plaintiff and made a transaction between BB Cable andCC in order to obtain a loan for purchase fund.In the latter case, the transaction between the Plaintiff and the buyer sells the scrap generated from the process of processing or manufacturing by requesting the cR to the external company and sell the cR to the BB Cable or by directly selling the cR to the external company.

The transaction price of 2.0/2.6m of SCR supplied toCC through the Plaintiff was determined based on the daily low unit price purchased fromCC.

In 2010, prior to the establishment of the Plaintiff, the CC sold SCR from BB cable toCC, and the financial situation of the CC has deteriorated due to the said transaction, and subsequently did not engage in subsequent transactions.CC first, when it was unable to make cash settlement due to the aggravation of the financial situation while making cash settlement in BB cable, it did not supply the CC any wire to the BB cable any longer.

The reason why the ○CC would be supplied with BB cable because it would be at a disadvantage to the unit price or supply time due to the SCR supplier's intention to purchase the SCR from the outside. Since it is impossible to directly purchase the BB cable, it is difficult forCC, which is short of funds, to purchase the SCR on favorable terms from BB Cable, and it is inevitable for it to purchase it from an outside company with good terms and conditions of transaction.

LGG

Although the case of JCR transactions between the plaintiff's ○'s dong Line, there are some cases of JCR transactions, there was no son in the case of SCR transactions, and OF, the spouse, was directly involved.

The actual business of ○ was the husband, the OF, and was aware of the overall transaction details before the transaction. There was no knowledge about the operation of the funds. Although there was no well equipped human and material facilities, it is trying to have a place of business equipped well with human and material facilities.

[Ground of recognition] Facts without dispute, Gap evidence 2, 3, Eul evidence 2 to 8, the purport of the whole pleadings

D. Whether the instant disposition is lawful

1) Article 17(2)2 of the former Value-Added Tax Act (amended by Act No. 11873, Jun. 7, 2013) which denies the deduction of an input tax amount for a tax invoice received in the course of transaction refers to a case where the requisite entries in the tax invoice are inconsistent with the actual supplier of goods or services or the price and time of the goods or services, regardless of the formal entries in the transaction contract, etc. entered between the parties concerned with the goods or services, (see, e.g., Supreme Court Decision 96Nu617, Dec. 10, 196). Therefore, even if a transaction of supplying goods, etc. is actually conducted, it constitutes a “unlawful tax invoice different from the actual supplier”. Moreover, in the case of Articles 6(1), 7(1) and 16(1)2 of the Value-Added Tax Act, the taxpayer should be deemed as a person who actually supplies goods or services, such as the delivery or supply of goods or services, and the supplier should be deemed as a person who actually supplies the goods or services.

2) Comprehensively taking account of the aforementioned legal principles and the following circumstances revealed in the facts acknowledged earlier, the instant transaction has the form of supplying goods in external form. However, the actual party to the instant transaction is BB cable andCC, and the Plaintiff is merely a person establishing a nominal legal relationship with the aim of obtaining a loan from a financial institution.

A) BB cable supplied CC with a considerable amount of CR around 2010, before the Plaintiff was established. However, as the CC’s financial situation has deteriorated due to the 2010 transaction, it did not thereafter engage in a transaction in the same form as CC until the Plaintiff was established.

B) Since, in the event that BB cable andCC directly engage in a scam transaction, the OF, the representative director of the BB Cable andCC, did not hinder the loan of purchase funds from a financial institution on the ground that it is a purchase between related parties, it seems thatCC established the Plaintiff to obtain a loan of purchase funds, and determined the form of the instant transaction, the sales price decision, and the method of delivery of SCR after establishing the Plaintiff.

C) The Plaintiff’s representative representative did not actually participate in determining terms and conditions of the instant transaction, such as the form of the instant transaction or the purchase price, as the Defendant’s wife.

D) As part of the purchase price received fromCC, the Plaintiff only paid the BB cable with the purchase price, but did not raise the purchase fund, and did not keep and manage the transactional goods as SCR was directly delivered from the BB Cable toCC (the Plaintiff did not have any warehouse facilities, etc. that can keep the same line, such as SCR, at the time of the instant transaction). In addition, at the time of the instant transaction, the employee working inCC prepared documents or books related to the Plaintiff’s transaction.

E) The Plaintiff’s profits from purchasing SCR from MTM, an external company, and supplying BB electric wires are 140 won per kilogramg. The profits that the Plaintiff acquired while purchasing SCR from BB Electric and supplying it toCC are merely 10-20 won per kilogramg.

3) Therefore, the instant tax invoice constitutes a tax invoice different from the fact (the entry of the evidence No. 4 alone does not interfere with the above recognition), and the Plaintiff received the instant tax invoice without being supplied with or being supplied with goods, and thus, the Defendant’s disposition denying sales and input tax amount and imposing additional tax on the non-faith of the tax invoice is lawful.

(e) the existence of justifiable grounds for exemption from additional duties;

1) Penalty taxes under tax law are administrative sanctions imposed in accordance with the provisions of tax law in cases where a taxpayer violates his/her duty to report and pay taxes without justifiable grounds in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim. Such sanctions are not imposed in cases where there are justifiable grounds for not being attributable to the failure of the taxpayer to perform his/her duty, such as cases where there are circumstances where the taxpayer is deemed unreasonable to be unaware of his/her duty, or where it is unreasonable for the taxpayer to expect the performance of his/her duty to pay taxes, etc. (see, e.g., Supreme Court Decision 2004Du930, Nov. 25, 2005).

2) In light of all the circumstances, including the purpose and details of the instant transaction, and the subject to whom substantial profits from the instant transaction accrue, etc., it cannot be deemed that there is any justifiable reason not to mislead the Plaintiff, who reported value-added tax pursuant to the instant tax invoice different from the facts, to breach of its duty. Therefore, the instant disposition based on the same premise is lawful.

3. Conclusion

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