Suwon District Court 2010Guhap3719 ( November 18, 2010)

Early High Court Decision 2009Du3738 ( December 22, 2009)

A non-ferrous metal wholesaler who has been issued a false tax invoice by the supplier;

The imposition of value-added tax is legitimate, but the disposition of imposing corporate tax is recognized as having actually purchased the same, because it is difficult to view that there was no negligence on the part of the supplier due to the supplier's failure to know the fact of false tax invoices as the non-ferrous metal wholesaler.

2010Nu445 Disposition of revocation of Disposition of Imposing Value-Added Tax, etc.

XX Metal Co., Ltd.

O Head of tax office

Suwon District Court Decision 2010Guhap3719 Decided November 18, 2010

June 24, 2011

August 19, 2011

1. Of the judgment of the first instance court, the part against the plaintiff ordering cancellation shall be revoked.

The Defendant’s disposition of imposing KRW 61,091,960 on the Plaintiff on October 1, 2009 is revoked.

2. The plaintiff's remaining appeal is dismissed.

3. The plaintiff bears 30% of the total costs of the lawsuit and the remainder respectively.

The judgment of the first instance shall be revoked. Each disposition of the second-term value-added tax for the year 2008 imposed on the Plaintiff on October 1, 2009 and KRW 61,091,960 for the corporate tax for the year 2008 and the corporate tax for the year 2008 shall be revoked.

1. Details of the disposition;

A. The Plaintiff, a business operator engaged in the non-ferrous metal wholesale business in XX 000-0, was issued a tax invoice of KRW 173,673,90 (hereinafter “the instant tax invoice”) from the supply price of Non-Party 2 Co., Ltd. (hereinafter “Non-Party 2”) located at OO during the 2008 taxable period of value-added tax, and filed a tax return by deducting the tax amount related to the instant purchase amount from the amount of value-added tax, and filed a tax return by including the purchase amount in deductible expenses.

B. As a result of the tax investigation into XX mining, the head of the OO head of the tax office deemed the processed tax invoice issued without real transaction and notified the Defendant of the tax invoice as taxation data. Accordingly, on October 1, 2009, the Defendant issued a disposition of imposing the value-added tax for the second period of 2008 (hereinafter “instant disposition of imposing the value-added tax”) and a disposition of imposing the corrected amount of KRW 29,564,350 for the business year 2008 (hereinafter “instant disposition of imposing the value-added tax”), and a disposition of imposing the corrected amount of corporate tax for the business year 2008 (hereinafter “instant disposition of imposing the corporate tax of this case”) (hereinafter “instant disposition of imposing the corporate tax of this case, and referred to as “the instant disposition”).

C. On October 19, 2009, the Plaintiff filed an appeal seeking the revocation of the instant disposition with the Tax Tribunal, but was dismissed on December 22, 2009.

[Ground of Recognition] Unsatisfy, Gap evidence 1, 10, Eul evidence 1 and 2 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The instant disposition based on the premise that the instant tax invoice is not a tax invoice for a processing transaction but a processing transaction is unlawful.

2) The disposition of this case, based on the Plaintiff’s intention or negligence, is unlawful, even though the Plaintiff did not know the fact that the name of the tax invoice of this case was issued in disguised manner and did not know the fact.

3) Since the name of the instant tax invoice was disguised and issued, it entails real transactions, the amount equivalent to the instant tax invoice shall be recognized as a loss of corporate tax, the instant disposition imposing corporate tax which did not recognize it as a loss is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Facts of recognition

A) Although the place of business was 00-0 of O-Gu O-Eup O-gu O-type O-type 000-0, 2008 was leased the office located in the above domicile on July 28, 2008 and used only for two months, and did not have basic facilities, such as valleys, open storage sites, transportation vehicles, etc. for scrap metal wholesale business.

B) Nonparty 1 paid KRW 3,00,000 to Nonparty 2, who is the former representative director of the XX mining, and accepted the XX bargaining, and then changed the name of the representative director to Nonparty 2 on July 28, 2008. After that,: (a) Party 1 managed the seal impression and seal of the name of the XX mining; and (b) Party 2 and Nonparty 1 sent two accounts and seals of the name of the XX learning to Ga and MaE on the condition that he is paid 3% of the fee; and (c) Party 1 issued the tax invoice of the name of the XX bargaining in Busan area without real transaction in Seoul and Gyeonggi area.

C) Song has had ParkD and EE issue the instant tax invoice and received 3% commission fees, and Song and LCC did not know of the Plaintiff’s representative director.

D) However, on September 208, 2008, GG stated that, from the Seocho-si Industries of △△△△, 22 to 24 tons, such as A, B, and structural steel, transportation of 22 to 24 tons was made to the Plaintiff, and that the Plaintiff received transportation expenses from the Plaintiff.

E) In the presence of Park DoD, the Plaintiff issued a certificate of measurement in six copies of the instant transaction, which was the instant transaction goods, and the weight of the Plaintiff’s custody during the issuance of the certificate of measurement in the third chapter and the consent of the instant tax invoice is consistent.

F) On September 4, 2009, the Plaintiff transferred KRW 191,041,290 to the account under the name of XXco-learning.

[Ground of recognition] The evidence Nos. 2, 4, 5, 7, 13, 14, Eul evidence Nos. 3 and 4 (including paper numbers), the testimony and the purport of the whole pleadings by YG witness of the first instance trial

2) Determination on the imposition of value-added tax of this case

A) In principle, the burden of proving that a tax invoice received in the course of a specific transaction constitutes a “tax invoice different from the fact” under Article 17(2)1-2 of the former Value-Added Tax Act (amended by Act No. 9268 of Dec. 26, 2008) where the deduction of an input tax amount is denied on the ground that the specific transaction is a nominal transaction without actual delivery or transfer of goods is a transaction (see, e.g., Supreme Court Decision 2008Du9737, Dec. 11, 2008). Furthermore, a supplier and a supplier under a tax invoice may not deduct or receive an input tax amount unless there is any special circumstance that the supplier was unaware of the disguised fact in the name of the tax invoice, and that the person claiming the deduction or refund of the input tax amount is not negligent in not knowing the above nominal fact (see, e.g., Supreme Court Decision 2009Du18088, Jun. 11, 2009).

B) According to the above facts, i.e., ① the Plaintiff cannot be deemed to have been supplied with the same trade goods, which are transaction goods of the instant case, from XXco bargaining, on account of the data that only issued tax invoices without real trade, and ② the Plaintiff appears to have sold the same as the goods to be supplied at the time of issuing the instant tax invoice, even though the Plaintiff did not receive the supply from XX bargaining, and thus, the instant tax invoice received by the Plaintiff constitutes a false statement of accounts prepared as if they were supplied, even if the instant tax invoice was not actually supplied, even if they did not supply the same (the structural).

C) Furthermore, we examine whether the Plaintiff did not know that the name of the instant tax invoice was disguised and was not negligent.

(1) As seen earlier, the Plaintiff acknowledged the fact that he remitted 191,041,290 won to the account under the name of XXK on September 4, 2008, and that according to the letter of evidence Nos. 4, 9, 10, and 12 (Ga number No. 12) (Ga number No. 12), the Plaintiff was provided with a copy of the business registration certificate of xxco-learning, a certificate of representative director’s personal seal impression, and a certified copy of the register from Gaz that he was aware of prior to the instant transaction, and the Plaintiff was provided with a copy of the business registration certificate of xxco-learning, a certificate of representative director’s personal seal impression, and a certified copy of the register, and asked Nonparty Doz. who was employed in the investigation book of xco-learning at the time of the instant transaction to the effect that it would be an issue of this case, and therefore, it would be a normal actual transaction from MF.

(2) However, in light of the evidence and the following circumstances acknowledged as mentioned above, the Plaintiff appears to have been negligent in not having been aware of the fact that the instant tax invoice was prepared differently from the actual transaction, since the Plaintiff could have been negligent in not having been aware of the fact that the instant tax invoice was entered in the name of the Plaintiff, on the ground that the Plaintiff could not be said to have been negligent in having been aware of the fact that the instant tax invoice was entered in the name of the Plaintiff.

(A) GG made a statement to the effect that it measured and measured the instant trade goods, which are the instant trade goods, from the △△ industry, and measured them after getting off to the Plaintiff. The Plaintiff does not seem to have undergone any procedure to confirm what relationship is with the instant tax invoice supplier, even if having received transaction goods from the △ industry.

(B) Furthermore, the measurement confirmation that was prepared prior to the opening of the Dong, which is a transaction object of this case, is written by the supplier as the △ non-ferrous metal wholesale and retail business. The supplier of the third measurement certificate kept by the Plaintiff is indicated as the supplier, unlike the supplier of the said measurement certificate. In light of the above facts, the Plaintiff did not appear to have been easily aware of the fact that the supplier was not the xxco bargaining. In light of the above facts, the Plaintiff did not appear to have been aware of the fact that the supplier was not the xxco bargaining.

D) Therefore, the instant disposition of value-added tax is lawful.

3) As to the disposition of imposition of corporate tax of this case

A) If a tax invoice on a part of any of the costs reported by a taxpayer is proved to have been prepared by a tax authority without a real transaction, and it is disputed as to whether it is an actual cost, and the taxpayer's use of the cost claimed by the taxpayer and the other party to the payment have been proved to the extent that it is reasonable for the other party to the tax payment, it is necessary to prove that such cost has been actually paid by the taxpayer easily to present all the data, such as the account book keeping and documentary evidence (see Supreme Court Decision 96Nu8192, Sept. 26, 1997).

B) As seen earlier, the instant tax invoice received by the Plaintiff is prepared by the customer differently from the actual transaction. However, in light of the following circumstances revealed from the above fact of recognition, the Plaintiff appears to have been actually supplied with the same trade goods, which are transaction goods in the instant case, from another company that is not the Co-learning, and paid the price through the corporate account in the name of xco-learning, rather than the actual receiving company, since the Plaintiff appears to have been paid the price through the corporate account in the name of xco-learning, which is the transaction goods in the instant case paid by the Plaintiff, should be treated as deductible expenses.

(1) The Plaintiff is a business entity that actually runs the wholesale business of non-metallic metals.

(2) On September 4, 2008, the Plaintiff remitted KRW 191,041,290, which is the purchase amount of the instant tax invoice from his own account, to the XX bargaining account. However, the Defendant is bound to have used the said transferred amount in purchasing the instant transaction goods, because it fails to disclose whether the transferred amount has been returned to the Plaintiff again.

(3) Furthermore, on September 2008, GG itself directly transported the instant transaction goods to the Plaintiff on its own, and verified through the preparation of a written confirmation and testimony at the court of first instance. The circumstances do not seem to warrant the recognition of credibility in the statement of GG.

(4) The Plaintiff issued 6 copies of measurement after the succession of the instant transaction goods in the presence of ParkD and supported the fact that the Plaintiff’s actual transaction had been made in conformity with the weight on the three measurement certificates in the Plaintiff’s custody and the weight on the instant tax invoice.

C) Therefore, the disposition imposing the corporate tax of this case, which excluded the purchase amount equivalent to the tax invoice of this case from deductible expenses on the premise that the tax invoice of this case was issued without a real transaction, is unlawful.

3. Conclusion

Therefore, the part of the disposition imposing the corporate tax of this case among the plaintiff's claims shall be quoted as of the ground and the remaining claims shall be dismissed as of the ground. Since the part concerning the disposition imposing the corporate tax of this case in the judgment of the court of first instance differs from this conclusion, this part is revoked, and the remaining appeal of this case is dismissed as of the ground for appeal. It is so decided as per Disposition.