National High Court Decision 2007Du2096 (Law No. 20081.07)

Whether medical equipment was omitted from sales

It is reasonable to calculate the amount omitted in the sales report by selling new equipment after recovering the equipment of the Gu and returning the price of the equipment of the Gu.

The contents of the decision shall be the same as attached.

Article 16 of the former Value-Added Tax Act (Tax Invoice)

Article 21 (Time of Supply for Enlargement)

1. The part of the claim added by the amendment of September 19, 2008 and the part of the claim seeking revocation of the disposition of corporate tax for the business year 2001, among the original claims, shall be dismissed.

2. Each taxation disposition of KRW 13,485,360 for the business year 2002 against the Plaintiff on April 13, 2007, corporate tax of KRW 11,778,700 for the business year 2003, corporate tax of KRW 11,778,700 for the business year 202, value-added tax of KRW 5,965,370 for the second business year 2002, value-added tax of KRW 6,759,650 for the first business year 203, and each income earner who disposed of the income as the largest mountain area for the business year 2002, shall be revoked.

3. The plaintiff's remaining claims are dismissed.

4. The costs of lawsuit shall be borne by each person;

The defendant revoked each of the dispositions on the plaintiff on April 13, 2001 as corporate tax of 3,422,00 won for the business year of 2001, corporate tax of 13,485,360 won for the business year of 2002, corporate tax of 11,778,700 won for the business year of 2003, value-added tax of 202 5,965,370 won for the second year of 2003, value-added tax of 6,759,560 won for the first year of 203, value-added tax of 2,042,080 for the second year of 203 as the largest ○, 201, and the income amount of 34,800,000 won for the business year of 202, 203, 506, 2005, and 00 won for each income amount for the second year of 20.

[Claim in addition to the Amendment of September 19, 2008]

The disposition of imposition of KRW 1,315,20, KRW 580, value-added tax for the second period of 2001 against the plaintiff, KRW 585,540, value-added tax for the first period of 2002, KRW 5,774,440, KRW 5,770 for the second period of 202, KRW 7,074,870 for the second period of 202, KRW 15,93,580 for the corporate tax for the year of 2002, KRW 13,893,680 for the income tax for the year of 203, KRW 13,893,680 for the income tax for the year of 203, KRW 8,016,70 for the first period of 203, corporate tax for the business year of 203, KRW 969,480 for the year

1. Details of disposition;

A. The Plaintiff is a company that opened on August 15, 1998 and runs a retail business of medical appliances with an office in the third floor of ○○○dong, Seoul 369-○○ Building.

B. From December 22, 2005 to March 31, 2006, the director of the Seoul Regional Tax Office conducted a tax investigation on -○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○, a member of the Seoul ○○○○○○○○○○○○○○○○○○○○○○○, who operated the ○○○○○○○○○○○○○○○○○○, until June 30, 2003, who operated the ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○, while operating each of the ○○○○○○○○○○○○○○○○○○ and notified the Defendant of the fact that the Plaintiff failed to report the necessary expenses.

C. The Defendant, on April 13, 2007, notified the Plaintiff of each tax imposition disposition and change in the amount of income on April 13, 2007 as stated in the purport of the claim against the Plaintiff on the ground that the Plaintiff sold the medical equipment, etc. to Lee ○○, based on the following transaction details revealed in the tax investigation on Lee ○○.

D. On May 30, 2007, the Plaintiff filed an appeal with the National Tax Tribunal on the grounds that it is dissatisfied with the remaining dispositions except for the imposition of corporate tax for the business year 2001 among the above dispositions of imposition and notice of change in the amount of income. The National Tax Tribunal dismissed the appeal on January 7, 2008.

[Grounds for recognition] The items of evidence Nos. 1, 10-3, 11, and 12-2, and the purport of the whole pleadings

2. The purport of the claim added by the amendment of September 19, 2008 and whether the lawsuit seeking revocation of the disposition imposing corporate tax for the business year 2001 is legitimate

A. The part of the purport of the claim added to the correction as of September 19, 2008

The plaintiff asserts to the effect that, while submitting the amendment as of September 19, 2008, the additional dues were corrected by adding it to the tax imposition disposition originally brought by the plaintiff.

However, with the lapse of the time limit for payment of taxes, additional dues are naturally arising under the provisions of laws and regulations, and the amount thereof is determined as well. If the initial amount of tax imposed is determined, revoked, or revised, it is unlawful as to the additional dues, which are automatically revoked or reduced in response thereto. In addition, the imposition of the value-added tax for the second period of 201, 2002, the value-added tax for the first period of 2002, the income tax for the first period of 2002, the income tax for the first period of 2002, and the income tax for the year 203, which had not been subject to a lawsuit at the time of the initial filing of

B. The part seeking the revocation of the imposition of corporate tax for the business year 2001

Administrative litigation against any illegal disposition of imposing national taxes may not be instituted without going through a request for examination or a request for adjudication under the Framework Act on National Taxes and a decision thereon (Article 56(2) of the Framework Act on National Taxes). The fact that the plaintiff did not go through a transfer procedure, such as national tax adjudication, etc. in relation to the disposition of imposing corporate tax for the business year 2001 is inappropriate

3. Determination as to the claim for revocation of the disposition other than the preceding paragraph (hereinafter the instant disposition)

A. The plaintiff's assertion

The Plaintiff’s sales of KRW 97,900,000 in total, as alleged by the Defendant, occurred in the course of returning the sales proceeds after selling the NA system to ○○○ on October 14, 2002 and returning the sales proceeds, and selling new equipment and paying the sales proceeds. However, when the Plaintiff issued the tax invoice and deducted the sales amount of KRW 35,000 as of October 5, 200 and the sales amount of KRW 55,000 in total, which was returned by the Plaintiff, from October 5, 2005, the omitted amount of the sales return is KRW 7,90,000,000, and thus, the tax base and tax amount should be corrected only for the shortage of KRW 7,90,000, while the disposition of this case was unlawful.

(b) Related statutes;

Article 16 of the former Value-Added Tax Act (Tax Invoice)

Article 21 (Time of Supply for Enlargement)

(c) Fact of recognition;

(1) In 2001, the Plaintiff supplied 00,000 won on August 20, 2001, and 3,600,000 won on November 16, 2001, and 3,600,000 won on the CK system goods for the CK system were supplied to ○○○○ upon the declaration of value-added tax and corporate tax, but the sales were omitted at the time of the declaration of the sale. However, during the second period of 2003, the Plaintiff supplied ○○○ items for the CK system goods of this case on July 30, 2003, 200, 4,50,000 won on August 20, 203, 200, and 4,50,000,000 won on November 4, 203, 200, and 1,500,000 won on December 31, 2003.

(2) On October 14, 2002, the Plaintiff sold the K system one unit of CK system (hereinafter “the equipment of this case”) to ○○○○ in supply amount of KRW 60,000,000, and received KRW 30,000,000 out of the purchase price on October 15, 2002 and KRW 1,80,000,000 out of the sale price.

(3) Subsequent to the Plaintiff’s request for the return of the instant equipment on January 10, 2003, following the Plaintiff’s request for the return of the instant equipment, the Plaintiff recovered the instant equipment and returned KRW 35,000,000,000, including the amount of 3,200,000,000, for the consumed goods recovered. The Plaintiff did not directly pay the amount to the ○○○○○○○○○, which was in a transaction with the Plaintiff, and transferred the amount to the ○○○○○, which was in a transaction with the Plaintiff.

(4) On March 6, 2003, the Plaintiff: (a) sold the K system one unit of CK system (hereinafter “new equipment of this case”) to ○○○○ in supply price of KRW 70,000,000; and (b) received KRW 30,000,000 out of the purchase price and KRW 10,000,000 of the expendable goods; and (c) as seen earlier, supplied 16,50,000 of the expendable goods during the period from May 26, 2003 to December 31, 2003.

(5) On October 5, 2005, the Plaintiff issued a tax invoice of KRW 50,000,000 for the supply of CK system and expendable goods to ○○○○.

[Reasons for Recognition] Evidence Nos. 2, 3-1, 2, 4-7, 11, 13, Eul evidence Nos. 6-2-4, 7, 8-1 to 3, and 9-7, testimony of the witness Lee ○, and the whole pleadings

Purport

D. Determination

(1) Of the instant disposition, the imposition of KRW 2,042,080 on the second half-year VAT in 2003 and the imposition of KRW 6,600,000 on the income amount that was disposed of as the bonus attributable to the Plaintiff’s representative director in 2001 and was lawful of the notice of change in income amount issued

The Plaintiff supplied ○○○ with consumed goods totaling KRW 6,600,000 and KRW 13,500,000 in total for the second period of October 5, 2001 as well as KRW 13,50,000 in total for the second period of 2003, but omitted sales at the time of filing a return of each value-added tax and corporate tax is as seen earlier. As such, the Defendant’s disposition on the premise that the omitted sales for the second period of 2001 is an unknown outflow from the company to which it belongs, and the disposition that the Defendant disposed of as a bonus to the representative and imposed the value-added tax for the second period of 2003 is lawful (the supply price of KRW 50,00,000 in total issued by the Plaintiff on October 5, 2005 is different from each of the above dispositions and taxation periods

(2) Whether the disposition of this case, other than the preceding paragraph, is legitimate

The Defendant issued a disposition on the premise that the Plaintiff omitted sales of KRW 3,00,000 in the first period of 202, KRW 31,800,000 in the second period of 2002, and KRW 43,000 in the first period of 2003, and KRW 13,500,000 in the second period of 203. However, according to the facts acknowledged earlier, the Plaintiff’s supply of the former equipment at the second period of 2002 and the omitted amount in the sales report is KRW 61,80,000 in the aggregate of the credit sales, and the amount omitted in the sales report by selling the new equipment at the second period of 203 after recovering the new equipment at the second period of 203 and returning the price. Accordingly, this part of the disposition is erroneous by misapprehending the legal principles as to the Plaintiff’s tax base and amount of tax.

Therefore, the part of the disposition in this part which exceeds the amount of tax properly calculated shall be revoked, but since the materials submitted for the argument in this case alone cannot be calculated by classifying the amount of tax with the legitimate amount for each taxable period, the entire disposition shall be revoked.

4. Conclusion

Therefore, the part of the lawsuit of this case which the plaintiff added to the correction suit of September 19, 2008 and the part which the plaintiff sought revocation of the disposition of corporate tax for the business year of 2001 are dismissed as unlawful. The defendant's claim for revocation of the disposition of corporate tax for the business year of 2002, corporate tax for the business year of 2003, corporate tax for the second business year of 2002, value added tax for the second business year of 2002, value added tax for the first business year of 2003, and the income earner for the first business year of 2003, which was disposed of as the largest ○, shall be 34,80,000, and 56,500,000 for each income amount for the year of 203, and the remaining claims shall be dismissed as it is without merit. It is so decided as per Disposition.

3. Conclusion

Therefore, the part of the plaintiffs' claim for revocation of each disposition of imposition Nos. 11 through 15 and Nos. 22, 24, 27, 29, and 34 among the second disposition of this case among the second disposition of this case is unlawful and dismissed, and each remaining claim of the plaintiffs is accepted, and it is so decided as per Disposition.