Seoul High Court 2007Nu3133 (Law No. 12, 2008)

No trade shall be deemed a nominal transaction on the ground that a bombane company was opened in connection with the transaction of gold bullion.

It is difficult to readily conclude that the instant transaction, one of the entire transactions, is not a nominal transaction, on the sole basis of the fact that there is a wide carbon company in the middle stage, etc., which is a day until gold bullion is imported and exported.

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

Article 17 of the Value-Added Tax Act

The part on imposition of value-added tax is reversed, and that part of the case is remanded to Seoul High Court.

The defendant's appeal is dismissed.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Plaintiff’s ground of appeal

Article 1(1)1 of the Value-Added Tax Act provides that "the supply of goods as taxable subject to value-added tax" and Article 6(1) provides that "the delivery or transfer of goods shall be a delivery or transfer of goods on all contractual or legal grounds." In light of the characteristics of value-added tax as multi-stage transaction tax, "delivery or transfer" under Article 6(1) of the Value-Added Tax Act includes all acts of causing the transfer of rights to use and consume goods, regardless of the existence of profits actually acquired (see, e.g., Supreme Court Decisions 85Nu286, Sept. 24, 1985; 9Du9247, Mar. 13, 2001; 9Du9247, etc.). In this case, the issue of whether a specific transaction among a series of transactions constitutes the supply of goods as provided for in the Value-Added Tax Act shall be determined on the grounds that there are no specific transaction under Article 29(1)2 of the Value-Added Tax Act, including the purpose and attitude of each transaction party, the payment of profits, and the payment.

According to the facts duly established by the court below and the records, the plaintiff purchased gold bullion 10 kilograms (hereinafter "the gold bullion of this case") on September 80, 2004 and 110 kilograms (hereinafter "the gold bullion of this case") on December 10, 204, each of which was delivered on the date of purchase, and received the delivery of the gold bullion of this case (hereinafter "the gold bullion of this case") and received two tax invoices (hereinafter "tax invoices of this case") from the supplier of this case. The plaintiff can find the fact that the gold bullion of this case was wholly exported from the revenue of Hong Kong on the day of purchase.

Examining these facts and records in light of the legal principles as seen earlier, it is difficult to readily conclude that the instant transaction, one of the entire transactions of this case, is a nominal transaction that is subject to value-added tax, on the sole basis of the following: (a) a series of entire transactions until the import and export of the instant gold bullion (hereinafter “the entire transaction”); (b) the purchase of gold bullion exempt from value-added tax at the intermediate stage and supply it to a person who is not recommended to be exempted from value-added tax; and (c) there is a so-called wide carbon company that does not pay the amount equivalent to value-added tax; and (d) there is a so-called -

Nevertheless, the lower court determined that the instant tax invoice constituted a different tax invoice from the facts on the ground that the instant transaction was merely a nominal transaction, based on the circumstance that the instant transaction was included in the entire transaction of the instant case where the so-called wide coal company was opened. In so doing, the lower court erred by misapprehending the legal doctrine on the “supply of goods” and “tax invoice different from the facts”, thereby adversely affecting the conclusion of the judgment.

The ground of appeal pointing this out is with merit.

2. As to the Defendant’s ground of appeal

According to Articles 76 (5) and 116 (2) 2 of the former Corporate Tax Act (amended by Act No. 8141 of Dec. 30, 2006), "the head of the district tax office having jurisdiction over the place of tax payment shall collect an amount calculated by adding an amount equivalent to 2/100 of the unpaid amount as corporate tax in cases where a corporation is supplied goods by a businessman in connection with its business and fails to receive a tax invoice under Article 16 of the Value-Added Tax Act," and Article 16 of the former Value-Added Tax Act (amended by Act No. 8142 of Dec. 30, 2006) provides that "if an entrepreneur registered as a taxpayer supplies goods, he shall deliver a tax invoice stating the registration number, name or title, registration number, value-added tax number, value-added tax amount, etc. of the supplier to the person who receives the supply."

As seen earlier, insofar as the instant transaction cannot be deemed to be a supply of goods subject to value-added tax, it is reasonable to view that the instant tax invoice received accordingly is also a legitimate tax invoice under Article 16 of the former Value-Added Tax Act. Accordingly, the lower court’s determination that the Defendant’s disposition of imposing corporate tax based on the provision on additional tax that was not received by deeming the instant tax invoice as “illegally different tax invoice” is unlawful on the ground that the provision on additional tax that was received by the Defendant cannot apply the provision on additional tax that was not received by the actual transaction under the disguised title

The court below did not err in the misapprehension of legal principles as to the penalty tax provision for lack of evidence, as alleged in the grounds of appeal.

3. Conclusion

Therefore, the part of the judgment below on the imposition of value-added tax is reversed, and that part of the case is remanded to the court below for a new trial and determination, and the defendant's appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices