early 209west3019 (2010.03.09)

The de facto monetary transaction that leads to the transaction of goods is not the supply of goods.

The instant transaction was conducted in the form of sale in order to pretend the supply of goods, and its substance is merely a money transaction in which investment funds are induced and investment allowances are paid accordingly. Thus, it cannot be deemed that there was the supply of goods subject to value-added tax.

Article 1 of the Value-Added Tax Act

Article 6 of the Value-Added Tax Act

2010Guhap23910 Revocation of Disposition rejecting a claim for rectification of value-added tax

AAAcoa Ltd.

Five others from the Head of the District Tax Office

December 8, 2011

February 23, 2012

1. The date of the notice of rejection disposition issued by the Defendants is as follows: (a) the notice of rejection issued by the Defendants against the Plaintiff for each of the following dates is revoked: (b) each of the value-added tax amount of KRW 145,593,218,687 in total; (c) the notice of rejection is revoked.

2. The costs of lawsuit are assessed against the Defendants.

The decision is as follows (However, among the list of the refusal disposition attached to the complaint, the total amount of 48,193,216,903 won of the final and conclusive claim for correction will be 48,193,216,906 won.)

1. Basic facts

A. The business organization, type of business, etc. of the Plaintiff Company

(1) The business organization of the Plaintiff Company and the BBBBB Person;

(A) On October 30, 2003, the Plaintiff Company, a multi-level marketing company, was established in order to engage in a private business related to BBB World PP, a multi-level marketing company (hereinafter “BBB1”). Nonparty CC and ZH, together with the above BBBBB, practically operated the Plaintiff Company or controlled its business.

(B) BB had six branches, including Gangnam-gu, Busan, Gwangju, Incheon, Daejeon, Daegu, and Daegu, and operated 62 centers nationwide. The Plaintiff Company operated its branch offices and centers of BBB, and did not have any separate branch offices and centers. The two companies also maintained and managed the sales assistant through the organization relationship between the Plaintiff Company and its subordinate shop.

(2) Method and compensation system of the Plaintiff Company and BBB’s private business;

(가) 위 장CC은 2004.경 BBBBB의 지속적인 매출 하락으로 경영사정이 악화되자, 당시 DD네트워크 주식회사 등에서 시행하던 공유마케팅(일정금액 이상을 구매하여 회원이 되면 추가로 상품을 구매하여 포인트를 얻을 때마다 구매대금의 일정배율을 투자금액으로 배당받는 판매방식이다)을 도입하기로 하였다. BBBBB가 2004 10.경 시작한 공유마케팅의 보상플랜의 내용은 '30만 QQ 상당의 물품을 구매하면 1단계 회원이 되고, 1단계 회원이 120만 QQ 상당의 물품을 구매하면 2단계 회원이 되고, 2단계 회원이 추가로 100만 QQ 상당의 물품을 구매하면 3단계 회원이 되며, 3단계 회원이 된 후 100만 QQ 상당의 물품을 구매하면 이를 1점으로 하여 1점에 최대 250만원을 지급한다'는 내용이었다. 그러나 판매물품가격의 상한제 등 관계법상 제한 규정으로 영업이 어려워지자, 장CC은 2005. 1. 20.경 주식회사 EEEE(원고 회사의 당시 상호) 명의로 방문판매업을 병행하며 새로운 보상플랜에 의한 마케팅으로 변경하였는데, 그 내용은 위 보상플랜에서 4단계를 추가하여 100만 QQ(143만 원) 상당의 물품을 구매하면 이를 1점으로 환산하여 1점에 250만원의 판매수당 등을 지급하는 것이었다. 위 주식회사 EEEE의 회사명을 현재의 상호로 변경함에 따라 위 4단계의 명칭을 'AAA(FF) 마케팅' 내지 'AAA(FF) 보상플랜'이라고 하였다.

(나) 한편, BBBBB의 1. 2, 3단계를 거치지 않고도 원고 회사에서 1000만 QQ(약 1,430만 원) 상당의 물품을 구매하게 되면 그 이후부터 AAA 보상플랜의 모든 수당을 적용받을 수 있으나, BBBBB에서 350만 QQ(약 594만 원) 상당의 물품을 구입하여 1, 2, 3단계를 거치면 그 이후부터 원고 회사에서 제한 없이 물품 구매에 따른 접수를 획득할 수 있어, 대부분의 판매원들은 BBBBB의 1. 2, 3단계를 거쳐 AAA 마케팅으로 진입하였다.

(3) Circumstances leading to the recruitment of salespersons by the Plaintiff Company

(A) The recruitment of new sales members of the Plaintiff Company was conducted by holding a business explanatory meeting for those invited by its sales clerks based on the prospectus or basic lecture distributed mainly by each center at its head office to invite them to join the sales.

(나) 원고 회사는 사업설명회에서 사람들에게 "BBBBB는 200만 명의 회원 을 확보하여 5,000여 가지 생활용품을 네트워크 방식으로 생산자와 소비자를 직접 연결시켜 판매함으로써 고수익을 창출하고, 대기업과 제휴하여 통신 사업, 여행서비스 사업, 보험사엽 등 다양한 수익사업을 통해 고수익을 창출하고 있다. 원고 회사는 품질은 우수하나 판로가 없어서 특수마케팅으로 유통을 할 수밖에 없는 벤처기 업, 중소기업 제품을 판매하는데, 생산자와 소비자를 직접 연결시켜 유통비용 없이 판매함으로써 고 수익을 창출하고, 레저사업, 전원주택사업, 바나나스원 체인점 사업, 통신사업 등 다양한 수익사엽체도 훈영하여 고수익을 창출한 다음, 이를 판매원들에게 수당으로 지급하는 회사이다. 전국에 200만 명 이상의 활동 회원을 확보하고 있어 월 2,500억 원 이상의 매출이 안정적으로 발생하고 있다. 벤처기업 등 제품 판매와 관련하여 통상의 다단계업체처럼 거리에 나가 판매할 펼요 없이 소비하는 것만으로도 이익을 창출할 수 있다. 수익사업과 관련하여 무선통신사업은 이동통신 3사 와 제휴하고 있고, 유선통신사업, 즉 인터넷망 사업은 2005년 기준 400여개 업체에 서비스를 제공하여 GG통신 국제전화 시장의 60% 이상을 장악하고 있다. 100만 QQ(1,430,000원)를 부여받는 물품을 구입하여 1점을 획득할 때마다 토, 일요일 및 공휴일을 제외하고 매일 1만원씩 2,500,000원의 수당을 틀림없이 지급한다. 1만 원은 수학적으로 얘기하는 고정 값이다 라는 내용으로 설명하면서 판매원 가업을 권유하였다.

(C) In accordance with the method of calculating the above business explanation, the Plaintiff Company paid an allowance of KRW 10,00 per day to its members by September 25, 2006. Meanwhile, the Plaintiff Company changed its 1,480,000 won per 1,680,000 won due to the aggravation of the finance around August 16, 2006. The Plaintiff Company changed its 1,430,000 won per 1,680 won as it was difficult to cope with the payment of allowances due to AAA compensation franchise. After the occurrence of the situation where the payment of allowances was suspended on September 26, 2006, the allowance system was changed to the payment of KRW 60,00,000 per day. After the shortage of financial resources, the Plaintiff Company’s payment of allowances was practically suspended until around September 25, 2007. On the other hand, each of the Plaintiff Company’s sales of the Plaintiff Company appears to have changed its payment of allowances to its members.

(4) Status of transactions between the Plaintiff Company and the salespersons

(A) BBB sold mainly health food, etc. as the sales amount is limited to 1.3 million won according to the relevant laws and regulations of multi-level marketing business. The Plaintiff Company, which had no such restriction, sold relatively high-priced silver, multi-level machinery and appliances, etc.

(B) The cost of the goods sold by the Plaintiff Company was only 1.16% of the sales price, and the details of the purchase and sales price of certain goods sold by the Plaintiff Company to the salespersons are as listed below.

(The following table omitted):

(C) The sales clerks of the Plaintiff Company did not have interest in the performance, quality, or price of the purchased goods. In general, most sales clerks do not individually select the goods in ordering the goods, but if they refer to the amount of their investment to the head of the Center, etc., they ordered the goods determined by considering the amount of investment.

(D) On the other hand, in the case of purchasing goods from BB, most of the sales clerks received goods, while the purpose of purchasing goods from the Plaintiff Company is not to actually purchase goods, but to receive allowances for acquiring points, so most of the sales clerks prepared an order contract with the Plaintiff Company by entering the place of residence of the relevant center in the "stack address" column without receiving most of the goods, and received an amount equivalent to 5% of the value of the goods by resale through each center (such as so called 'the so-called 's white paper allowance' or 'one trial allowance') (the re-sale seems to have been automatically treated by the Plaintiff Company in the absence of any separate declaration of intention as well as the case where the sales clerks entered their financial modernization numbers in the order form, and the sales clerks did not raise any objection thereto).

(5) Other

(A) As a result of the analysis of the Plaintiff Company’s daily funding in 2005 and 2006, the total revenue between January 30, 2005 and November 30, 2006 of the Plaintiff Company was confirmed to have been paid KRW 2.380 billion to the sales of goods to the salespersons, and KRW 88.5 billion to other deposits. The Plaintiff Company purchased from the sales and goods delivery company from the salespersons, and then delivered them to the BBB, and there was no other company’s revenue except for those accrued from the sales and goods delivery company. The Plaintiff Company was confirmed to have been paid KRW 73.87% with the sales’s bonus, approximately KRW 1.65% with the sales of goods, KRW 12.33% with the sales of goods, business expenses, and other rents, and approximately KRW 1.2% with the employee’s salary.

(B) The Plaintiff Company and BBB did not have any particular import source except for the sale of goods.

B. Criminal punishment

(1) When the Plaintiff Company suspended the payment of allowances, the Plaintiff Company filed a complaint with the Plaintiff Company on charges of receiving and receiving money from the salespersons in the name of the purchase cost of the goods, despite the absence of the intent or ability of some salespersons to pay high-amount dividends, and the Prosecutor charged the Plaintiff Company with detention on the charge of violating the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud) and the Act on Door-to-Door Sales, Etc. on October 30, 2007, which was in general managed with the Plaintiff Company on June 2007. The Seoul Central District Court sentenced the above headCC and its branch II as the above court 2007Da525 on September 30, 207, sentenced the Defendant to nine years of imprisonment and five years of imprisonment, respectively, and the above judgment was finalized as the appeal (Seoul High Court 2007No2567) and the final appeal (Supreme Court 2008Do2236) were dismissed.

(2) Meanwhile, eight persons, including the JJ, who were the salespersons of the Plaintiff Company, filed a lawsuit for damages as Seoul Central District Court 2008Gahap3989, asserting that they were obtained money from the Plaintiff by deceiving the Plaintiff Company in the name of the purchase cost of the goods. On May 15, 2009, the above court rendered a judgment of winning the entire decision of the JJ, etc. on the part of the Plaintiff Company. On the contrary, the sales clerks amount to KRW 10 billion for the final claim against the Plaintiff Company.

C. Circumstances leading to the Plaintiff’s filing of value-added tax and the instant rejection disposition

(1) During the period from April 2006 to April 2007, the Plaintiff Company reported and paid each value-added tax from January 2006 to January 2007 as stated in each of the “the first declaration” column among the “the details of the return and request for correction by Defendant,” respectively, to the Defendants (Provided, That there is no evidence that the Plaintiff Company did not pay part of the value-added tax of the reported value-added tax (in accordance with evidence A No. 8 & No. 2, it stated that the Plaintiff Company did not pay the value-added tax of March 2006).

(2) On March 16, 2009, the Plaintiff Company filed a correction claim seeking refund of KRW 145,593,218,687 in the aggregate of value-added tax from January 1, 2006 to January 2007, by asserting that the business performed by the Plaintiff Company did not constitute supply of goods under the Value-Added Tax Act because it took the form of sale and purchase of goods to attract investment funds without actual transaction of the goods. The details are as shown in the column of "request for correction (determination)" among the value-added tax return and request for correction by the Defendant.

(3) For this reason, the Defendants rendered each of the instant refusal dispositions rejecting each of the instant dispositions to the effect that the Plaintiff Company supplied the Plaintiff Company with the purchase price after receiving the purchase price for the Plaintiff Company on the same date as indicated in the separate sheet of refusal disposition in the separate sheet of “the date of each disposition” was subject to taxation pursuant to Articles 6 and 1 of the Value-Added Tax Act.

(4) On August 7, 2009, the Plaintiff Company filed a tax appeal against each of the instant refusal dispositions. On March 9, 2010, the Tax Tribunal dismissed the Plaintiff Company’s appeal on the ground that the Plaintiff Company’s act of selling goods to multi-stage salesmen constitutes a transaction subject to value-added tax on the grounds that the transaction type between the Plaintiff Company and the salesperson is somewhat different from the ordinary commercial transactions. The pertinent written decision reached the Plaintiff Company around March 11, 2010.

【Ground for Recognition: Facts without dispute; Gap evidence 1 through 12; each statement of evidence (including paper numbers) in Articles 14 through 24; the purport of the whole pleadings

2. Whether the rejection disposition of this case is legitimate

A. The plaintiff company's assertion

In light of the fact that most of the goods sold by the Plaintiff Company (hereinafter referred to as the “instant transaction”) to its subordinate salespersons are low-price and it is impossible to sell them at low-price and its selling price also reaches 10-20 times the purchase price of the Plaintiff Company. The above salespersons purchased them solely for the purpose of receiving the goods purchased without intent to use and consume the instant goods, and did not receive the goods actually purchased, while promising to pay a certain amount of allowances, the Plaintiff Company recruited investors (sales Board) while promising to pay the said allowances, and the investors also invested in the anticipated recovery of the investment amount. In light of the above, the instant transaction was conducted in the form of sale in order to pretend the supply of the goods. The substance of the transaction was to attract the investment amount by mediating the relevant goods, and thus, it does not constitute the supply of goods subject to the imposition of value-added tax.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) Whether the instant transaction constitutes the supply of goods

(A) Even if it appears as if the goods were supplied in appearance, it cannot be deemed that there was a supply of goods, which is the cause of imposing value-added tax, in the event that it merely pretends to be the supply of goods or is actually considered to be only the receipt of investment money without the transaction of the goods. Whether it constitutes such act shall be determined individually and specifically by comprehensively taking into account all the circumstances, such as the objective value of the goods in question and the supply value thereof, whether the person who receives the supply actually intended to use and consume the goods, whether the collection of the investment was scheduled between the parties (see Supreme Court Decision 2006Du13497, Dec. 24, 2008). Meanwhile, Article 3 of the Regulation on Unauthorized Receipt of Goods provides that the act of receiving investment money cannot be seen as one of the acts of receiving investment money under Article 2 subparag. 1 of the Act, which constitutes “the act of receiving investment money in excess of an unspecified amount,” and thus, it is difficult to view that the act of receiving the investment money as an act of receiving investment money under the law without permission or sound regulation.

(B) We examine the above facts and evidence of this court in light of the following circumstances acknowledged as a whole as a result of the fact finding about KRK Co., Ltd. of this court and the overall purport of the arguments, since the transaction of this case was conducted in the form of sale for the purpose of pretending the supply of goods, its substance is merely a de facto monetary transaction that attracting investment funds through mediating the pertinent goods and paying investment allowances, it cannot be deemed that there was the supply of goods subject to value-added tax. Each fact inquiry about 3 through 5 (Additional No. Ga No. Ga No. Po) of this court, each fact inquiry about KRK Co., Ltd. of this court and the director of this tax office is insufficient to recognize that the instant transaction constitutes the supply of goods, and there is no other evidence to acknowledge otherwise. Accordingly, it is unlawful for the Plaintiff Co., Ltd to calculate the tax amount by including sales in the tax base at the time of filing the initial value-added tax return to the Defendants, and each of the instant refusal disposition by the Defendants on the premise that the initial return of

① In light of the fact that the sales price of the Plaintiff Company was set at approximately 6 times to 20 times as much as that of the Plaintiff Company purchased from its manufacturer’s manufacture and sold relatively high-priced goods (the average cost of the pertinent goods is only 1.16%) and the sales price was paid only 5% of the price of the goods purchased from the Plaintiff Company as a trial allowance, it is reasonable to deem that the sales price of the goods traded between the Plaintiff Company and the sales salesperson is remarkably higher than the objective value of the pertinent goods or the ordinary market price of the pertinent goods. Thus, Article 23(2) of the Act on Door-to-Door Sales, etc., whichever is reasonable [the same purport is that Article 23(2) of the Enforcement Decree of the Act on Door-to-Door Sales, etc., whichever is earlier than that of the instant multi-level marketing salesperson, shall not be deemed to have been an act of selling the goods or services at least 10 percent of the sales price of the goods or services at least 20 percent of the sales price of the goods or services at least.

② In light of the fact that the price of the goods subject to the instant transaction is unreasonable, and that the actual sales salesperson did not receive the goods purchased from the Plaintiff company and reselled only the amount equivalent to 5% of the price of the goods without receiving the goods, and that the sales salesperson guaranteed a certain amount of profit (e.g., allowance) exceeding the purchase price in the event that the goods are purchased from the Plaintiff company, it is difficult to deem that the sales salesperson had an intention to actually sell, use, or consume the goods supplied by the Plaintiff company.

③ In addition, the Plaintiff Company explained to the effect that “the Plaintiff Company operates a variety of profit-making businesses in the areas of sales of goods, leisure and communications, etc., as well as sales of goods, thereby creating high profits, and that the Plaintiff Company pays the Plaintiff Company as an allowance. The Plaintiff Company may generate profits only by driving the products on a street without any necessity, and that the Plaintiff Company promised to pay KRW 2,500,000 per day to the salespersons, except for Saturdays, Sundays and holidays, whenever it purchases a certain amount of goods and obtains one point from the purchase of goods.” In fact, the Plaintiff Company paid KRW 10,000 per day to the salespersons by September 26, 2006. In other words, it is reasonable to view that the Plaintiff Company promised not only sales profits by lending the form of goods purchase, but also by creating various business operations and profits, thereby guaranteeing the Plaintiff Company’s collection of investments and certain profits.

④ 비록 실질적 운영자, 조직형태 및 사업방법 등의 측면에서 원고 회사 와 BBBBB가 사실상 하나의 조직처럼 운영되었다고 하더라도, 부가가치세의 과세 원인이 되는 '재화의 공급'에 해당하는지 여부는 개별 거래를 기준으로 거래당사자의 거래의 목적과 경위 및 태양 등 그 실질에 따라 구체적으로 살펴보아야 한다고 할 것 이고, 이에 더하여 앞서 본 사실 및 증거들에 의하여 인정되는 판매물건의 품목과 가 격조건, 판매원들의 물품구입 목적, 물품수령 여부 등에 있어서 원고 회사와 QQQQQ 사이의 거래의 방식과 내용이 상이하다는 점을 고려하면, 피고틀의 주장과 같이 판매원들과 BBBBB 내지 원고 회사 사이의 각 거래가 '재화의 공급'에 해당하는지 여부를 위 각 회사 전체를 기준으로 일체로서 판단하여야 할 것도 아니다.

⑤ Meanwhile, according to the result of the fact-finding conducted by the court on the part of the plaintiff company and its salesperson from May 2006 to October 2006, it is difficult to conclude that the above door-to-door dispatch company dealt with a total of 20,377 door-to-door transfer business at the request of the LLLL LL corporation, a trader of the plaintiff company. However, regardless of the identity of the consignee (the plaintiff company's salesperson appears to be the plaintiff company's salesperson), the consignee's address indicated in the invoice appears to be most of the "the consignee's address", and as seen above, the salesperson's door-to-door transfer address was put into the plaintiff company's counterpart address when preparing the order contract. In light of the above, it is difficult to conclude that the above door-to-door transfer was a real transaction between the plaintiff company and its salesperson. Rather, it is nothing more than that of the plaintiff company's general address, but it cannot be viewed that the plaintiff company's address was not a specific address of the plaintiff company.

(2) Determination as to the assertion on non-existence of claim for correction

The Defendants asserted to the effect that the Plaintiff Company should have asserted or submitted the grounds for filing a request for correction by reducing the total purchase amount, such as the date and time of the transaction, the other party, the amount received from the other party, the grounds for filing a request for correction, etc. However, as to whether the tax base and tax amount stated in the tax base return exceed objectively legitimate tax base and tax amount to be reported under the tax laws, the Defendants, the tax authority that received the request for reduction or correction (see, e.g., Supreme Court Decision 2002Du9261, Aug. 16, 2004). In addition, in light of the purport of each of the arguments in evidence No. 25 and evidence No. 26, the Plaintiff Company’s submission of a request for correction cannot be seen as either the grounds for filing a request for correction or the scope of the amount of the tax amount to be reduced by the initial duty base (amount to be reduced by the tax base) as supporting supporting evidence on the grounds for filing a request for correction, and each of the instant provisions cannot be seen as either the Plaintiff’s tax base and the tax amount of the purchase tax amount.

(3) Whether each of the instant claims filed by the Plaintiff Company violates the principle of good faith

(A) The fact that the Plaintiff Company filed a return of value-added tax, etc. on the basis of sales amount, etc. on the basis of its own supply of goods and received sales proceeds, but the representative was subject to criminal punishment, and the instant transaction was actually engaged in money transaction (on the part of the supply of goods without permission) and thus, filed a claim for refund of value-added tax with the purport that the report was erroneous, is filed as seen earlier.

(B) To apply the principle of trust and good faith to the taxpayer, there is an objectively contradictory behavior, the behavior was caused by the taxpayer's severe acts of worship, and the trust of the tax authority caused thereby should be worth being protected. Thus, the application of the principle of trust and good faith to the substantial tax law which strongly acts under the principle of no taxation without law is allowed only when it is acknowledged that specific trust needs to be protected even if it sacrifices the legality. In addition, the tax authority has the right of on-site investigation, and accordingly has the duty to investigate and impose tax as well as the burden of proof on the legality of taxation. In light of the fact that the taxpayer bears the burden of proving the legality of the tax disposition, it is difficult to deem that the taxpayer committed an excessive act of good faith to the extent that it violated the principle of trust and good faith merely because the tax authority reported the excessive amount of value-added tax and filed a request for correction on the excessive amount of tax after paying it, and even if the tax authority believed only the value-added tax return on the basis of accounting different from the fact, it cannot be deemed that it violates the aforementioned principle.

3. Conclusion

If so, the plaintiff company's claim against the defendants of the plaintiff company is with merit, each of them is accepted.