Supreme Court Decision 2008Du16476 ( December 11, 2008)

National High Court Decision 2005No4262 (Law No. 11, 2006)

Whether it is merely a nominal transaction with no actual transaction related to gold bullion

The mere fact that a series of total transactions from gold bullion import to export have been made for a short period of time, and there is a wide carbon company in the middle transaction stage, etc., it is difficult to view that one of the total transactions is not a nominal transaction, which is not a supply of goods subject to value-added tax.

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

1. Revocation of a judgment of the first instance;

2. Each disposition that the Defendant issued against the Plaintiff on September 1, 2005 the value-added tax of KRW 173,430,330, value-added tax of KRW 173,430, value-added tax of KRW 527,806,710, corporate tax of KRW 29,349,740, corporate tax of KRW 2003, corporate tax of KRW 29,349,740, corporate tax of KRW 126,294,020 for the business year of 2004, and the disposition that adjusted the amount of KRW 740,719,960 for the second period of value-added tax of KRW 475,708,164 for the second period of 204 as the amount of

3. All costs of the lawsuit shall be borne by the defendant.

The same shall apply to the order.

1. Details of the disposition;

The following facts are not disputed between the parties, or can be acknowledged by taking into account the whole purport of the pleadings in each entry in Gap evidence 1-1-4, Gap evidence 2-1-2, Eul evidence 3-1-5, Eul evidence 1-2, Eul evidence 2-3, Eul evidence 2-1, 2-2, and Eul evidence 3.

A. The Plaintiff is a legal entity that has run the precious metal wholesale business, retail business, export business, etc. from October 20, 2003, including gold bullion (in this case, “gold bullion” with the net level of at least 995/100 in the state of raw materials, such as gold bullion and dud bar).

B. During the period from October 20, 2003 to December 31, 2004, the Plaintiff issued 28 tax invoice for the purchase of gold bullion amounting to KRW 7,074,443,220 (hereinafter “the instant tax invoice”) from the company, the company, the company, the company, and the company BB metal (hereinafter referred to as “stock company,” among the above company’s trade names”), and exported the instant gold bullion to the importing company, which is the Hong Kong company, for the said period, at least 7,074,443,220 won (hereinafter “instant supplier”).

C. Based on the instant tax invoice and the aforementioned export facts, the Plaintiff reported to the Defendant each tax base and tax amount for the second term portion in 2003, the first and second term portion in 2004, and each of the value-added taxes for the second term portion in 2003 and the corporate tax for the business year 2003 and 204.

D. However, from November 8, 2004 to July 8, 2005, the director of the Seoul Regional Tax Office recognized the tax invoice of this case as a "tax invoice different from the facts" and notified the defendant. Accordingly, the defendant did not deduct the input tax amount as to the amount of the value-added tax, and the defendant applied the additional tax for the amount of the above value-added tax for the second period of September 1, 2005 to the plaintiff on September 1, 2005, the value-added tax of 173,430,30, 527,710, 29, 349, 740, 204, 126, 204, 204, 204, 126, 204, 204, 2004, and 204, 2074, 407, 407, 1967, 407, 2007.

E. On November 29, 2005, the Plaintiff appealed against the instant disposition, and requested a judgment to the National Tax Tribunal, but the National Tax Tribunal dismissed the said judgment on July 10, 2006.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

As the Plaintiff actually traded the same content as the instant tax invoice, the instant tax invoice does not correspond to “illegal tax invoice,” and even if so, the Plaintiff did not know it without negligence. The instant disposition made on a different premise is unlawful.

(b) Related statutes;

It is as shown in the attached Form.

(c) Fact of recognition;

The following facts may be acknowledged by taking into account the following facts: (a) there is no dispute between the parties; (b) Eul evidence Nos. 3, 4 Eul evidence Nos. 5-1 through 4; (c) Eul evidence Nos. 6, 7, and 8-1 through 9; (d) Eul evidence Nos. 10-1 through 5; (e) Eul evidence Nos. 11-1 through 9; (e) 12-1 through 8; and (g) Eul evidence Nos. 13-1, 2, Eul evidence Nos. 14, 15-1, 2, 16-1, 3, 17; (e) evidence Nos. 18-1, 2, 19 through 23; and (e) evidence Nos. 24-1 through 15; and (e) evidence Nos. 27 and 29-1; and (e) evidence Nos. 27, 29-2.

(1) From around December 2002 to December 31, 2004, the Act on the Restriction of Special Taxation abused the zero-rate or zero-rate tax exemption system among the precious metal business framework located in Seoul through Seoul, thereby importing gold bullion and distributing it through various stages of zero-rate or zero-free tax exemption. The so-called large carbon business (an enterprise evading value-added tax by purchasing a prohibited amount as a tax-free gold and selling it as a tax-free gold, and then withdrawing and concealing all profits within the short period after withdrawing and concealing the profit within the short period of time) has been converted into a tax amount, and then exporting it again through a variety of stages of stages of wholesale wholesalers, and the exporter did not pay value-added tax, and the exporter only carried out so-called large coal business to receive value-added tax that has not been paid by the heavy coal business.

(2) The instant gold bullion purchased by the Plaintiff also was imported by importing companies, such as Geum-si, etc., from foreign companies, through the 2-3-level wholesale companies (finally, the supplier of this case) after converting the gold bullion into the tax-free gold bullion, and then, the Plaintiff, the exporting company, via the 2-3-level wholesale companies (finally, the supplier of this case), purchased gold bullion and exported it to the "SU YOHG HNAD DESD DESD" located in Hong Kong.

(3) Among the above transaction parties, the company (S.S.) that purchased the instant gold bullion as tax exemption and sold it by converting it to the transaction subject to value-added tax is liable to pay the total value-added tax including the added value arising from the previous transaction. However, in fact, the company did not perform its duty to pay value-added tax by closing its business without paying value-added tax.

(4) The gold bullion of this case was mainly conducted by the importer from the importer to the Plaintiff. The date of import and the date of export do not vary to the extent that it was identical or one day, and most of the details of payment related to the transaction of the gold bullion of this case were paid in sequence by the supplier of this case, such as DD, which the Plaintiff purchased the gold bullion of this case, in the reverse order, the purchase price at all stages including the import price, and the Plaintiff was made by receiving the export price from the supplier of this case from the supplier of this case. In addition, considering the transport evidence related to the transaction of the gold bullion of this case, it is contradictory to the transport content, such as the starting point before the arrival of the gold bullion of this case at each transaction stage.

(5) The export price of the instant gold bullion was lower than the import price, and was considerably low compared with the domestic market price (the DD price of the gold bullion publicly announced daily via the Internet or via automatic response telephone) and the international market price.

D. Determination

(1) Article 1(1)1 of the Value-Added Tax Act provides that "the supply of goods as taxable subject to value-added tax" shall be "the 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 act of causing the transfer of authority to use or consume goods, regardless of the existence of actual profits (see, e.g., Supreme Court Decisions 85Nu286, Sept. 24, 1985; 9Du9247, Mar. 13, 2001; 99Du9247, etc.). In such a case, whether a specific transaction among a series of transactions constitutes the supply of goods under the Value-Added Tax Act shall be determined on the grounds that there is no specific transaction relation between the two parties, including the purpose and attitude of each transaction, and the owner of the goods and the owner of the profits accrued under Article 6(2)4).2 of the Value-Added Tax Act.

In light of the above legal principles, as seen earlier, gold bullion was actually distributed from the importer to the exporter. From October 2003 to December 31, 2004, the Plaintiff purchased each of the gold bullion from the supplier of this case on the date of purchase, received it on the date of delivery, and received all of the price (hereinafter referred to as "the transaction of this case"), and received 28 copies of the tax invoice under this case from the supplier of this case. Since it can be known that the gold bullion was exported to the Hong Kong import, all of the series of transactions up to the date of import and export of the gold bullion were conducted within a short period of time until the import and export of the gold bullion. Since the Plaintiff purchased the gold bullion exempted from value-added tax at the interim stage, and prepared and delivered the tax invoice to a person who did not receive a recommendation for tax exemption, and it is difficult to conclude that the gold bullion was supplied as a false transaction or supplied as a false transaction under the pretext of the transaction of this case, and it is also difficult to conclude that the transaction of this case constitutes a false transaction.

In regard to this, the Defendant argues that the Plaintiff’s taking the gold bullion of this case out to a foreign country is merely a formal disguised export for the purpose of acquiring the input tax revenue through the method of converting the tax-free gold bullion into the tax-free gold bullion by abusing the zero rate system and the input tax deduction which are recognized for exporters rather than normal goods export, but it is insufficient to recognize that the Plaintiff’s taking the gold bullion of this case out to a foreign country only for the purpose of refunding the value-added tax by abusing the zero rate system and the input tax deduction without the intent to export the goods normally. Thus, the Defendant’s assertion that the Plaintiff’s taking the gold bullion of this case out to a foreign country is not justifiable without any need to further examine it.

(2) As to the additional tax due to the failure to pay corporate tax

Meanwhile, according to Articles 76(5) and 116(2)2 of the Corporate Tax Act (amended by Act No. 8141 of Dec. 30, 2006), the chief of the district tax office having jurisdiction over the place of tax payment provides that where a corporation supplies goods from an entrepreneur in connection with its business and fails to receive a tax invoice under Article 16 of the Value-Added Tax Act, the amount calculated by adding an amount equivalent to 2/100 of the unpaid amount to the corporate tax shall be the aggregate of the corporate tax, and Article 16(1) of the former Value-Added Tax Act (amended by Act No. 8142 of Dec. 30, 206; hereinafter the same) provides that where an entrepreneur registered as the taxpayer supplies goods, the tax invoice stating the registration number and name or name of the supplier, the registration number of the recipient, the supply price, value, value, etc. shall be issued to the person who receives the supply.

However, as seen earlier, insofar as it cannot be readily concluded that the instant transaction is not a supply of goods subject to value-added tax, it is difficult to conclude that the instant purchase tax invoice received accordingly is not a legitimate tax invoice under Article 16 of the former Value-Added Tax Act.

E. Sub-committee

Therefore, the disposition of this case, which did not deduct input tax amount on the premise that the tax invoice of this case falls under the "unlawful tax invoice prepared differently from the actual one," or which applied the provision of penalty tax not received as evidence, is unlawful.

3. Conclusion

Therefore, the plaintiff's claim of this case shall be accepted on the grounds of its reasoning, and the judgment of the court of first instance which has different conclusions is unfair, so it shall be revoked and it shall be decided as per Disposition with the cancellation of each disposition of this case.