[1] Even if a taxpayer who filed a tax base return within the statutory due date of return commits a fraudulent or other unlawful act, the exclusion period for imposition of national taxes (=5 years) where the taxpayer evades, or fails to obtain a refund or deduction of, the national taxes

[2] The scope of determination as to whether a national tax was evaded, unlawfully refunded, or deducted in the form of national tax declared by the taxpayer, and where the entrepreneur filed a return on the tax base of value-added tax or the amount of tax refundable based on the processed purchase tax invoice along with the processed sales tax invoice, the part concerning whether there was a tax evasion, unlawful refund, or deduction of value-added tax

[1] Even if a taxpayer who has filed a tax base return within the statutory due date of return in accordance with the principle of strict interpretation of Article 26-2(1)1 of the Framework Act on National Taxes, commits a fraudulent or other unlawful act, the exclusion period of imposition shall be five years in principle, if he/she evades national taxes, or does not receive refund or deduction. This does not change even if the taxpayer participated in the tax evasion, etc. of another taxpayer, even if he/she did not have any tax evasion amount, etc.

[2] In the national tax return method, whether there was a evasion, unjust refund, or deduction of the pertinent national tax shall be determined on the basis of the main tax amount excluding the additional tax. In a case where the entrepreneur who supplies goods or services files a return on the tax base of value-added tax or the amount of tax refund based on the processing tax invoice along with the processing tax invoice, the portion without the supply of goods or services subject to value-added tax on the processing tax invoice, which cannot be deemed to have constituted an abstract tax liability. Thus, even if the input tax amount subject to deduction is processed, it shall be deemed that there was a evasion, unjust refund, or deduction of value-added tax related to the processing transaction

[1] Article 26-2(1)1 and 3 of the Framework Act on National Taxes / [2] Article 26-2(1)1 and 3 of the Framework Act on National Taxes, Article 22(3) (see current Article 22(4)) and (4) (see current Article 22(5)) of the former Value-Added Tax Act (Amended by Act No. 7007, Dec. 30, 2003)

[2] Supreme Court Decision 96Do2398 delivered on December 10, 1996 (Gong1997Sang, 450) Supreme Court Decision 2001Do5459 delivered on July 26, 2002 (Gong2002Ha, 2136)

Dong Gwangju Joint Co., Ltd. (Attorneys Yoon Jong-sung et al., Counsel for the defendant-appellant)

head of Sung Dong Tax Office

Seoul High Court Decision 2007Nu4478 decided July 12, 2007

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

This part of the grounds of appeal is without merit, since it is erroneous for the selection of evidence or fact-finding, which belongs to the lower court's exclusive jurisdiction, and therefore cannot be deemed legitimate grounds

2. Regarding ground of appeal No. 2

Article 26-2(1) of the Framework Act on National Taxes provides that in principle, with respect to the exclusion period of imposition of national taxes other than inheritance tax and gift tax, five years may not be imposed after the date on which the relevant national tax may be imposed, in principle, after the lapse of 5 years from the date on which the relevant national tax may be assessed. Article 26-2(1) of the Framework Act on National Taxes provides that in cases where a taxpayer evades a national tax, or obtains a refund or deduction by fraudulent or other unlawful means, the relevant national tax may not be imposed after the lapse of 10 years from the date on which the relevant national tax may be assessed. In such cases, even if a taxpayer who filed a tax base return within the statutory due date of return in accordance with the provisions of this case, legislative purport, and strict interpretation of the provisions of this case, if the taxpayer evades a national tax, or fails to receive a refund or deduction due to such fraudulent or other unlawful act, the exclusion period of imposition shall be

In addition, whether there was a evasion, unjust refund, or wrongful deduction of the pertinent national tax in the national tax return method shall be determined on the basis of the principal tax other than the additional tax (see, e.g., Supreme Court Decision 2001Do5459, Jul. 26, 2002). In a case where a business operator supplying goods or services files a return on the tax base of value-added tax or the refund tax amount based on a processing tax invoice along with a processing tax invoice, the said processing tax invoice does not constitute an abstract tax liability for the supply value on the processing tax invoice. Thus, even if the input tax amount is processed, it shall be deemed that there was a evasion, unjust refund, or wrongful deduction of value-added tax related to the processing transaction only for the portion exceeding the output tax amount of the processing.

The court below, based on its adopted evidence, found that the Plaintiff received processed tax invoices from Hartju Co., Ltd. and Dong stores (hereinafter “BY”) during the value-added tax period from 197 to 198, and issued processed tax invoices of the same amount as the value of supply on the purchase tax invoice, and used only value-added tax return without delivering them to other transaction parties. Since there is no Plaintiff’s evaded tax amount on the grounds that the value of supply on the purchase tax invoice received from the liquor store and the value of supply on the processing tax invoice issued by the Plaintiff are identical to the value of supply on the sales tax invoice issued by the Plaintiff, the court below determined that the imposition period of additional tax on the sales invoice and the aggregate of the aggregate of the total tax invoices by seller cannot be seen as null and void, on the ground that the Plaintiff did not participate in the imposition period of additional tax on the grounds that the period of imposition of the total tax on the sales invoice and the aggregate of the total tax invoices by seller was 5 years under Article 26-2(1)3 of the Framework Act on National Taxes, and the Plaintiff did not participate in the tax evasion period.

In light of the above legal principles and records, the above judgment of the court below is just, and there is no error of law as to the exclusion period of imposition as otherwise alleged in the ground of appeal.

The Supreme Court Decision 2004Du9197 Decided November 10, 2005 delivered on the grounds of appeal is different from the case, and it is not appropriate to invoke the case in this case.

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Young-ran (Presiding Justice)