Seoul High Court 2011Nu34216 (Law No. 10, 2012)

early 209west2240 ( December 30, 2010)

Where the input tax amount of gold bullion exporter is deducted under the good faith principle, five years of exclusion period shall be applied.

Even if there is a bombomb in the process of a series of gold bullion transactions, it was actually distributed and exported gold bullion from the importer of gold bullion to the plaintiff who is the exporter, as well as it was properly issued for each transaction phase, and so, the Plaintiff’s act of receiving a refund or deduction of value-added tax under the tax invoice of this case does not constitute a case where national tax is deducted or refunded due to fraud or other unlawful act.

2012du 19977 Disposition of revocation of Disposition of Imposition of Value-Added Tax

-Appellee

XX Stock Company

-Appellant

The director of the tax office.

Seoul High Court Decision 2011Nu34216 Decided August 10, 2012

January 16, 2013

All appeals are dismissed.

The costs of appeal are assessed against each appellant.

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

After recognizing the facts as indicated in its reasoning based on the adopted evidence, the lower court determined that the Plaintiff’s assertion of refund and deduction of the input tax amount as to the instant tax invoice violates the principle of trust and good faith, on the grounds that, in light of the form of the instant gold bullion transaction, transaction price, relationship between the parties to the transaction, etc., the Plaintiff could have known, or could have known, the malicious business operator engaged in illegal transactions for the purpose of evading value-added tax at the time of purchase of gold bullion pursuant to

In light of the relevant legal principles and records, the judgment of the court below is just, and there is no error in the misapprehension of legal principles as to the principle of good faith.

2. As to the Defendant’s ground of appeal

Article 26-2 (1) of the former Framework Act on National Taxes (amended by Act No. 10405, Dec. 27, 2010; hereinafter the same) provides that "ten years from the date on which a national tax may be imposed, where a taxpayer evades a national tax, obtains a refund or deduction by fraud or other unlawful means," subparagraph 1 provides that "if a taxpayer fails to file a tax base return by the statutory due date of return, for seven years from the date on which a national tax may be imposed," and subparagraph 2 of Article 26-2 (1) provides that "if a taxpayer does not fall under subparagraphs 1 and 2, for five years from the date on which a national tax may be imposed."

The lower court rejected all the Defendant’s assertion that the Plaintiff’s act of receiving value-added tax on the instant tax invoice does not constitute a case where the amount of national tax is deducted or refunded through fraud or other unlawful act, and Article 26-2(1)1 of the former Framework Act on National Taxes cannot be applied to the case where the Plaintiff reported the tax base to receive the refund or deduction of value-added tax within the tax base return deadline under the Value-Added Tax Act, and the application of Article 26-2(1)3 of the same Act cannot be deemed as violating the principle of good faith, on the ground that the Plaintiff’s act of receiving the refund or deduction of value-added tax on the instant tax invoice was unlawful, since it was not a case where it was actually distributed or exported gold bullion from the importer of the instant gold bullion to the Plaintiff, who is the exporter.

In light of the above provisions and relevant legal principles and records, such determination by the court below is just and acceptable, and there is no error in the misapprehension of legal principles as to the exclusion period of the imposition of national taxes.

3. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal are assessed against each appellant. It is so decided as per Disposition by the assent of all participating Justices on the bench.