Seoul High Court 2008Nu12520 ( October 08, 2008)

National High Court Decision 2007west0729 ( November 06, 2007)

A party to the disposition that deducts input tax amount by deeming it as a processing tax invoice (a malicious manufacturing business)

Since the representative of the requesting non-party corporation stated that the issuance details of the sales tax invoice is a processing transaction, and the financial data presented by the claimant is judged to be the transaction details for disguised transactions, the disposition of non-deduction of the input tax invoice is legitimate.

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

Article 17 of the Value-Added Tax Act

The appeal is dismissed.

The costs of appeal are assessed against the Plaintiff.

It is so decided as per Disposition by the assent of all participating Justices on the bench, in accordance with Article 8(2) of the Administrative Litigation Act, Article 429 of the Civil Procedure Act, and Article 5 of the Act on Special Cases concerning the Final Appeal, since the petition of appeal filed by the Plaintiff did not state the grounds for

[Seoul High Court Decision 2008Nu12520 ( October 08, 2008)]

1. The plaintiff's appeal is dismissed.

2. The costs of appeal shall be borne by the Plaintiff.

The judgment of the first instance shall be revoked.

The Defendant’s imposition of value-added tax against the Plaintiff for the first period of 2007.01.02, the first period of 2001, the second period of 10,462,730, the second period of 2001, the second period of 9,207,160, the second period of 2002, the first period of 10,483,680, the second period of 2002, the amount of 10,483,680, the first period of 203, the amount of 7,498,160, the amount of 14,638,240, the second period of 203, the amount of 14,638,240, the amount of 4,649,720 won shall be revoked.

1. Quotation of judgment of the first instance;

The court's explanation on this case is the same as the reasoning of the judgment of the court of first instance, and thus, citing this as it is in accordance with Article 8 (2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act

2. Conclusion

If so, the claim of the Republic of Korea is dismissed because it is without merit, and the judgment of the court of first instance is consistent with this conclusion, and the plaintiff's appeal is without merit, and it is so decided as per Disposition.

[Seoul Administrative Court 2007Guhap46210 ( April 15, 2008)]

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff.

The Defendant’s imposition of value-added tax against the Plaintiff on January 2, 2007, KRW 2,83,780 on January 2, 2001, KRW 10,462,730 on February 2, 2001, KRW 10,483,680 on February 2, 2002, KRW 10,483,680 on February 2, 2002, KRW 7,498,160 on January 2, 2003, KRW 14,638,240 on February 2, 2003, and KRW 4,649,720 on January 2, 204 shall be revoked.

1. Details of the disposition;

The following facts may be acknowledged by taking into account the following facts: Gap evidence 1-1, 2, 2-1 through 7, Gap evidence 5-1 through 70, and Eul evidence 1-1 through 7, and the whole purport of pleadings:

A. From around 199 to 00, the Plaintiff: (a) was a business operator who had been engaged in a long-term and liquid tax invoice manufacturing business with the trade name of ○○○○○○○○○○○○○○○○○; (b) during the first to 2001 taxable period of the value-added tax for the first period of the value-added tax from 2004, 00, 00 KRW 38,543,000 (hereinafter referred to as “○○○○○○”) total supply value of KRW 38,543,00 (3,12,919, 99, KRW 10,49, KRW 10,787, KRW 987, KRW 10, KRW 45, KRW 4784, KRW 97, KRW 999, KRW 200, KRW 360, KRW 496, KRW 2936, KRW 194, KRW 2945, KRW 297, KRW 29496, KRW 29405.

B. However, the Defendant, on the ground that the above ○○○○ was data and the instant tax invoice received by the Plaintiff from ○○○○○○, was an input tax invoice for processing without any real transaction, deducted input tax amount on the instant tax invoice, revised value-added tax, and notified the Plaintiff of the imposition of value-added tax from January 2, 2001 to January 2004, as stated in the purport of the claim on January 2, 2007 (hereinafter “each disposition of imposition of value-added tax”).

C. On March 9, 2007, the Plaintiff appealed to the National Tax Tribunal, but was dismissed on November 6, 2007.

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

Even if so-called ○○○○○ does not deal with the so-called transaction, all or part of the transaction is a real transaction. The Plaintiff’s actual financial transaction pursuant to the instant tax invoice exists, and the ○○○○, the actual representative, made a false statement that the instant tax invoice was based on a processed transaction in order to obtain the Defendant’s prior notice during the criminal trial process, but was prepared and submitted a written confirmation that the purchase was based on the real transaction in this case. Furthermore, in light of the circumstances that the Plaintiff’s value added ratio during the pertinent taxable period would amount to 59% in the event that the purchase content was not entirely deducted from ○○○○○, such as the instant tax disposition, the instant tax invoice received by the Plaintiff would be deemed to have been completely or partially prepared according to the actual transaction. However, each of the instant tax dispositions based on the premise that both the instant tax calculation transaction was a processed transaction is unlawful.

(b) Related statutes;

[Valued Tax]

Article 16 (Tax Invoice)

(1) Where an entrepreneur registered as a taxpayer supplies goods or services, a invoice stating the following matters (hereinafter referred to as “tax invoice”) shall be delivered to the supplier at the time specified in Article 9 (where Presidential Decree prescribes otherwise, referring to the time specified otherwise), as prescribed by Presidential Decree:

In such cases, where any cause prescribed by Presidential Decree, such as error or correction, occurs after a tax invoice is issued, the tax invoice may be revised and issued as prescribed by Presidential Decree.

1. Registration number, name or denomination of the businessman who provides;

2. Registration number of the person who receives;

3. Supply value and value-added tax;

4. Date of preparation.

5. Matters prescribed by Presidential Decree, other than those under subparagraphs 1 through 4.

Article 17 (Payable Tax Amount)

(1) The amount of value-added taxes payable by an entrepreneur (hereinafter referred to as the “paid tax amount”) shall be the amount computed by deducting the tax amount under the following subparagraphs (hereinafter referred to as the “purchase tax amount”) from the tax amount on the goods and services supplied by him (hereinafter referred to as the “sales tax amount”): Provided, That where an input tax amount exceeds the output tax amount, it shall be the refundable tax amount (hereinafter referred

1. The tax amount for the supply of goods or services used or to be used for his own business;

2. The tax amount for the import of goods used or to be used for his own business; and

(2) The following input tax amounts shall not be deducted from the output tax amount:

1-2. An input tax amount, in case where the tax invoice as provided in Article 16 (1) and (3) is not delivered, or the whole or part of the matters to be entered under Article 16 (1) 1 through 4 (hereinafter referred to as a “necessary entry item”) is not entered or entered differently from the fact on the delivered tax invoice: Provided, That the input tax amount in such case as prescribed by the Presidential Decree shall be excluded;

(c) Fact of recognition;

In full view of the above evidence as evidence Nos. 2, 3-1, 2, 4, 5, 6, and 7-1, 2, 8, 9, and 10, respectively, the following facts may be acknowledged:

1) While the ○○○○ is the representative of the business registration, the actual representative is ○○○○ (from July 2, 2002 to July 2, 2001) and Kim○ (from July 2, 2002 to the closure of business).

2) The director of the regional tax office of ○○○○○ has conducted a tax investigation on the ○○○○○○. As a result, the amount of KRW 127,081,081,127,397 won (2,762 companies and sales tax invoices 24,852 copies) out of the total sales amount of KRW 257,79,00,000 reported by the ○○○○○○○○ from the first to the first period of 1, 2004, was processed and sold, and the amount of KRW 62,732,92,178 was equal to the processed credit card sales slip (7,971,826,000 in total) was equal to KRW 47,971,826,00 in total sales amount issued by the ○○○○○○○ in order to disguise the normal sales, and the remaining processed sales amount was disposed of in the name of the ○○○○○○’s employees, or was refunded in cash.

3. On the other hand, on November 2, 2004, at the time of investigating data about ○○○○○○○○, Kim○ issued to the Plaintiff the instant tax invoice to the Plaintiff was based on the processed transaction without real transaction.

4 ○○ and Kim○-○ were subject to criminal punishment on the grounds that the processed sales tax invoice was issued while actually managing ○○○○○○○○○ and on the grounds that the processed sales tax invoice was issued (abvered: ○○○○○ District Court ○○○○○○○○○○○○, ○○○○○○○○○○○○○○, ○○○○○○○○○○○○○○, ○○○○○○○○○○○○○○○, ○○○○○○○○○○○○○○○○, and ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○, and all the instant tax invoices are included in the criminal facts of the final judgment of conviction on

5) The Plaintiff submitted the details of transactions transferred from the Plaintiff’s bank account to ○○○ bank account through telebanking at a time similar to the date of the preparation of the instant tax invoice.

D. Determination

1) The burden of proving that the tax invoice is false, as a matter of principle, is against the defendant who is the tax authority. Thus, the defendant must prove that the tax invoice is not accompanied by real transactions, based on direct evidence or all the circumstances. If the defendant proves considerable degree of proof as to this point to the extent reasonably acceptable, it is necessary to prove that the tax invoice is not false and that it is easy for the plaintiff who is the tax payer to present evidence and materials related to the defendant's disposition as well. In addition, in the administrative trial, even if it is not bound by the temporary recognition of the criminal trial, the fact that the tax invoice is already established as the reason for the criminal judgment, and thus, it cannot be acknowledged that it is inconsistent with the above, unless there are special circumstances where it is difficult to employ a criminal trial in light of other evidence submitted in the administrative trial (see Supreme Court Decision 97Da24276, Sep. 30, 1997; 92Du1964, Jan. 29, 1999).

2) However, the fact that ○○○ issued the instant tax invoice to the Plaintiff without a real transaction is already determined as a conviction of the relevant criminal case. On the other hand, it is difficult to believe that the final and conclusive judgment is a content contrary to the Plaintiff’s argument that the instant tax invoice was prepared pursuant to the actual transaction, and that it is contrary to the Plaintiff’s argument that it was prepared after the final and conclusive judgment, and thus, ○○○ was prepared after the final and conclusive judgment was insufficient. As seen in the facts of recognition, the companies that conducted the processing transaction with ○○○○○○ was either remitted the relevant amount or made a substitute payment through ○○○○○○’s employees to disguised the actual transaction. In particular, according to the evidence No. 10, it is recognized that ○○○○○ was also acting on behalf of the Plaintiff under the Plaintiff’s name, and further, there is no evidence to verify whether the cash that the Plaintiff was actually paid to ○○○○○○’s account, as alleged in the Plaintiff’s tax invoice No. 6-1 and the instant tax invoice No.2.

3. Ultimately, in light of the aforementioned circumstances, unlike the fact that the evidence submitted by the Plaintiff was found guilty in the final and conclusive criminal judgment, it is difficult to deem that there was an actual transaction, such as the contents indicated in the instant tax invoice, between the Plaintiff and ○○○○, and there is no evidence to acknowledge it. Accordingly, each of the instant dispositions on the same premise is lawful.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit, and it is so decided as per Disposition.