Whether the sale was omitted

The fact that the amount deposited in the account of the financial institution of the taxpayer constitutes sales or revenue can be proved by either disclosing or revealing indirect facts that can be inferred in light of the empirical rule in the specific litigation process.

Article 26 of the Value-Added Tax Act on Supply of Goods or Services

2017 disposition of revocation of imposition of value-added tax, etc.

Plaintiff, Appellants

AA

a) the Director of the Tax Office

June 22, 2018

July 27, 2018

1. All of the plaintiff's claims are dismissed.

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

Cheong-gu Office

Each disposition taken by the Defendant on March 1, 2017 against the Plaintiff on the imposition of the value-added tax of the first quarter of 2014, the second quarter of 2014, the value-added taxx (including the penalty tax) and the global income taxx (including the penalty tax) for the year 2014, shall be revoked.

1. Details of the disposition;

A. The Plaintiff is an individual entrepreneur operating from 00 to bb pharmacy in Songpa-gu Seoul, Songpa-gu, and is concurrently running a taxable business and a tax-free business under the Value-Added Tax Act.

B. On March 1, 2017, the Defendant: (a) deemed that x members deposited in the Plaintiff’s business account (hereinafter “the instant money”) were omitted from the cash sales subject to value-added tax; (b) deemed that x members, such as welfare expenses, vehicle maintenance expenses, and personnel expenses, were excessively appropriated as necessary expenses; and (c) imposed the Plaintiff on March 1, 2017, value-added taxx (including additional taxes) for the first period of 2014, value-added taxx (including additional taxes) for the second period of 2014, and global income taxx (including additional taxes) for the second year of 2014.

C. On April 18, 2017, the Plaintiff filed an appeal against it. On July 26, 2017, the Tax Tribunal rendered a decision that the Plaintiff included the x won for personnel expenses paid by the Plaintiff to BB in the necessary expenses, thereby correcting the Plaintiff’s global income tax base and tax amount for the year 2014, and dismissing the remainder of the appeal. Accordingly, on August 16, 2017, the Defendant adjusted the Plaintiff’s global income tax for the year 2014 to the x members by reducing the Plaintiff’s global income tax, value-added tax, and additional tax imposition (hereinafter “instant disposition”).

Facts without dispute over the basis of recognition, Gap evidence 1, 6, Eul evidence 1 to 5, the purport of the whole pleadings

2. Related statutes;

It is as shown in the attached Form.

3. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

The Plaintiff borrowed cash from her husbandCC from time to time to time and used it as operating funds, and the instant money is the money that the Plaintiff borrowed from CC as above. Accordingly, the Defendant’s disposition that deemed the instant money as the amount of omission in sales subject to value-added tax imposed by bBC is unlawful.

B. Determination

1) Since the tax authority bears the burden of proving the fact of taxation requirement in a lawsuit seeking revocation of a tax imposition disposition, the taxpayer’s account at a financial institution constitutes sales or revenue, and the taxpayer’s taxation requirement that the amount was omitted from such return is in principle proved by the tax authority. However, the taxpayer’s account at a financial institution’s financial institution’s account can also be proved by either disclosing the fact that it can be presumed in light of the empirical rule or indicating indirect facts that can be acknowledged in light of the taxpayer’s specific litigation process. Even in cases where the taxpayer’s account at a financial institution’s financial institution’s principal deposit and management account for sales or revenue can be presumed to constitute sales or revenue, individual payment or specific type of deposit can not be readily concluded if there are special circumstances that can be acknowledged as a transaction or personal transaction irrelevant to sales or revenue already reported or received in light of the date, amount, transaction counterpart, and circumstances (see, e.g., Supreme Court Decision 2012Du776, Jun. 23, 2015).

2) In light of the following facts or circumstances, it is reasonable to deem that the instant money deposited into the Plaintiff’s business account constituted an omission of sales subject to value-added tax imposed by BB Contracting State, and the evidence submitted by the Plaintiff alone is insufficient to reverse it, by taking into account the following facts or circumstances, which are acknowledged by the parties to the dispute or by comprehensively taking account of the overall purport of the pleadings as to the respective statements in subparagraphs 4,

① The account in which the instant money was deposited is the business account in which the Plaintiff deposited the cash sales of BB pharmacy and disbursed small amount of goods and expenses. The two-day substitutions with the two-thirds short each month from the said account were continuously deposited one time at the intervals of 11-15 days, and there was no other source of income except the business income from BB pharmacy.

② The Plaintiff asserts to the effect that her husband, a husband’s assets holding several billion won, kept cash in the depository and lent it to the Plaintiff, but the Plaintiff’s assertion that the Plaintiff was keeping a large amount of cash close to x won in the depository is difficult to believe. Furthermore, according to the details of the global income tax return for the year 2013 and 2014 ofCC’s global income tax, the income reverted to the year 2013 is merely x (interest incomex, dividend incomex, rental incomex), and the income reverted to the year 2014 is merely x (interest incomex, dividend incomex, lease incomexx) and merely xx (interest incomex, lease incomexxxx). Therefore, it does not appear that CC had financial capacity to lend the instant amount to x in cash.

③CC has been working in BB pharmacy, which is the Plaintiff’s workplace, and considering the characteristics of marital relationship, the Plaintiff andCC could have made the appearance that the Plaintiff borrowed the instant money fromCC at any time. In addition, the instant money was continuously deposited in the Plaintiff’s business account since the beginning of 2014, and in light of the relationship between the parties, the time of deposit, the period of deposit, etc., the Plaintiff’s loan certificate (Evidence A5) dated January 15, 2015, prepared with the purport that the x won was borrowed fromCC at the annual interest rate of 0.1%, is difficult to believe.

④ Under Article 26 subparag. 5 of the Value-Added Tax Act and Article 35 subparag. 4 of the Enforcement Decree of the same Act, the term “preparation of medicines provided by a pharmacist under the Pharmaceutical Affairs Act” is exempted from value-added tax. In addition, considering the nature of the preparation of medicines that can receive medical care benefits, etc. from the National Health Insurance Corporation, the Plaintiff did not deem that the Plaintiff omitted sales subject to value-added tax. In addition, in light of the monthly details of preparation of medicines managed by the Plaintiff by electronic books, etc., the Plaintiff seems to normally report sales subject to value-added tax exemption. Therefore, the Defendant’s instant disposition that deemed the instant

⑤ The Plaintiff asserts to the effect that the instant money would be excessively high in the ratio of purchase amount compared to the sales amount subject to value-added tax when considering the amount of omission of sales subject to value-added tax, but this is related to the recognition of necessary expenses corresponding to omission of sales, and the Plaintiff bears the burden of proof as to such necessary expenses. Therefore, just because it is alleged by the Plaintiff, it cannot be readily concluded that the instant money is erroneous in deeming it to

3) Therefore, the Plaintiff’s assertion seeking revocation of the instant disposition is without merit on the premise that the instant money constitutes a loan borrowed from the Plaintiff’s spouse.

4. Conclusion

Therefore, all of the plaintiff's claims are dismissed. It is so decided as per Disposition.