Supreme Court Decision 2007Du4193 ( October 12, 2009)

No supply of goods shall be excluded from the application of zero tax rate solely on the ground of defects in issuing a purchase certificate.

Unless there are special circumstances, such as that the supplier of the goods was aware of the defect in the issuance of a purchase certificate, the supply of the goods by the purchase certificate may not be immediately excluded from zero tax rate under the Value-Added Tax Act on the sole ground of the defect in the process of such issuance, and such special circumstances must be demonstrated by the defendant.

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

1. The defendant's appeal is dismissed.

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

1. Purport of claim

On June 1, 2002, the Defendant revoked each disposition of imposition of value-added tax of KRW 2,613,656,780 for the Plaintiff in 2001, value-added tax of KRW 1,366,113,850 for the first time in 2002, and the disposition of refusal of application for refund of KRW 4,268,739,620 for the first time in 202 for the first time in 202.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

1. Quotation of judgment of the first instance;

The court's reasoning for this case is the same as the judgment of the court of first instance, except for addition of the following judgments.

2. The addition;

A. The defendant's argument

The Plaintiff was aware of the actual condition of domestic gold bullion transactions, which are currently supplied at the price applied with zero-rate tax rate through false purchase certificates, through Mlori Futures Co., Ltd., which had been established and operated in the same place of business as the Plaintiff, prior to the instant transaction. In the case of partial purchase certificates concerning the instant transaction, the Plaintiff’s application for refund of customs duties on the ground of excessive payment or export four occasions in February 2002, the Plaintiff did not issue a modified installment certificate reflecting the refund of customs duties on the basis of excessive payment or export to the relevant purchaser. The Plaintiff’s issuance of a divisional certificate to the purchaser and refund of customs duties on the basis of the exporter’s status should be deemed to have been aware of the fact that the purchaser was aware of the fact that the Plaintiff had been aware of the fact that the Plaintiff had been supplied with gold bullion for domestic distribution, not export gold bullion, and thus, the Plaintiff had to be aware of the fact that the purchaser had been aware of the fact that it had been supplied with gold bullion in advance.

B. Determination

Article 11(1)1 of the Value-Added Tax Act and Article 24(2)1 of the former Enforcement Decree of the Value-Added Tax Act (amended by the Presidential Decree No. 17827, Dec. 30, 2002) stipulate that the zero-rate tax shall apply to the supply of exported goods, and that the zero-rate tax shall apply to the supply of goods supplied by an entrepreneur through a local letter of credit or a purchase confirmation as prescribed by the Ordinance of the Ministry of Finance

On the other hand, it cannot be deemed that the purchase confirmation issued by the head of a foreign exchange bank is null and void a year solely on the ground that the high-class existing market is actually exported or not affected the application of zero-rate tax rate to the supplier, and that there are defects such as those issued based on the export contract or the effective date or those issued after the effective date, etc. in the process of issuing the purchase confirmation, and barring special circumstances, such as where the supplier of the goods knows that there was a defect in the issuance of the purchase confirmation, the supply of goods based on the above purchase confirmation cannot be immediately excluded from zero-rate tax rate under the Value-Added Tax Act, and such special circumstances must be proved by the defendant who bears the burden of proving the legality of the tax imposition disposition and the existence of the taxation requirements (see, e.g., Supreme Court Decisions 2005Du13735, Jan. 26, 2006; 2002Du1000, Aug. 30, 2004).

In light of the above legal principles, the Plaintiff’s defect in the procedure of issuing customs certificates was found to have been based on a false export contract. However, as stated in the judgment of the first instance court, there are many cases where ○○ purchase certificates are issued prior to the supply of goods, and the basis documents and number of the stated matters, e.g., e., e., e., e., e., e., e., e., e., e., e., e., e., e., e. 100 if the Plaintiff’s initial sale of the instant gold bullion was omitted, e.g., 100, 200, and 100, 2000, 300,0000,000,000,0000,0000,0000,000,0000,000,000,0000,000.

3. Conclusion

Therefore, the judgment of the first instance court is legitimate, and the defendant's appeal is dismissed. It is so decided as per Disposition.