Case Number of the previous trial
Cho High Court Decision 2006No3467 (O4, 2007)
Title
The method of calculating whether or not the value-added tax is imposed on the lottery sales agency service and tax base;
Summary
Lottery ticket sales agency services shall be subject to value-added tax, and the difference of the value purchased from the foundation in calculating the tax base shall be calculated as the difference in the face value, but the retailer fees belonging to the retailer shall be excluded.
The decision
The contents of the decision shall be the same as attached.
Text
1. Of the imposition disposition of value-added tax against the plaintiff, the amount of KRW 1,42,035,490 for the first period of July 15, 2005, KRW 296,578,393 for the first period of 200, KRW 627,164,40 for the second period of 200, KRW 1,450,226, and KRW 560 for the second period of 200, KRW 627,40 for the third period of 1,481,670, KRW 207, KRW 70 for the third period of 207, KRW 207, KRW 370 for the second period of 207, KRW 207, KRW 3647, KRW 9750 for the second period of 207, KRW 97, KRW 207, KRW 3681,6381, KRW 297,2097,27810 for the year of 207.
2. The litigation costs shall be borne by the defendant.
Purport of claim
The same shall apply to the order.
Reasons
1. Circumstances of dispositions;
A. The plaintiff's business
The plaintiff was a corporation established by the investment of Dosan Foundation (hereinafter referred to as the "Seosan Foundation"), which is a foundation, and was commissioned from the non-party foundation to September 30, 1999 to sell the △△△△ Lottery (hereinafter referred to as the "the lottery of this case") on behalf of the plaintiff.
(b) Disposition imposing value-added tax on the plaintiff (hereinafter referred to as "disposition of this case") by the defendant
(1)Grounds for imposition: the Plaintiff’s vicarious sale of the instant lottery tickets from the first to the second period of 2000 to the second period of 2004 constitutes the lottery sale services that are subject to value-added tax.
(2) Tax base: Calculation (a total of 39,521,142,816 won) of the amount of lottery tickets (500 won) minus the price (i.e., 430 won lottery tickets, and 422.5 won lottery tickets) that the Plaintiff purchased from the non-party foundation; and (b) calculation (hereinafter referred to as "tax base of this case") of the amount of lottery tickets sales agency fees received from the non-party foundation during the above period.
(3) Notice of value-added tax amount by each date of each disposition (including additional tax, etc. for each return and incomplete payment)
(A) July 15, 2005: 1,442,035,490 won for the first term of 2000
(B) January 6, 2006: 1,450,226,560 won for the second term of 2000
(C) June 8, 2006
“O 1,481,670,210 Won 1,935,181,610 for the second term of 2001; “O 202 for the second term of 1,782,201,620 won for the second term of 202; “O 1,822,409,30 for the first term of 203,976,170 for the second term of 203,O 2003
o 144,374,380 won for the first period of 2004 1,037,750 won for the second period of 1,037,750
Facts without dispute over the basis of recognition, Gap evidence 1-1 through 10, Eul evidence 1-1 through 10, and the purport of the whole pleadings
2. Whether the instant disposition is lawful
A. The plaintiff's assertion
(1) The instant lottery sales is not value-added tax taxable.
(A) Since the non-party foundation purchased lottery tickets, which are tax-free goods under Article 12(1)8 of the Value-Added Tax Act, and run lottery sales business to the intermediate seller, the Defendant’s disposition of this case based on the premise that the Plaintiff provided lottery sales agency services to the non-party foundation is unlawful.
(B) Even if domestic lottery ticket sales services are provided, it is subject to tax-free goods. Therefore, lottery ticket sales services are also subject to tax-free goods in light of the purport of Article 12(1)8 of the Value-Added Tax Act.
(2) The computation of the tax base of this case was erroneous (excluding retailers fees and sales incentives).
(A) The Plaintiff purchased lottery tickets from the non-party foundation and sold them to the intermediate wholesaler, and the intermediate wholesaler sold lottery tickets to the retail seller, and the retail seller sold lottery tickets to the end consumer, so the retailer fee (retailer) belonging to the retailer in the instant tax base should be excluded.
However, the defendant calculated the total amount of the price difference between the face value of lottery tickets and the price of lottery tickets actually accepted by the plaintiff as service fees received from the non-party foundation.
(B) As the Plaintiff received sales incentives from the Nonparty Foundation for the distribution of lottery tickets and used them for the payment of promotional products, the Plaintiff actually distributed the amount of sales incentives to the sales agencies, such as intermediary stores and retail stores, and thus, the sales incentives received from the Nonparty Foundation shall be excluded from the tax base of the instant case.
(3) Additional taxes shall be excluded in return and payment in bad faith.
The Value-Added Tax Act provides as tax exemption for lottery sales, etc., and was newly established by Presidential Decree No. 17041 on December 29, 2000 and enforced on January 1, 2001 under Article 33(4)1 of the former Enforcement Decree of the Value-Added Tax Act, and thus, the Plaintiff was unaware that the lottery sales agency is subject to taxation. As such, there is justifiable reason for the Plaintiff’s failure to fulfill its duty to report and pay the value-added tax in this case.
Therefore, the penalty tax imposed in the instant disposition is illegal.
B. Relevant statutes
It shall be as shown in the attached Form.
(c) Fact of recognition;
(1) △△△ Lottery sales agency contract (hereinafter referred to as "the sales agency contract of this case")
The non-party foundation established pursuant to Article 19 of the Special Act on Innovation in Science and Technology concluded the following contracts with the Plaintiff regarding the sales business of the lottery tickets issued pursuant to Article 7-2 of the same Act and Article 13-2 of the Enforcement Decree of the same Act
(A) Scope of the Plaintiff’s agency business (Article 3)
O. Sales and direct sales to retailers (including Durlers: Merchants selling lottery tickets to retailers as prescribed by the Plaintiff) and retailers (persons selling lottery tickets directly to buyers).
O. Recruitment and management of retailers and retailers
(O) A corresponding prize not exceeding 10,000 won per lottery day.
O Establishment, operation, etc. of a computer network for the management of lottery ticket sales;
(B) Obligations and Responsibilities (Articles 4, 7, 19, and 22)
In the event that the plaintiff inflicts damage on the non-party foundation by intention or gross negligence in the course of performing the lottery sales business, he/she shall be liable for civil and criminal liability.
O The non-party foundation shall notify the plaintiff at the time of the determination of the lottery ticket issuance plan for the following year, and shall transport the lottery ticket allocated to the plaintiff in consideration of the plaintiff's sales snow, etc. during the following year to the agency designated by the plaintiff at its expense and responsibility.
O If necessary, the non-party foundation may guide and supervise the sale of the plaintiff's lottery tickets on a regular or occasional basis, and the plaintiff shall actively cooperate with it.
O The plaintiff is not allowed to sell lottery tickets other than lottery tickets issued by the non-party foundation without consultation with the non-party foundation.
(c) Designation of agents, sale and settlement of lottery tickets (Articles VIII, XI and XII)
O The plaintiff shall formulate a management plan for the designation of agents and retailers, transaction methods, etc. and obtain prior approval from the non-party foundation.
O Where it is difficult to sell all of the lottery tickets allocated to the plaintiff by the closing date, the plaintiff shall request the non-party foundation to return it, and the non-party foundation shall recover and discard the lottery tickets at its cost and responsibility.
(d) Settlement of supply value and sales proceeds of lottery tickets (Articles 13, 16, and 17);
O The non-party foundation shall supply the Plaintiff with 430 won per sheet, and 422.5 won per sheet.
O The plaintiff shall pay the balance remaining after deducting the prize money from the above acceptance price of lottery tickets within the payment deadline of the prize money to the non-party foundation.
In order to promote the plaintiff's lottery sales, the non-party foundation may pay separate sales incentives, sales promotions, etc. within budgetary limits, and the plaintiff may act as an agent or directly implement the sales promotion affairs, such as public relations and advertisements.
(2) Contracts for the supply of the instant lottery tickets and the structure of profits at each stage
(A) Terms of the agency supply contract
In order to distribute the instant lottery tickets, the Plaintiff agreed to pay a certain sales incentive upon entering into a contract for sales of KRW 370 to KRW 450, and KRW 430 to KRW 450, respectively, with △△△ distribution, △△△△△△△△△△△△△△△△△△△△△, which is an intermediate wholesaler (sales agency).
O The agreement between the Plaintiff and the above companies did not stipulate that most matters relating to sales, such as the volume adjustment of lottery tickets sales, designation of agents, sales area and sales method, supply value, publicity and advertisement, etc., should be decided upon upon consultation with or with the Plaintiff. The above companies agreed to pay the price to the Plaintiff by the 25th day of the following month after the receipt of lottery tickets in cash.
(b)a profit structure at each stage;
The plaintiff takes over 430 won of 500 won of tin and 422.5 won of rupture and sells intermediate distributors, retail stores, etc. (detailed sale conditions are determined by prior consultation, and Article 10(2) of the above Agreement). The final consumer price of lottery tickets is fixed at 500 won of the above face value and it is impossible to discount or increase sales according to market conditions.
O Stage of supply to the Plaintiff’s sales agency (Intermediate wholesale store chain)
The value of supply for and sales agencies, and the profit from sales agency services equivalent to the difference between the value of payment and the value of payment from the foundation.
· The revenue of sales incentives received from the non-party foundation
O Supply phase for retail stores (individual convenience stores, etc.) of sales agencies
The value of supply on retail and the sales profit of a wholesaler equivalent to the difference between the purchase price and the purchase price from the plaintiff;
· Revenue from sales incentives received from the Plaintiff
O The final supply stage for retail consumers
Retail sales profit equivalent to the difference of purchase price from sales agencies and the supply price to consumers;
· Sales incentives received from sales agencies
(3) Plaintiff’s sales agency interest
(A) On January 29, 2001, the Minister of Science and Technology notified the non-party foundation of the imposition of value tax in 2001, which was known by the Minister of Science and Technology, and around that time, found that the above sales agency service is subject to taxation.
Each entry of Gap evidence Nos. 2 through 6 (including each number), the purport of the whole pleadings
D. Determination
(1) The plaintiff's business form and tax exemption
(A) If the Plaintiff’s ownership of lottery tickets purchased from the non-party foundation, who is a lottery ticket issuer, supplies (sale) the instant lottery tickets under the Plaintiff’s independent calculation and responsibility, it constitutes the supply of exempted goods under Article 12(1)8 of the Value-Added Tax Act, and thus, is subject to value-added tax if it is determined as the substance of the transaction taking into account the commercial practice, specific evidence, circumstances at the time of the transaction, social norms, etc., regardless of the form, details of the record or trade name, etc., and provided sales agency services for receiving fees, etc., it constitutes value-added tax.
(B) In full view of the foregoing recognized private theory and the following circumstances revealed in the argument of this case, it is reasonable to view that the Plaintiff was engaged in sales agency business for the purpose of receiving fees, etc. rather than selling lottery tickets on its own account and responsibility independently from the non-party foundation (see Supreme Court Decision 2002Du10391, Jan. 29, 2004).
O The Plaintiff stipulates that most matters related to the sale, such as the adjustment of the volume of lottery tickets sales, designation of an agency, sales area and sales method, supply price, publicity and advertisement, shall be consulted with or even obtain approval from the non-party foundation.
The non-party foundation sells lottery tickets only through the plaintiff or other financial institutions without directly selling lottery tickets. While the non-party foundation delivered lottery tickets without immediately receiving the payment at the time of delivery for lottery tickets, it did not receive any collateral for securing the claim for lottery tickets even though it received the payment later, and there was no special agreement on securing the claim for lottery tickets.
C. Among the lottery tickets that the plaintiff acquired from the non-party foundation, the return of the non-sale lottery tickets is permitted in fact unlimited, and the non-sale lottery tickets have been recovered and discarded under the cost and responsibility of the Foundation.
O The Plaintiff has been delegated not only to sell lottery tickets but also to expand the sales organization and organizational management, promotional business, prize prohibition rate, and disposal of lottery tickets to be paid, and agreed to make decisions with the Foundation after consultation or obtaining approval with the Foundation on most matters related to sales, such as the volume adjustment of lottery tickets sales, designation of agencies, sales area and sales method, value of supply, promotion and advertisement.
O's acquisition of the price equivalent to the lottery sales by the plaintiff is not subject to the payment of the sales agency fee.
(C) The Plaintiff’s business constitutes a service subject to value-added tax because it is not a finance or insurance subject to tax exemption in accordance with Article 33(4) Subparag. 1 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 18207, Dec. 29, 2000; Presidential Decree No. 18207, Dec. 30, 2003) by providing lottery sales agency services. The Plaintiff’s assertion on this part is without merit.
(2) Whether the method of calculating the tax base of this case is appropriate
(A) The nature of the supply contract between the Plaintiff and the intermediate sales and the criteria for calculating the tax base
In full view of the above facts and the following circumstances revealed in the argument of this case, it is reasonable to view that the Plaintiff’s supply of lottery tickets to the non-party foundation on the intermediate wholesale market does not delegate part of the lottery ticket sales agency services that the Plaintiff should supply to the non-party foundation on the intermediate wholesale market, but directly sells lottery tickets to the non-party foundation on the intermediate wholesale market
On the other hand, the value-added tax base for the supply of the Plaintiff’s lottery ticket sales service is to be limited to the amount within the scope of 10% of the face value (500 won) acquired by the retail sales service provided by the Plaintiff as a lottery sales agent and all monetary values related to the payment from the Nonparty Foundation regardless of the names such as prices, charges, fees, and others, which are equivalent to the difference between the value of lottery tickets sales for intermediary wholesale, etc. and the value of the sales incentive or sales commission paid by the Nonparty Foundation.
O The Plaintiff acquired a 500-point lottery ticket from the foundation of the non-party, i.e., 430-point 42.5 won, i.e., 370- to 450 won, and i.e., 430 through 450-point 450 won, and i.e., 430-point 450-point 450 won. Unlike a contract between the Plaintiff and the non-party foundation, there was no provision that the contract between the Plaintiff and the above companies shall be determined by consultation with or with the Plaintiff on most matters related to the sale, such as the volume adjustment of lottery tickets, designation of agents, sales area and sales method, supply value, publicity and advertisement.
(O) After acquiring lottery tickets from the non-party foundation, the Plaintiff sold lottery tickets instead of paying the value of lottery tickets separately, and thereafter, agreed to undergo settlement with the foundation from the proceeds therefrom. On the other hand, the said company agreed to pay the amount to the Plaintiff in cash or in cash by the 25th day of the following month following the receipt of lottery tickets.
In the reality of O transaction, the retail prizes such as △△△△ Lottery are acquired as sales profit the amount of approximately 10% of the face value of the lottery.
C. Although the Plaintiff and the Nonparty Foundation do not specify the amount of fees when concluding the instant lottery sales agency contract, the Plaintiff would sell lottery tickets to intermediate wholesalers, etc. rather than directly selling them to consumers, and would collect only the fees equivalent to the difference between the sales price and the sales price from the Nonparty Foundation. In fact, the Plaintiff did not sell lottery tickets directly to consumers.
O) At the time of the instant sales agency contract, the Plaintiff sold lottery tickets without being separately paid by the Nonparty Foundation for the supply of lottery sales agency services, and then deposited only the amount equivalent to the value of the subscription from the Foundation out of the sales proceeds to the Foundation for sales agency services. As such, the Plaintiff did not specify the specific amount of remuneration due to the Plaintiff’s remuneration for lottery sales agency services. However, it appears that the Plaintiff planned the remainder of the sales proceeds excluding the amount of the sales proceeds (50 won) at least 10% of the face value (50 won) acquired by the retail store.
(B) Sub-decisions
O Based on the premise that the Plaintiff was supplied with lottery sales agency services from intermediate wholesalers, etc., the instant disposition imposing the value-added tax on the whole amount equivalent to the difference between the face value of lottery tickets and the Plaintiff’s value of lottery tickets in return for the supply of lottery sales agency services is unlawful since the taxation standard was erroneous.
O) Furthermore, when calculating the legitimate tax base again, the Plaintiff’s assertion that the amount equivalent to the difference between the value of lottery ticket sales for the intermediate wholesale, etc. and the value of the subscription from the Foundation and the sales incentive or sales commission actually received from the foundation of the non-party is reasonable. Therefore, the Plaintiff’s assertion that the retailer fee portion should be excluded from the tax base of this case is reasonable
The plaintiff asserts that sales incentives received from the non-party foundation to receive sales incentives for the distribution of lottery tickets and use them for the payment of promotional products, etc., and actually delivered the amount of sales incentives to the sales agencies, such as intermediary wholesalers and retailers, etc., so the sales incentives received from the non-party foundation should be excluded from the tax base of this case.
However, barring any special circumstance, the sales incentive that the Plaintiff received from the non-party foundation falls under the category of monetary value related to consideration regardless of the price, charge, commission, and any other name, as prescribed by Article 13(1)1 of the Value-Added Tax Act and Article 48(1) of the Enforcement Decree of the same Act. Furthermore, the Plaintiff, after receiving the sales incentive from the non-party foundation, determined and paid the sales incentive to the sales agency, etc. according to the specific direction of the Foundation, not to pay the sales incentive to the sales agency, etc., but under its own responsibility and judgment for the sales agency business of its lottery tickets, and thus, the repurchase incentive shall be deemed to have been acquired in return for the provision of the instant lottery ticket. Even if the Plaintiff used the sales incentive for the same purpose as it was alleged, it cannot be excluded from the tax base. This part of the Plaintiff’s assertion is without merit
(3) Whether the Plaintiff’s neglect of duty to report and pay value-added tax has a justifiable reason
(A) In order to facilitate the exercise of the right to impose taxes and the realization of tax claims, additional taxes are administrative sanctions imposed as prescribed by the Act in cases where a taxpayer violates a return and tax liability, etc. as prescribed by the Act without justifiable grounds. Such sanctions cannot be imposed in cases where there are justifiable grounds, such as where the taxpayer is unable to know his/her duty, or where there are extenuating circumstances to deem that it is unreasonable for him/her to expect the fulfillment of his/her duty, etc.
(B) As seen earlier, as long as the Plaintiff knew that the instant lottery sales agency service is exempt from the duty and did not perform its duty to report value-added tax, it was subject to the imposition of the first and second imposition of value-added tax on July 19, 200 by the Defendant on July 19, 200, and around that time, there was a problem as to whether to impose the said sales agency service, it cannot be viewed that there is a justifiable reason for not being attributable to the Plaintiff’s neglect of duty solely on the ground that the tax provision was newly established for the provision of lottery sales service. The Plaintiff’s above assertion
(4) Sub-determination
(a)reasonable tax amount;
The value-added tax of this case is to newly calculate a legitimate tax base, including sales incentives, with the exception of the retailer fees, and there is no data that can identify the detailed details of the tax standard of this case, which served as the basis of the disposition of this case (only on the basis of the document No. 6, it is insufficient to determine the tax base of this case and the legitimate tax base).
(B) Scope of revocation
Therefore, as long as a legitimate tax amount cannot be determined, the disposition of this case, which calculated the value-added tax amount including the retailer fee portion, in the tax base, is unlawful, and its revocation is bound to change the whole disposition, but only the part for which the plaintiff seeks revocation in the purport of
3.In conclusion
The plaintiff's claim of this case is justified and accepted.