2. All of the plaintiffs' claims corresponding to the above revocations are dismissed.

3. The costs of lawsuit are assessed against all of the plaintiffs in the first and second instances.

A. The primary purport of the claim is to revoke each of the permissions for payment in kind made by the Defendants against the Plaintiffs on January 7, 2004.

B. Preliminary claim: The Defendants’ refusal to refund payment in kind to the Plaintiffs on each date listed in the separate sheet No. 9 shall be revoked.

2. Purport of appeal

The same shall apply to the order.

At the first instance court, the Plaintiffs sought revocation of each of the Defendants’ respective permissions for payment in kind as of January 7, 2004, and revocation of each of the Defendants’ respective payment in kind as of each of the date stated in the separate list No.9 of the Defendants’ respective conjunctive claims. The first instance court dismissed all of the Plaintiffs’ primary claims on the ground that they were brought in the instant lawsuit without due process for the first instance court, and rendered a judgment of winning part of the Plaintiffs’ respective acceptances of each of the conjunctive claims.

As to this, the plaintiffs did not appeal and only the defendants appealed against the defendants among the conjunctive claims, and the scope of the judgment of the court of the trial shall be limited to the part of the claim for revocation of the refusal of payment in kind in the preliminary claimant.

2. Details of the disposition;

The following facts are not disputed between the parties, or may be acknowledged by comprehensively taking into account the whole purport of arguments in each of the statements in Gap evidence of subparagraphs 1 through 4, 7-1 through 6, Eul evidence of subparagraph 1-4, 2-1 through 5, 3-1 through 6, 4-1, 2, 3, 5-1 through 4, 6-1, 7-1, 2, and 3.

A. On August 30, 2002, Nonparty 1, the shareholder of ○○○○ Co., Ltd. (hereinafter “○○○○”). On the basis of Nonparty 2, etc., a non-related shareholder, purchased KRW 50,000 per share in KRW 14,00,000, and purchased KRW 2 billion per share in the name of the Plaintiff 1’s name, and thereafter, purchased KRW 14,000, KRW 6,200 under the name of the Plaintiff 2, KRW 6,200, KRW 4,00 under the name of the Plaintiff 5, KRW 5,850, KRW 3,950 under the name of Plaintiff 4, and KRW 6,00 under the name of Plaintiff 6, Plaintiff 3, respectively.

B. Accordingly, the Defendants deemed that Nonparty 1 donated each of the above shares to the Plaintiffs, and assessed the value per share of each of the above shares as of the date of title trust as KRW 362,063 in accordance with the method of assessment in accordance with Article 54 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17828, Dec. 30, 2002). Based on this, on December 11, 2003, the Defendants imposed on the Plaintiffs each of the aggregate of KRW 6,51,865,050 (hereinafter “the amount of original gift tax”) of the same amount as indicated in attached Table 3 as of December 11, 2003.

C. Accordingly, on December 20, 2003, the Plaintiffs filed an application for payment of the initial amount of gift tax with the stocks donated to the Defendants on December 20, 2003. The Defendants, upon granting permission for payment in kind on January 7, 2004, received 3,575,630 won per share because 00% of the shares of 00 were reduced for 90% since the shares of 00 was paid in kind. Accordingly, the Defendants received 3,575,630 won per share [3,063 won per share - (5,00 won per share ? 0.9 shares of 1- old shares of 0.9 shares of 1- old shares of 0.9 shares of 0 per share] ¡À(hereinafter referred to as “share shares of 0.9 payment in kind”).

D. Meanwhile, on February 2, 2004, the plaintiffs filed a request for a trial with the National Tax Tribunal to the effect that the assessment amount per share of ○○○ Stocks shall not be 362,063 won, but shall be 50,000 won at the market price. On July 6, 2004, the National Tax Tribunal accepted the plaintiffs’ claim on July 6, 2004, and decided to the effect that the assessment amount per share of ○○ shares shall be 50,000 won, and the defendants corrected the amount of the initial amount of the gift tax by reducing the amount of the gift tax to 469,391,50 won, as shown in the [Attachment] paragraph (5) of the attached Table on July 19, 2004.

E. On July 22, 2004, the Plaintiffs filed an application for refund of the property paid in kind with the content of requesting the Defendants to refund all of the outstanding shares paid in kind, which were revoked and paid in cash, since the original gift tax imposition disposition was unlawful and unfair. However, the Defendants assessed the amount of receipt per share by calculating the amount of receipt per share of the shares paid in kind in accordance with the above decision of the National Tax Tribunal based on the amount of KRW 50,000 per share of the shares paid in kind, as seen earlier, and assessed the amount of receipt per share of the shares paid in kind as KRW 45,00,00 on each day specified in the attached Table 9. On each day specified in the attached Table 9, only 801 shares listed in the attached Table 8 among the shares paid in kind were refunded, and the remaining 1,034 shares were appropriated for the amount of gift tax amount corrected in the attached Table 5 (hereinafter “instant disposition”).

F. The plaintiffs appealed and filed an appeal with the National Tax Tribunal on November 24, 2004 on October 18, 2004. However, the National Tax Tribunal rendered a decision to dismiss each of the plaintiffs' claims on July 6, 2005.

3. Whether the instant disposition is lawful

A. The parties' assertion

The defendants asserted that the disposition of this case is lawful in accordance with the relevant statutes and the grounds for the above disposition, and the plaintiffs asserted that the disposition of this case is unlawful for the following reasons.

(1) The ratio of the amount of gift tax reduced according to the decision of the National Tax Tribunal on the reduction of gift tax is about 93%, and the shares received after the payment in kind by the Plaintiffs are merely about 43% among 1,835 shares of outstanding shares in kind, and thus, it is nothing more than 83% of the shares paid in kind and thus infringing the Plaintiffs’ property and management rights and interests. In addition, the Plaintiffs did not file an application for the withdrawal of the initial payment in kind on July 22, 2004 because there was no apparent defect in assessing the value of shares at the time of the initial imposition of gift tax in kind. As such, as long as the application for the payment in kind is extinguished, the Defendants should be able to refund all 1,835 shares paid in kind and pay the revised gift tax in cash.

(2) In light of the purport of Article 51-2 of the Framework Act on National Taxes that provides that in the case of a payment in kind, in principle, a refund shall be made only in exceptional cases where the property paid is returned and it is impossible to return the property paid in kind. In addition, there is no reason to believe that it is entirely impossible to refund all shares paid in kind where a disposition imposing gift tax is corrected after the payment in kind of shares is made in accordance with the purport of Article 51-2 of the Framework Act on National Taxes, and to order a payment in cash for the reduced or corrected gift tax. It accords with the principle of tax payment, the principle

(3) The original amount of gift tax paid in kind 1,835 shares for KRW 6,51,865,050, and thereafter the amount of tax paid in kind was adjusted to KRW 469,39,391,50. However, even under the provisions of Article 22-2(2) of the Framework Act on National Taxes, it does not affect the amount of tax. Accordingly, according to the purport of this, the Defendants cannot make the amount of tax paid in kind 469,391,50 won without nullifying or cancelling the entire amount of the disposition of permission for payment in kind, 45,000 won for only the amount of tax paid in kind, 455,00 won, which shall not be considered as the basis for refund. In addition, the amount of tax paid in kind shall be 3,575,630 won per share, which is the original amount of tax paid in kind. As a result, 1,698 shares among the shares paid in kind, which must be corrected to the Plaintiffs.

(b) Related statutes;

Attached Table 1 is as stated in the relevant Acts and subordinate statutes.

C. Determination

(1) Whether the property paid in kind is fully refunded due to the withdrawal of the application for payment in kind

Article 51-2 of the Framework Act on National Taxes provides that the entire disposition of permission for payment in kind shall not be deemed null and void, even if the amount of original gift tax is reduced or corrected by the decision of the National Tax Tribunal. In light of the fact that Article 51-2 of the Framework Act on National Taxes provides that where a taxpayer refunds the whole or part of the imposition in kind after the taxpayer paid the inheritance, gift tax, income tax or corporate tax, the whole disposition of permission for payment in kind shall be refunded to the property paid in kind. There is no basis to acknowledge that the taxpayer withdraws the application for payment in kind after the payment in kind, seeks a refund of the entire property paid in kind on the premise that the taxpayer is entitled to request a change in the method of payment in kind, and there is no right to claim a change in the method of

(2) Whether a duty to fully refund property paid in kind should be recognized based on the provisions of Article 51-2 of the Framework Act on National Taxes, the principle of monetary payment, the principle of tax equity, etc.

According to Article 51-2 (1) of the Framework Act on National Taxes, where property paid in kind is already sold or being used for other purpose, etc., it shall be refunded as the property paid in kind in case where an inheritance or gift tax is paid in kind under Article 73 of the Inheritance Tax and Gift Tax Act, and then a refund is made by the decision of correction to cancel or reduce the imposition in whole or in part: Provided, That in cases prescribed by the Presidential Decree, such as where the property paid in kind is already used for other purpose, etc., the provisions of Article 51 of the same Act shall apply. This is interpreted as the purport of applying Article 51 of the same Act.

As can be seen, barring any special circumstance under Article 51-2(1) of the Framework Act on National Taxes, the pertinent property shall be refunded, unless there are special circumstances, and there is no provision that the tax authority shall return all stocks paid in kind and substitute them for payment of money on the ground that the initial disposition of payment in kind was corrected after the disposition of payment in kind was taken, and as seen thereafter, a significant portion of the stocks paid in kind should be appropriated for the payment in kind for the amount of paid in kind. As seen earlier, even if the Defendant refunded the entire property paid in kind and did not change the method of payment in cash, it cannot be deemed that the mere fact is contrary to the principle of tax payment in accordance with the Framework Act on National Taxes, the principle of tax equity, the principle of good faith, or the principle of tax

(iii)the calculation method of the reasonable value of receipt due to the rectification of amount;

(A) According to Article 75(1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18989, Aug. 5, 2005; hereinafter “Enforcement Decree of the Inheritance Tax and Gift Tax Act”), the value of real estate and securities to be appropriated for payment in kind shall be the value of inherited property or donated property except for the following cases. Among subparagraph 1 of the same Article, subparagraph 1 of the same Article provides that “in the case of stocks, the value calculated by the formula prescribed by the Ordinance of the Ministry of Finance and Economy shall be the value of new stocks issued by the corporation or the stocks are reduced during the period from the date of commencing the inheritance or the date of donation until the date of receipt of the notice of permission for payment in kind.” Article 75(1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that “The value of securities due to the insolvency of an heir, such as disposal of principal property of the corporation that issued the securities within the period from the base date of appraisal to the date of issuance of the notice of permission for payment in kind, shall be interpreted as follows:

(B) Furthermore, according to Article 20-2(1) of the Enforcement Rule of the Inheritance Tax and Gift Tax Act, where shares are issued or reduced in relation to the “the “the “value determined” under the main sentence of Article 75(1) of the Enforcement Decree of the same Act, the amount to be received shall be calculated by applying the “value determined” per old shares. Article 75(1) of the Enforcement Decree of the same Act provides that the “value of inherited or donated property” or the “value of donated property” per old shares under Article 20-2(1) of the Enforcement Rule of the same Act shall be deemed to mean the reasonable value or value of inherited or donated property. Thus, in this case, the “taxable value per old shares” shall be deemed to be KRW 50,00,00, which is the basis for calculating the corrected tax amount, and it shall not be deemed to be KRW 362,063, which is found to have been mistakenly assessed, and thus, it shall not be deemed that there is any apparent error in calculating the amount of gift tax to be collected by 360, even if there is no reasonable reason to deem that the Plaintiffs’ amount of gift tax payment.

(C) According to Article 51-2(1) of the Framework Act on National Taxes and Article 43-2 of the Enforcement Decree of the same Act, in the event a refund is made by the decision of revocation or reduction of all or part of the disposition of payment in kind, the property to be refunded should be provided for the value of the property to be refunded in kind. The above provision does not provide for the subject or method of refund, and does not provide for the purport that the value of the property to be refunded should be calculated at the time when it is appropriated for the payment in kind. Furthermore, there is no room to interpret that the above provision does not include the purport that the amount of the property to be paid in kind should be calculated at the time of payment in kind, even if the calculation of the value

Generally, in cases where property paid in kind is refunded after the receipt of gift tax in kind, the scope of property to be refunded shall be calculated based on the “value of donated property appropriated for payment in kind” calculated at the time of granting permission for payment in kind, except in extenuating circumstances. However, as in this case, it is proved that the value of donated property, which was the basis for calculating the amount of tax after the initial disposition of permission for payment in kind pursuant to a disposition of gift tax in kind, was erroneous, and where the amount of tax is corrected based on the reasonable value

(D) The amount of KRW 455,00, which is calculated and applied as the amount of receipt appropriated for payment in kind at the time of the instant disposition, was different from the original amount of receipt. However, as the corrected amount of gift tax, which was calculated based on the amount of KRW 50,00 per share after the calculation of the original amount of receipt, is calculated based on the same amount, it cannot be deemed that it violates the principle of substantial taxation or infringes on the plaintiffs' property rights, and rather, it is to realize the tax justice.

(E) When comprehensively taking into account the above provisions of the statutes and all other circumstances, where the value of inherited or donated property on the basis of the value of the property paid in kind is increased or decreased by the determination of the tax authority after the date of receiving the payment in kind, it is natural to re-calculated the value of the property paid in kind with the value of inherited or donated property, which is the basis of the value of the property received in kind. Therefore, in such a case, the tax authority shall determine the value of the property received in kind, which should have been reasonably paid in kind due to the determination of the tax authority, and if the property already received in kind is excessive, it shall be further paid in kind. In such a case, it is not necessary to interpret that

(F) As long as it is found that the original value of the share, which is an element of calculation, has been erroneously assessed due to erroneous application of the taxable value per share, the meaning of the original value of the tax was lost after the correction of the tax amount, that is, the amount to be re-calculated with the legitimate value of the tax payment, i.e., the amount to be received at the time of the disposition of permission for payment in kind, i.e., the lawful value of the share at the time of the disposition of permission for payment in kind. The Defendants calculated the amount to be received at KRW 3,575,630 on the premise that the legitimate value of the share at the time of the disposition of permission for payment in kind is KRW 362,00 per share, not KRW 362,063 per share, and corrected the amount of tax on the premise that the legitimate value of the share is KRW 50,000 per share, which is a legitimate value of the share, and accordingly, calculated the amount to be received at KRW 45,005,00.

(4) Sub-determination

Therefore, the defendants calculated the number of shares to be appropriated for payment in kind on the basis of the above legitimate amount of payment in kind, and then refund only 801 shares (1,835 shares - 1,034 shares) in the attached Table 8 out of the shares paid in kind to the plaintiffs, and the disposition of this case refusing to refund the above shares 1034 shares is lawful. Thus, the plaintiffs' above assertion against this is without merit.

4. Conclusion

Therefore, the plaintiffs' preliminary claims against the defendants are without merit, and they shall be dismissed. Since the judgment of the court of first instance is partially unfair with different conclusions, the part against the defendants in the judgment of first instance shall be revoked and all of the claims against the defendants in the judgment of first instance shall be dismissed. It is so decided as per Disposition.

[Attachment of List]

Judges Kim Su-chul (Presiding Judge)