AA et al.

2. The plaintiffs' claims against the above revocation are all dismissed.

3. The costs of the lawsuit are assessed against the Plaintiffs.

The Defendant’s imposition of KRW 000 and penalty tax of KRW 000 on July 2, 2010 against Plaintiff AA, and the imposition of KRW 000 on July 5, 2010 on each of the imposition of KRW 000 on Plaintiff BB, CCC, and DD on each of the imposition of KRW 000 on each of the imposition of KRW 000 and the imposition of KRW 000 on each of the imposition of KRW 00 on Plaintiff EE, FF, GG, and H on July 7, 2010 and the imposition of KRW 00 on each of the imposition of KRW 00 and penalty tax exceeding KRW 00 on each of the imposition of KRW 00 on Plaintiff EE, FF, GG, and H are revoked.

2. Purport of appeal

A. The plaintiffs

The part of the judgment of the court of first instance that ruled against the Plaintiffs falling under the part that orders revocation below is revoked. The part that exceeds KRW 000 of the imposition of gift tax against Plaintiff AA on July 2, 2010, the part that exceeds KRW 000 of the imposition of gift tax against Plaintiff BB, CCC, and DD on July 5, 2010, and each of the imposition of KRW 000 of gift tax against Plaintiff EE, FF, GG, and H on July 7, 2010, shall be revoked.

B. Defendant

The part against the defendant in the judgment of the court of first instance shall be revoked, and the plaintiffs' claims corresponding to the revoked part shall be dismissed.

A. Plaintiff AA was an officer of the JJ (hereinafter referred to as the “JJ”) of the JJ, and on December 29, 2003, the Plaintiff AA donated 00,000 shares issued by the JJ (hereinafter referred to as “originally donated shares”) of the JJ, which were the unlisted company at the time, from the LL, who fell under the largest shareholder, etc. under Article 41-3(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter referred to as the “former Inheritance Tax and Gift Tax Act”).

Plaintiff AA accepted KRW 00,00 per share of KRW 00 per share of capital increase issued on October 5, 2004 by JJ on November 5, 2004, November 5, 2004, and December 22, 2005.

B. Plaintiff EE, FF, BB, CCC, GG, HH, and DD were the members of the JJ. However, on December 1, 2004, Plaintiff EE, FF, BB, CB, GG, HH, and DD acquired 0,000 shares issued by the JJ each at the time from MM, who was an unlisted company, as of December 1, 2004.

On December 22, 2005, Plaintiff EE, FF, BB, CCC, GG, HH, and DD accepted each of the KRW 0,000 per capita’s face value from the capital increase for new stocks held by JJ on December 22, 2005 (hereinafter “the total of the shares originally donated and the shares acquired by Plaintiff EE, FF, BB, CB, CCC, GG, HH, and DD for a fee, and the new shares acquired by the new shares acquired by the capital increase for new stocks at issue.”

C. On July 1, 2007, the JJ listed the KOSDAQ market on January 25, 2008, after which the par value per share was divided into 000 won, and on January 25, 2008, the number of the plaintiffs' shares was increased to 10 times due to the above par value division (However, in case of convenience, it shall be stated as the number of shares before the share division).

D. After conducting an integrated tax investigation with the JJ from August 10, 2009 to September 30, 2009, the ○○ Regional Tax Office imposed each gift tax on the Plaintiffs on the profits arising from the listing of the original acquired stocks, and did not impose gift tax on the profits arising from the listing of the instant issued stocks for consideration.

E. On January 25, 2010, the Board of Audit and Inspection issued a request to audit the business of ○○ Regional Tax Office to levy taxes on the Plaintiffs’ interest pursuant to the listing of the instant new stocks for consideration. The Defendant imposed KRW 000 and additional tax KRW 000 on the Plaintiff AA on July 2, 2010, including the profits accrued from listing the instant new stocks for consideration, and on the Plaintiff BBB, CCC, and DD on July 5, 2010, the amount of the gift tax increased to KRW 00,000, the additional tax on the gift tax increased to KRW 00,000, respectively, and on July 7, 2010, the amount of the additional tax on the gift tax was adjusted to KRW 00,000,000,000,000,000,000,000,000,000,00,000,00,00,00.

F. The Plaintiffs were dissatisfied with the instant disposition and filed a request for revocation with the Tax Tribunal, while the Tax Tribunal rendered a decision of dismissal on June 29, 201 with respect to the claims of Plaintiffs AA, EE, and HH, with respect to the claims of Plaintiffs FF, BB, CCC, and GG, on June 30, 2011, and on the claims of Plaintiff DD, on September 19, 201.

2. Scope of the trial of the political party after remand;

At the first instance court, the Plaintiffs sought revocation of the instant disposition, and the first instance court dismissed the Plaintiffs’ claim to revoke the revocation of each of the instant disposition, thereby dismissing their claim for revocation of each disposition of gift tax.

With respect to the judgment of the first instance court, the part of dismissing the claim for revocation of the imposition of each gift tax among the dispositions of this case in which the plaintiffs lost, the defendant appealed as to each part of the disposition of this case in which the plaintiff lost, and the court of the first instance dismissed both the plaintiffs' appeal and the defendant's appeal.

With respect to the judgment of the court before remanding the case, the defendant appealed against the part against the plaintiff AA among the plaintiffs. Accordingly, among the judgment of the court before remanding the case, the part on the claim for revocation of the imposition of each gift tax against the remaining plaintiffs in the disposition of the plaintiffs except the plaintiff AA among the judgment of the court before remanding the case was separated and finalized by the appeal period.

The Supreme Court accepted only the defendant's appeal, reversed the part against the defendant, and remanded this part to this court, and dismissed the appeal by the plaintiff AA. As such, the part of the plaintiff AA's claim for revocation of gift tax disposition among the disposition of this case was separated and finalized.

Therefore, the subject of the judgment after remand is limited to the plaintiffs' request for revocation of the imposition of additional tax among the dispositions of this case.

3. Whether the disposition of imposing additional tax is legitimate among the dispositions in this case

A. The plaintiffs' assertion

On August 10, 2009, the Defendant was investigating into the JJ and did not impose gift tax on the exchange marginal profits of the instant new stocks. On January 25, 2010, the taxation was made according to the opinion of the Board of Audit and Inspection after being pointed out by the Board of Audit and Inspection. Whether to impose gift tax on the exchange marginal profits of the stocks issued with new stocks constitutes a conflict of views under tax law among the tax authorities. Therefore, since the Plaintiffs cannot expect the return and payment of gift tax with the knowledge that the exchange marginal profits of the stocks issued with new stocks were subject to taxation from the beginning, it cannot be expected that the Plaintiffs would have known that they were subject to taxation, and thus, each of the dispositions of this case is unlawful.

Even if there is no justifiable reason, the defendant notified the wrong tax investigation result on August 10, 2009 that the shares issued with capital increase are not subject to taxation. Since the plaintiffs' failure to pay gift tax on the exchange marginal profits of the new shares issued with capital in this case was due to the defendant's notice of erroneous tax investigation result entirely, the part of the additional tax paid with capital increase from August 10, 2009 to the date of the disposition in this case is unlawful.

B. Relevant legal principles

Article 47-2 of the former Framework Act on National Taxes (amended by Act No. 911, Jan. 1, 2010; hereinafter the same) provides that "additional taxes shall not be imposed if a taxpayer fails to file a tax base return within the statutory due date of return; where a taxpayer files a tax base return under the tax-related Acts within the statutory due date of return; where a taxpayer has filed a tax base return under the tax-related Acts; and where the reported tax base falls short of the tax base to be reported under the tax-related Acts; and Article 47-5 of the former Framework Act provides that "Where a taxpayer fails to pay a national tax within the due date of return under the tax-related Acts; or where a taxpayer fails to pay a national tax within the due date of return; or where a taxpayer fails to fulfill his/her duty, an additional tax shall be imposed, respectively."

In order to facilitate the exercise of taxation rights and the realization of tax claims, additional tax under the tax law is an administrative sanction imposed by a taxpayer as prescribed by the Act in cases where the taxpayer violates the duty to report and pay taxes without justifiable grounds, and the taxpayer’s intent or negligence is not considered as a justifiable reason. Moreover, even if the taxpayer has believed the erroneous explanation of the tax park and failed to perform his/her duty to report and pay taxes, it cannot be deemed that such reason alone constitutes a justifiable reason (see, e.g., Supreme Court Decision 2003Du20350, Sept. 24, 2004).

C. Determination

In light of the above legal principles, even if a shareholder’s tax investigation conducted on March 3, 2008, it is clearly stated that all of the listed marginal profits on shares acquired through capital increase, capital increase without compensation, and stock dividend constitutes subject to gift tax. The legislative intent of Article 41-3(1) and (6) of the Inheritance Tax and Gift Tax Act / [1] the purport of Article 41-3(1) of the Inheritance Tax and Gift Tax Act / [2] Article 61-3(1) of the Inheritance Tax and Gift Tax Act is to enable the largest shareholder, etc. to donate non-listed shares or transfer them for consideration to a person with a special relationship for the purpose of obtaining large-value marginal profits from the listing, or otherwise to acquire them for taxation without any tax burden, and thus, it is clear that the above provision is a provision for the taxation of new shares issued by a tax official to ensure that the shareholder would not be subject to gift tax in proportion to reliance on new shares issued by a new shareholder or a person with a special relationship for consideration (see, e.g., Supreme Court Decision 20101Du106-13).

Therefore, the plaintiffs' above assertion is without merit.

4. Conclusion

Therefore, the plaintiffs' claim for revocation of the imposition of additional tax among the dispositions of this case is without merit, and all of them are dismissed. Since the judgment of the court of first instance on the plaintiffs' claim is unfair with different conclusions, the part against the defendant in the judgment of the court of first instance which accepted the defendant's appeal and dismissed all of the plaintiffs' claim for revocation. It is so decided as per Disposition.