If the Local Tax Act was amended at the standard point of time to apply a claim secured by a local tax claim, mortgage, etc. at the time of distributing auction proceeds, but the time of reference under the former Local Tax Act has already arrived before the amendment, the applicable provision (=the preceding provision)

According to Article 31(1) and (2) of the former Local Tax Act (amended by Act No. 4794, Dec. 22, 1994); however, local taxes and additional dues are collected in preference to public charges and other claims in principle. However, where local taxes and additional dues are collected from the amount arising from the sale of property which is the object of the right of lease on a deposit basis, pledge right, or mortgage established before the tax base date or liability for tax payment of local taxes is established, claims secured by such mortgage, etc. may not be preferentially collected. Thus, local taxes and additional dues may be preferentially collected for claims secured by a mortgage established after the tax base date or liability for local taxes is established. As such, the base point for determining the priority relationship between the local tax bonds and mortgage under the former Local Tax Act and the protection of the security right, the security right holder may verify the existence and scope of the tax claim at the time of harmonization between the public interest purpose recognized by the priority of taxes and the protection of the security right. Accordingly, the priority relationship should be determined depending on the standard point of time prescribed by the former Local Tax Act.

Article 31 of the former Local Tax Act (amended by Act No. 4794 of Dec. 22, 1994)

Supreme Court Decision 96Da40264 delivered on April 11, 1997 (Gong1997Sang, 1423) Supreme Court Decision 97Da8939 delivered on April 27, 1999 (Gong199Sang, 1025)

Plaintiff (Attorney Cho Chang-ho, Counsel for the plaintiff-appellant)

Busan Metropolitan City Shipping Daegu (Attorney Jeong Young-cheon, Counsel for defendant-appellant)

Busan High Court Decision 2003Na509 delivered on May 29, 2003

The part of the judgment below against the defendant is reversed, and that part of the case is remanded to Busan High Court.

1. The facts duly established by the court below are as follows.

(1) The Busan Bank Co., Ltd. (hereinafter referred to as the "Yansan Bank") completed the registration of creation of a collateral on the instant tenement which is owned by the mining industry in order to secure the claim against the Young Industrial Co., Ltd. (hereinafter referred to as the "Yanong Industrial Co., Ltd.") with the Busan District Court No. 2100 on Oct. 18, 1993, which was received on Oct. 18, 1993, the registration of establishment of a collateral on the instant tenement as Busan District Co., Ltd., Ltd. (hereinafter referred to as the "Yansan Bank"), and accordingly, the Plaintiff acquired the claim secured by the collateral from the non-party to whom the claim secured by the said collateral was transferred

(2) The plaintiff filed an auction with the court of Busan District Court around 2001 by exercising the right to collateral security (20085) and filed an application for a decision to permit the sale of the instant apartment house with the price of 68 million won. The plaintiff paid the price for the instant apartment house.

(3) The Plaintiff indicated the loan amounting to KRW 20 million and KRW 25% per annum from April 16, 1997. On May 20, 2002, the Plaintiff submitted an account statement of the claim amounting to KRW 50,316,600 in total. On the other hand, on September 10, 1993, the Defendant imposed acquisition tax on KRW 30,456,00 in relation to the construction of apartment houses and apartment houses (use inspection on March 17, 1993, registration of initial ownership was completed on June 4, 1993; KRW 260,923,040 in total with local tax imposed on the Busan District Court Branch; KRW 30,00 in total from October 10 to 10, 1993; KRW 93,00 in total from 30,000 in total imposed on the Plaintiff’s establishment registration of the mortgage; and KRW 193,040 in total from 19.3.194.2.

(4) On June 5, 2002, on the date of distribution, Busan District Court: (a) on the date of distribution, the Defendant was fully distributed KRW 66,337,619, which was the applicant for delivery, after deducting the execution cost from the total sum of the proceeds of sale and the interest of the deposit; and (b) on the date of distribution, the distribution schedule was prepared with the content

(5) The Plaintiff sought distribution of 20 million won and money equivalent to 25% per annum from April 16, 1997 to the date of distribution to the date of distribution, and filed an objection against the Defendant against the distribution.

2. The lower court determined, based on the above factual basis on the premise that the priority order of the tax and the claims secured by the right to collateral security should be determined by Article 31(2)3(b) of the former Local Tax Act (amended by Act No. 6312 of Dec. 29, 200), in cases where the tax authority collects the increased amount of acquisition tax, etc. from the proceeds from the sale of the right to collateral security upon the exercise of the right to collateral security, on the ground that the person liable to pay the acquisition tax, which is a tax on the method of tax payment, was underreported, from the date of delivery of the tax and the date of establishment registration of the right to collateral security, the priority order should be determined on the basis of the following facts: (a) the property tax and aggregate of the aggregate of the property tax and aggregate land tax imposed and collected between January 10, 1993 and June 10, 1993; (b) KRW 2,492,520 and KRW 3939,394,20,29,20,20.

3. However, we cannot agree with the above determination by the court below for the following reasons.

According to Article 31(1) and (2) of the former Local Tax Act (amended by Act No. 4794, Dec. 22, 1994; hereinafter the same), public charges and other claims are collected in principle. However, in cases where local taxes and additional dues are collected from the amount arising from the sale of property which is the object of the right of lease on a deposit basis, pledge, or mortgage established before the tax base date or tax liability becomes effective (hereinafter referred to as "mortgage, etc."), local taxes and additional dues may be collected preferentially for claims secured by mortgage, etc. (see Supreme Court Decision 96Da40264, Apr. 11, 1997). Thus, the base point determined by the provisions of the former Local Tax Act as priority for claims secured by local tax claims and mortgages under the former Local Tax Act can be determined based on the revised provision of the former Local Tax Act as at the time when the security right holder becomes aware of the existence and the scope of the tax claim at the time when 97 was announced.

According to the facts established by the court below in this case, since the date of registration of creation of the plaintiff's neighboring mortgage is October 18, 1993, the date of issuance of a tax notice among local tax bonds requested by the defendant, even if the date of issuance of a tax notice is after the date of registration of establishment of the neighboring mortgage, if the tax liability establishment date or the tax base date under Article 31 (2) 3 of the former Local Tax Act is earlier than the date of registration of establishment of the plaintiff's neighboring mortgage, the

In contrast, the judgment of the court below that determined the priority relationship between the defendant's local tax claim and the claim secured by the plaintiff's mortgage as of the date of sending a tax notice by applying Article 31 (2) 3 of the Local Tax Act after the amendment by Act No. 4794 of Dec. 22, 1994, which affected the conclusion of the judgment, is erroneous in the application of Acts and subordinate statutes, which does not apply to the application of Acts and subordinate statutes, and thus, the part of the judgment of the court below against the

4. Therefore, the part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the lower court. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jack-dam (Presiding Justice)