Although a disposition is illegal, it does not constitute a justifiable invalidation because it is difficult to recognize that the defect is obvious.

In the case of transfer within five years from the date of acquisition of newly-built house at the time of disposition, there have been a variety of opinions as to whether capital gains tax is fully reduced or exempted, and on December 11, 2014, there has been a final and conclusive judgment of the Supreme Court that the first taxation disposition was unlawful, so it is difficult to recognize that the disposition is unlawful, but it

Article 99-3 (1) of the former Restriction of Special Taxation Act

2015 Bada 198179 Return of Fraudulent Gains

Park AA

Korea

August 10, 2016

September 21, 2016

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The defendant shall pay to the plaintiff 40,968,650 won with 5% interest per annum from August 6, 2012 to the service date of a copy of the complaint of this case, and 15% interest per annum from the next day to the day of complete payment.

1. Facts of recognition;

A. On November 13, 1995, the Plaintiff acquired OOO-dong No. 699-151, No. 7, and No. 2, No. 3 (hereinafter “the previous house”) of OO-dong Seoul OO-dong No. 699-151, but the previous house was reconstructed, and on December 20, 2002, acquired OOOO-O apartment No. 715, 608 (hereinafter “the newly-built house of this case”).

B. On April 23, 2007, the Plaintiff transferred the newly-built house of this case. On the ground that the newly-built house of this case was transferred within five years from the date of its acquisition, the Plaintiff reported the transfer income tax for the year 2006 under Article 99-3(1) of the former Restriction of Special Taxation Act (amended by Act No. 9272, Dec. 26, 2008; hereinafter referred to as the “Special Provision”).

C. On August 6, 2012, the head of Seodaemun District Tax Office imposed an imposition of capital gains tax of KRW 40,968,540 (including additional tax) on the Plaintiff on August 6, 2012, deeming that the capital gains accrued from the acquisition date of the previous house of this case until the day before the acquisition date of the newly-built house of this case is not the amount deducted from the income amount subject to capital gains tax.

D. After paying the capital gains tax in accordance with the instant disposition, the Plaintiff filed an objection on November 2, 2012 against the instant disposition; however, on December 4, 2012, the Plaintiff received a decision of dismissal from the Seoul Regional Tax Office; and thereafter, filed a request for a tax trial on March 4, 2013, but received a decision of dismissal from the Tax Tribunal on May 15, 2013. The said decision became final and conclusive as the Plaintiff did not institute an administrative litigation against the said decision of dismissal.

E. In the related litigation at issue of the interpretation of the Special Provision (Supreme Court Decision 2013Du12690), the Supreme Court held on December 11, 2014 that “in the case of “transfer within five years from the date of acquisition of a newly-built house eligible for reduction or exemption from the former part of the Special Provision, transfer income from the acquisition date of an existing house to the date of acquisition of a newly-built house” and “transfer income from the date of acquisition of a newly-built house from the acquisition date of a newly-built house shall be reduced or exempted in full

[Ground of recognition] Facts without dispute, Gap evidence 1 to 3, Eul evidence 1, Eul evidence 2-1, 2-2, the purport of the whole pleadings

2. Determination on the cause of the claim

A. The plaintiff's assertion

According to the Special Provision, “transfer within five years from the date of acquisition of the newly-built house” is subject to full reduction of capital gains tax. However, even if the head of Seodaemun District Tax Office rendered the instant disposition without any legal basis due to misunderstanding of legal principles, the instant disposition is null and void. However, the Defendant shall return to the Plaintiff KRW 40,968,650 paid by the Plaintiff in accordance with the instant disposition to the unjust enrichment.”

(1) In order for a tax to be unjustly paid or overpaid to constitute unjust enrichment, the tax payment or tax collection should be null and void as it has no legal basis in substantive or procedural aspects or due to the significant and apparent defect of the tax assessment. In a case where the defect of the tax assessment is limited to the extent that the tax assessment can be revoked, unless the tax authority voluntarily cancels it or cancels it by the appeal procedure (see, e.g., Supreme Court Decision 94Da2800, Nov. 11, 1994).

In order for a taxation disposition to be null and void as a matter of course, the mere fact that there exists an illegal ground is insufficient, and the defect must be objectively obvious as it seriously violates an essential part of the relevant laws and regulations. In determining whether a serious and apparent defect exists, the purpose, meaning, function, etc. of the laws and regulations, which serve as the basis for the said taxation disposition, shall be considered teleologically as well as reasonable consideration on the specificity of the specific case itself, in addition, in a case where a taxation disposition is conducted by applying a provision of a certain Act and subordinate statute to a certain legal relationship or factual relationship, clearly stated that the legal doctrine that the relevant provision cannot be applied to such legal relationship or factual relationship, and even if there is no room for dispute over the interpretation thereof, if the relevant tax authority imposed a taxation disposition by applying the provision of the relevant Act and subordinate statutes, it is significant and obvious that the defect is serious and obvious. However, in a case where there is an objective reason to believe that a certain legal relation or factual relationship that is not subject to an administrative disposition is subject to the disposition, and it can only be clarified even if it is erroneous (see, etc.).

(2) The main text of the Special Provision provides that “where a resident acquires a newly-built house (c) and transfers it within five years from the date of acquisition, the tax amount equivalent to 100/100 of the transfer income tax shall be reduced or exempted (hereinafter “former”), and where the relevant newly-built house is transferred after five years from the date of acquisition, the transfer income accrued for five years from the date of acquisition of the relevant newly-built house shall be subtracted from the income amount subject to the transfer income tax (hereinafter “afterward group”).

With respect to the "transfer within five years from the date of acquisition of a newly-built house" under the former part of the Special Provision at the time of the disposition of this case, there is room for dispute over the interpretation of ① the transfer income of the previous house from the acquisition date of the newly-built house to the date of acquisition of the newly-built house; ② the transfer income from the date of acquisition of the newly-built house is not subject to reduction or exemption stipulated in the same provision; ② the date of commencement of the transfer income subject to reduction or exemption in the former part is not expressly stated; and ② the method of calculating the transfer income subject to reduction or exemption in the former part, unlike the latter part, is not separately prepared; and the legislative intent of this case is divided into the opinions that the total amount of income accruing from the previous house during the period from the acquisition date of the newly-built house to the date of transfer of the newly-built house is to be reduced or exempted. In other words, there is no room for dispute over the interpretation of the previous house's income generated from the acquisition date of the newly-built house to the date of transfer thereof.

(3) Ultimately, the Plaintiff’s assertion on the ground that the instant disposition is void as a matter of course is difficult to accept.

3. Conclusion

The plaintiff's claim is dismissed on the ground that it is without merit.