Chuncheon District Court 2007Guhap991 (Law No. 23, 2008)

National High Court Decision 2005Du1585 (Law No. 15, 2007)

The scope of small and medium enterprises subject to special tax reduction or exemption, disposal of income, and recognition of extra expenses for the sales business;

If a building is newly constructed and sold under a contract, it is not subject to the special tax reduction or exemption for small and medium enterprises, and it is unclear that the processing costs and the costs incurred out of the building are directly corresponding to the case, so the disposition of income by the tax authorities is legitimate, and the refund of corporate tax on the costs incurred out of the building is not subject to administrative litigation, and the tax amount is not subject to administrative litigation.

The contents of the decision shall be the same as attached.

Article 7 of the Restriction of Special Taxation Act: Special Tax Abatement or Exemption for Small or Medium Enterprises

Article 67 of the Corporate Tax Act, Article 14 of the Framework Act on National Taxes

1. The plaintiff's appeal against the defendants is dismissed in entirety.

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

1. Purport of claim

On December 1, 2004, the head of the tax office at the Seocho District Tax Office (hereinafter “the Head of the tax office at issue”) shall revoke the notice of change in the amount of income in the attached Table 3-200 through 2003 as to the Plaintiff on December 16, 2004 and the notice of change in the amount of income in the attached Table 3-2,890,385,50 won in the imposition of corporate tax of KRW 2,277,10,080 in the business year of 202 against the Plaintiff and the notice of change in the amount of income in the attached Table 3-2,39,18,180 in the business year of December 16, 2004. The Defendant Republic of Korea shall pay to the Plaintiff the amount of KRW 482,398,180 in the year from the

2. Purport of appeal

The decision of the first instance court shall be revoked. The disposition of notification of changes in the amount of income in the attached Table 3-200 through 2003 rendered by the director of the tax office against the plaintiff on December 16, 2004 shall be revoked. The defendant Republic of Korea shall pay to the plaintiff 482,398,180 won per annum for the period from the filing date of the lawsuit to the delivery date of a copy of the complaint of this case, 5% per annum for the period from the next day to the delivery date of a copy of the complaint of this case, and 20% per annum for the period from the next day to

The court's explanation on the instant case is either 4 to 5 pages of the judgment of the court of first instance.

(1) Paragraph (1) of the same Article provides that the disposition of imposition of corporate tax for the business year 2002 is unlawful, and Paragraph (2) of the same Article provides that "the fifth through eighth is legitimate."

In addition to deletions (the plaintiff's withdrawal of the above part of the argument was made in the trial, the plaintiff's withdrawal of the above part of the argument is as stated in the column of reasons for the judgment of the court of first instance and the attached Table 1, Table 2, Table 3, and the relevant Acts and subordinate statutes bound by the judgment of the court of first instance, and therefore, they are cited in accordance with Article 8 (2) of

Therefore, the judgment of the court of first instance is legitimate, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.

1. All of the plaintiff's claims are dismissed.

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

Defendant ○○ Head of the Tax Office’s disposition of imposing KRW 2,890,385,50 on the Plaintiff on December 1, 2004, exceeding KRW 2,277,10,080 among the disposition of imposing KRW 2,207,10,080 of corporate tax for the business year 2002, and the disposition of notifying the Plaintiff of the change in the income amount for each business year of 2000 through 2003 as shown in attached Table 3-2,398,180 as to the Plaintiff on December 16, 204 is revoked. Defendant ○○○ shall pay to the Plaintiff 5% per annum from the filing date of the instant lawsuit to the delivery date of the duplicate of the instant complaint, and 20% per annum from the next day to the day of full payment.

1. Basic facts

A. On June 11, 1999, the Plaintiff was a corporation established with the objective business as a housing construction project and housing site preparation project, real estate sale, lease, sale of real estate, consignment sale business, soil construction business, etc., between December 1999 and August 2003, and used the construction work of the 24th floor and the 6th floor above the ground level in Seoul ○○○○-dong 1593-7, and the 6th floor below the ground level in the construction work between August 11, 1999, and calculated the gross income and deductible expenses for each business year according to the work progress rate for the sales portion in the business year of 200 through 202. The amount calculated according to the work progress rate for the remaining portion in the business year of 203 shall be included in the gross income and deductible expenses; ② in the business year of 202, 2003, based on the former Restriction of Special Taxation Act (amended by Act No. 20327, Dec. 31, 2004).

B. The head of ○○○○○ Tax Office conducted an investigation on the Plaintiff’s business year 199 through 2003, including corporate tax, etc. on the Plaintiff’s 204. ① The Plaintiff shall be deemed to have mistakenly calculated the rate of work progress and the amount of revenue based on the contract for the sale of the apartment complex excluding the unsold portion for a long period of time, and shall be included in the gross income and deductible expenses for each business year. ② The Plaintiff, while constructing the apartment complex of this case, offered a contract for construction to another construction company and constructed it, denied the reduction of and exemption from the special tax amount for small and medium enterprises, not the construction business that can be subject to the application of the special tax reduction and exemption under Article 7(1) of the former Restriction of Special Taxation Act. ③ The sales management expenses and construction expenses for the business year 200 through 203 to 300 won, the Plaintiff shall be deemed to have paid the total amount of KRW 2,03,605,500 to the Plaintiff for the business year 209,504,207.

C. Meanwhile, the head of ○○ Tax Office, on the ground that the total amount of 2,003,605,556 won was out of the company and the title of the processed labor cost of this case was unclear, he received each of the above amounts as the bonus to ○○○, ○○, and ○○○○, a representative director who held office at the time of each taxable period, and notified the Plaintiff of the change in the amount of income on December 16, 2004.

D. Afterwards, Defendant ○○ Head of the National Tax Office’s disposition of imposing corporate tax for the business year of 2000 to 2003 and the notice of the change in the amount of income of this case filed a request for a trial with the National Tax Tribunal on March 10, 2005, but the said request for a trial was dismissed on February 15, 2007.

[Based on Recognition] Unstrifed Facts, Gap evidence 1, Eul evidence 2-1, 2-1, 3-4, Gap evidence 4-1 through 4, Gap evidence 5-1, 2, Gap evidence 12-1 through 4, Gap evidence 13, Eul evidence 13, Eul evidence 4-1, respectively.

2. Determination on Defendant 1’s claim against the head of ○○ Tax Office

A. The plaintiff's assertion

(1) The allegation that the disposition of imposing corporate tax for the business year 2002 is unlawful

The plaintiff is in charge of construction directly and indirectly, and related labor costs and benefits was also paid to the ○○○ Company, which is entrusted with part of the construction of the apartment in this case. Thus, the plaintiff's above-mentioned type of business is "industrial activities performing construction activities taking general responsibility for new construction, extension, reconstruction and remodeling of various buildings", which are "industrial activities performing construction activities" under Article 17 of the Statistics Act, which is applied mutatis mutandis pursuant to Article 2 (3) of the Restriction of Special Taxation Act.

Nevertheless, Defendant 1. The head of ○○ Tax Office: (a) deemed that the Plaintiff’s business carried on constituted a real estate supply business, not a construction business subject to special tax reduction under Article 7(1) of the former Restriction of Special Taxation Act; and (b) imposed corporate tax amounting to KRW 2,890,385,50 for the business year 202; and (c) thus, the portion exceeding KRW 2,277,110,080

(2) The allegation that the instant disposition of notifying the change in income amount is unlawful

On June 17, 2003, the Plaintiff paid 1 billion won to ○○○ Co., Ltd. for the purpose of acquiring ○○○○○○, a fee of which was actually paid as brokerage commission or underwriting commission. Since it was actually paid from 2000 to 2003 as the processed labor cost, etc. of this case, it is deemed that the head of ○○○ Tax Office would not have reverted to 2,003,605,556 won, such as the processed labor cost of this case, etc., as the bonus for the representative director, the Plaintiff’s disposal of the income as a bonus for the representative director, and accordingly, the disposition of this case’s notice of change in the amount of income was unlawful.

B. Relevant statutes

Attached Form 3 is as shown in the "relevant Acts and subordinate statutes".

C. Determination on the legality of the disposition imposing corporate tax for the business year 2002

(1) Relevant provisions and interpretation of the scope of special tax reduction for small and medium enterprises

Article 7 (1) of the former Restriction of Special Taxation Act lists a majority of small and medium enterprises eligible for special tax reduction and exemption such as corporate tax, "manufacturing business, mining business, construction business, transportation business, fishery business, wholesale business, etc." and delegates the classification of specific types of business to the Korean Standard Industrial Classification publicly notified by the Commissioner of the Korean National Statistical Office. The Korean Standard Industrial Classification defines "construction business" as one of "Housing Construction Business (45)" among "Construction Business (45)" as "Housing Construction Business (45)", "Construction Business (4521)," "Construction Business (4521)," and excludes "Real Estate Supply Business (7012, Real Estate Supply Business) directly after entrusting another construction business," "Real Estate Supply Business (70)" as one of "Real Estate Sale Business (70)", "Real Estate Supply Business (70)", "Real Estate Supply Business ("Real Estate Supply Business ("Real Estate Supply Business," "Real Estate Supply Business", "Real Estate Supply Business ("70)" as "Construction Business (701).

On the other hand, the principle of no taxation without law is a requirement for taxation, or a requirement for tax exemption or exemption, and the interpretation of tax laws is to be interpreted in accordance with the text of the law, barring any special circumstance, and it is not allowed to be extensively interpreted or analogically interpreted without reasonable grounds. In particular, it accords with the principle of fair taxation to strictly interpret that the provision of tax exemption or exemption is clearly preferential provisions (see, e.g., Supreme Court Decision 2002Du9537, Jan. 24, 2003).

In light of the relevant provisions and legal principles, a small and medium enterprise that runs apartment construction business (45212) shall be engaged in an industrial activity that constructs residential apartment units to be subject to corporate tax reduction and exemption, and a real estate supply business (7012), which is not an apartment construction business, in the case where apartment units are built or sold after being entrusted or subcontracted to another construction business, shall be deemed to be engaged in the apartment construction business. In the case where the seller of apartment units supplies apartment units by directly constructing a part of the construction work, the degree of their direct construction shall be limited, as well as the degree of the buyer's participation in the whole construction work, the degree of the apartment units' participation in the whole construction work, the circumstance of the sale of the apartment units, the intention of the parties, etc., shall be considered to be reduced and exempted.

(2) As to whether the business run by the Plaintiff is subject to the reduction of special tax amount

In full view of the purport of the arguments in Gap evidence 2-2, Eul evidence 2-2, Eul evidence 3-2, and Eul evidence 3-2 and 3-3, the plaintiff entered into a contract with ○○○○ on May 22, 200 for the construction of the apartment of this case with 33,070,000 won, and with 35 months from the commencement date of construction, to the new construction of the apartment of this case. ② The total construction cost of the apartment of this case was KRW 46,653,75,827, and the construction cost of ○○○○○ was 33,445,00 won for the construction of the apartment of this case, and the construction cost of the apartment of this case was 50,00 won for the construction of the apartment of this case was 33,04,000 won for the construction of the apartment of this case to 30,000 won for the construction of the apartment of this case to 36,3134,274,20.

Therefore, even if there are parts of construction directly constructed as alleged by the Plaintiff, it is reasonable to view that the principal business operated by the Plaintiff is not an apartment construction business, but an "real estate supply business". Thus, it is not subject to the application of special corporate tax reduction for small and medium enterprise in 2002 business year. Therefore, the first Plaintiff's above assertion on different premise is without merit.

D. Determination as to the legitimacy of the notice of change in the income amount of this case

(1) Facts of recognition

(A) Details of the Plaintiff’s processing labor cost, etc. of the instant case, and account management and related account transactions.

① The Plaintiff managed the instant processing labor expenses, etc. as non-funds, and paid some of them as entertainment expenses, etc. to business partners or government offices at the same time, and some of the remainder has been deposited into the Plaintiff’s accounting division from May 31, 2002 to August 25, 2003, two of the Plaintiff’s accounting division in ○○○○○○ and the Plaintiff’s representative director’s ○○○○ account with the Plaintiff’s corporate director.

② The account of ○○○ was opened on May 10, 2002 and deposited several times with KRW 521,929,008 on September 13, 2002, and the balance was terminated after the withdrawal. The account of ○○○○○ was opened on September 13, 2002 and the balance was deposited on several occasions after the deposit of KRW 934-985-297 on February 27, 2003. The balance was terminated after the deposit of KRW 934-985-297 on several occasions. The account of ○○○○ was opened on March 26, 2003 and deposited several times with KRW 521,929,00 on several occasions (However, the balance between the amount deposited in the said account and the daily amount).

③ On the other hand, on June 17, 2003, 1 billion won was deposited by cashier’s checks from the Plaintiff’s account in the Plaintiff’s name of ○○○○○○○○ account, and the next day was deposited in two copies of 500 million won checks at face value. The Plaintiff’s account books contain no record of accounting of 1 billion won.

④ On June 18, 2003, 338,762,773 won and 600 million won were deposited from ○○○○○○○○○○○○○○○○ account, which held as the representative director of the Plaintiff, respectively, and deposited KRW 935,00,000 on the same day. Meanwhile, on the other hand, on the Plaintiff’s account under the name of the said corporation, KRW 935,00,000 was deposited in cash, respectively.

(B) The Plaintiff’s attempt to acquire ○○○○ and the process of childbirth

① On March 24, 2000, ○○○○ constituted ○○○ Investment and consortiums, and was selected as the subject of preferential negotiations on the acquisition of ○○○○. As ○○○, a representative director of ○○○○○○, was detained in another criminal case, and it was difficult to promote ○○○○’s acquisition, ○○○ was proposed to transfer the Plaintiff’s status as a member of the consortium.

② The Plaintiff attempted to participate in the acquisition of ○○○ pursuant to the above proposal, but due to the opposition to the trade union of ○○○○, the Plaintiff attempted to accept the agreement by cancelling the memorandum of understanding on the subject of preferential bargaining with ○○○ and the subject of preferential bargaining on September 9, 2003.

③ Meanwhile, around December 2003, on the ground that ○○○ has a debt of KRW 1 billion against the Plaintiff, the Plaintiff transferred the damage claim and tin arising from the termination of the memorandum of Understanding to the Plaintiff, and the Plaintiff filed a lawsuit claiming damages of KRW 1 billion against the Seoul Eastern District Court on February 2004.

[Ground of recognition] A without dispute, Gap evidence 2-2, Gap evidence 7 through 10, Gap evidence 11-1 through 3, Gap evidence 12-1 through 4, Gap evidence 13, 14, Eul evidence 4-1 through 3, Eul evidence 5 and 6, Eul's partial testimony, fact-finding with respect to citizen bank of this court, the result of fact-finding with respect to citizen bank of this court, the whole purport of pleadings

(2) Determination

Where a corporation fails to record its sales in the account book despite the fact of sales or appropriates the cost of processing in the account book, barring any special circumstance, the profit of the corporation which caused the omission of sales or the cost of processing shall be deemed to have been leaked out of the company, and in such case, the special circumstance that the total amount omitted sales, etc. is not leaked out of the company shall be proved by the corporation asserting it.

According to the facts acknowledged as above, even if part of the processing labor expenses, etc. of this case was deposited into the account of ○○○ and ○○○○○○○, the Plaintiff’s representative director, the above account is nothing more than the personal account, and as long as the amount deposited with the processing labor expenses, etc. of this case and the money deposited in the above account are not in accord with one day and amount, and as long as the deposited money was withdrawn from time to time without keeping it in the above account, it shall be deemed that the above money was already leaked out and its reversion is unclear.

However, in light of the account of ○○○○ and the details of the entrance and exit of ○○○○○○, even if the Plaintiff paid the said money to the ○○○○○○○, the Plaintiff cannot be deemed to have paid KRW 1 billion to the ○○○○○ with the funds created by the instant processing labor cost, etc.

Ultimately, the plaintiff's revenue equivalent to the processing labor cost of this case, etc., shall be deemed to have been leaked out of the company, and the plaintiff's assertion that the disposition of notifying the change of the income amount of this case against the business year 2000 to 2003 is unlawful on the premise that the processing labor cost of this case, etc. was paid with an amount of KRW 1 billion, such as brokerage commission, etc. to be treated as losses from the non-funds created over the period 200 to 2003, is without merit.

3. Determination on the claim against Defendant 2. The claim against ○○○

A. The plaintiff's assertion

Defendant 1. In investigating corporate tax for the business year 2003, the head of ○○○○○○○○○○○○, the Plaintiff’s business was not a construction business that becomes subject to the special tax reduction as prescribed in Article 7(1) of the Act, but a 354,30,000 won for processing labor expenses and gold 7,946,00 won was deemed to have been included in the amount of processed purchase, thereby notifying the Plaintiff to rectify corporate tax for the business year 2003 to KRW 1,391,75,598 by adding the above amount to deductible expenses and adding the amount to gross income. However, the Plaintiff’s business was subject to the reduction of and exemption from the special tax amount for the small and medium enterprise, and ② the total amount of processed labor expenses and processed purchase fees paid by the Plaintiff to ○○○○○ to include the amount of KRW 432,246,000 in deductible expenses. Accordingly, the corporate tax amount for the business year 2003 is legitimate amount of gold 9,377,418 won.

Nevertheless, Defendant 2. Defendant 2. ○○○ has the obligation to additionally refund the remainder amount of KRW 482,398,180 and damages for delay thereof to the Plaintiff, among KRW 1,694,19,114, which was reported as corporate tax for the business year 2003.

B. Determination

In a case where there is no taxation or a deferred invalidation, the amount paid or collected by a taxpayer under this taxation constitutes unjust enrichment acquired by the State without any legal ground. In this case, the taxpayer shall immediately file a claim for the refund of unjust enrichment with a civil procedure seeking the return of unjust enrichment, not by an administrative litigation against the rejection of refund by the national tax authority (see Supreme Court Decision 91Da13342 delivered on July 9, 191). As seen earlier, the reasons alleged by the Plaintiff cannot be deemed to be the absence of a notice of correction of corporate tax for 2003 business year by the head of ○○○ Tax Office on January 1, 200 and there is no reason to acknowledge it differently, and therefore, the Plaintiff’s above assertion is without any justifiable ground to further examine the remainder of the issue.

4. Conclusion

Thus, the plaintiff's claim against the defendants is without merit, and all of them are dismissed.