[1] In a case where a taxpayer did not neglect to pay due attention or management and supervision for the purpose of preventing unlawful acts, not only the taxpayer’s unlawful acts, but also his/her agent, employee, and other employees, in addition to the taxpayer’s unlawful acts under Articles 26-2(1)1 and 47-3(2)1 of the former Framework Act on National Taxes, whether the period for exclusion from imposition of national taxes is extended for the taxpayer himself/herself, and where the taxpayer did not neglect to pay due attention or management and supervision for the purpose of preventing the taxpayer’s unlawful acts under Article 26-2(1)1 of the former Framework Act on National Taxes (negative)

[2] In a case where a representative of a corporation, or an unlawful act such as an employee, etc., who is not the representative, is conducted as part of a crime, such as fraud, breach of trust, etc. committed by a taxpayer as a victim for the purpose of seeking a taxpayer's interest or a third party against his/her own interest or intent, and where the other party to the transaction could not easily recognize or have not anticipated his/her unlawful act due to his/her involvement, etc., whether a sanction may be imposed on a taxpayer for an unlawful underreporting by applying a heavy taxation rate under Article 47-3 (2) 1 of the former Framework Act on National Taxes on the ground of a taxpayer's unlawful act (negative), and whether a fraudulent act such as an employee is included in an unlawful act under Article 26-2 (1) 1 of the same

[1] In addition, not only a taxpayer’s unlawful act, but also a taxpayer’s agent, employee, or other servant (hereinafter “employee, etc.”) who obtains benefit from the expansion of the area of the relevant act by having the taxpayer take charge of the relevant work, barring any special circumstance, the “unfair act” under Article 26-2(1)1 of the former Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 201; hereinafter the same) and “unfair method” under Article 47-3(2)1 of the former Framework Act on National Taxes (hereinafter “unfair act”) includes not only the taxpayer’s unlawful act, but also the taxpayer’s unlawful act.

In relation to the scope of application of the aforementioned legal doctrine, if a taxpayer himself/herself was not negligent in due care, management, and supervision to prevent unlawful acts of his/her employees, etc., the taxpayer himself/herself may be deemed to have no error in the unlawful acts of such employees, etc. Therefore, even in such cases, he/she shall include his/her unlawful acts in the long-term exclusion period of imposition and the “illegal acts” as stated in the unfair under-reported penalty tax, thereby extending the exclusion period of imposition of national taxes on the taxpayer concerned

[2] [Majority Opinion] In a case where a representative of a juristic person, or an agent, employee, or other servant (hereinafter “employee, etc.”) of a taxpayer who is not a de facto representative in the course of operating the pertinent juristic person conducts an unlawful act as part of a crime, such as fraud, breach of trust, etc. committed by a taxpayer for the purpose of promoting his/her own interest or a third party against his/her own interest and intent, and where there are special circumstances in which a taxpayer could not easily recognize or anticipate his/her unlawful act due to the other party’s participation, etc. due to such unlawful act, even if the tax base of the taxpayer was underreported due to such unlawful act as an employee, etc., even if the tax base of the taxpayer was found to have been underreported, the under-reported return by such unlawful act may not be deemed to have been included in “where the taxpayer under-reported by an unjust method” under Article 47-3(2)1 of the former Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 2011).

However, in the case of a long-term exclusion period for taxation that extends the tax authority's right to impose on the taxpayer for an unlawful act, it is clear that it is difficult to exercise the tax authority's right to impose the national tax evaded by such unlawful act as an employee, etc., even if such unlawful act was committed as a means of committing a crime, such as fraud and breach of trust with the taxpayer himself/herself as the victim. Thus, barring any special circumstance, the unlawful act such as such employee is included in the unlawful act stipulated in Article 26-2 (1) 1 of the former Framework Act on National Taxes within the exclusion period for taxation.

As can be seen, a taxpayer’s negligence in the appointment, management, and supervision of the taxpayer, but the taxpayer committed a misappropriation committed by a third party, such as an employee who was easily aware of or could not have been anticipated, and denies the imposition of penalty taxes for unlawful underreporting. Meanwhile, the application of the exclusion period for imposition of long-term taxes should be deemed as the result of the constitutional statutory interpretation that takes into account the purpose of each system and the specific feasibility, even though it does not go against

[Dissenting Opinion by Justice Lee Ki-taik, Justice Kim Jae-hyung, Justice Park Jung-hwa, Justice Noh Jeong-hee, and Justice Noh Jeong-hee] The Majority Opinion, where an employee, etc. actively committed an unlawful act, such as hiding a taxpayer’s income in the course of committing an offense, such as fraud, breach of trust, etc. with the intent of seeking a taxpayer’s own interest or a third party against his/her own interest or intent, and where the employee, etc. committed an unlawful act, such as hiding the taxpayer’s income, which the taxpayer himself/herself could not have easily perceived or anticipated, and thus, the imposition of an unfair under-reported additional tax cannot be imposed on the taxpayer on the ground that “the taxpayer

However, since both the long-term exclusion period and the unfair under-reported penalty are also regulated under the Framework Act on National Taxes, the same requirement is stipulated, it is reasonable to interpret that the long-term exclusion period cannot be applied to a taxpayer if the taxpayer cannot impose the penalty tax for unlawful under-reporting on the ground of such unlawful act in breach of trust as above such as the employee.

[1] Article 26-2 (1) 1 (see current Article 26-2 (2) 2), 3 (see current Article 26-2 (1)), 47-2 (2) (see current Article 26-2 (2) 2, 47-2 (1) 1), 47-3 (1) (see current Article 47-3 (1) 2), and 47-3 (2) 1 (see current Article 47-3 (1) 1 of the current Act), Article 47-3 (2) 2 of the former Framework Act on National Taxes (Amended by Act No. 11124, Dec. 31, 201); Article 27 (2) of the former Enforcement Decree of the Framework Act on National Taxes (Amended by Presidential Decree No. 23592, Feb. 2, 2012); Article 26-2 (2) of the former Enforcement Decree of the Framework Act on National Taxes (see current Article 27-2 (16-2) of the Act)

[1] Supreme Court Decision 2010Du1385 Decided September 10, 2015 (Gong2015Ha, 1531)

Age Information and Communications Co., Ltd. (LLC, Kim & Lee LLC, Attorneys Cho Il-young et al., Counsel for the defendant-appellant)

Mapo Tax Office (Government Law Firm Corporation, Attorneys Cho Jae-ho et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2016Nu47361 decided February 10, 2017

The part of the judgment of the court below regarding the value-added tax (including the additional tax) for the first period from 2005 to 2008 shall be reversed. The judgment of the court of first instance concerning this part shall be revoked, and this part of the lawsuit shall be dismissed. Of the judgment of the court below, the part concerning the unfair underreporting additional tax among corporate tax for each business year from 2005 to 2010 shall be reversed, and that part of the case shall

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Ex officio determination on each part of the value-added tax (including the additional tax) on the first to 2008 set forth in the first to 2005;

When an administrative disposition is revoked, such disposition shall lose its validity, and no longer exists, and a revocation lawsuit against a non-existent administrative disposition is unlawful as there is no benefit of lawsuit (see Supreme Court Decision 2012Du18202, Dec. 13, 2012, etc.).

According to the records, around June 14, 2017, which was after the filing of the instant appeal, the Defendant ex officio revoked the imposition disposition of each value-added tax (including additional tax) for the first period to 2005 or 2008 pursuant to the purport of the lower judgment. Therefore, this part of the lawsuit is seeking revocation of the disposition that had not been extinguished and thus, became unlawful as there was no benefit of the lawsuit.

2. Determination on the portion of corporate tax (including additional tax) related to non-deductible expenses in deductible expenses

A. Case summary and key issue

1) Disposition imposing corporate tax (including additional tax) for the business year from 2005 to 2010 of the defendant on the ground of an unlawful act

The reasoning of the lower judgment and the evidence duly admitted by the lower court reveal the following facts.

A) The Plaintiff is a corporation that is engaged in the business of providing broadband (VN and VL-ADed Nwork) services. From August 200 to September 2012, Nonparty 1 has overall control over the Plaintiff’s corporate business division head, the former director of the headquarters of the business division of the Plaintiff from August 2000 to September 201, and Nonparty 2 has been in charge of the business of chain stores, agency management, and settlement of accounts, etc. from July 2001 to March 201.

B) Nonparty 1 and Nonparty 2, in collusion with Nonparty 3, the representative director of the Vienna Co., Ltd., Ltd., the agent of the Plaintiff (hereinafter referred to as the “Ngena”), led the Plaintiff to transfer the above money to the account in the name of the Plaintiff corporation, thereby inducing the Plaintiff to obtain a false tax invoice by preparing a false internal part to pay KRW 863,569,159, respectively, KRW 30,000 re-contract subsidy to the Korea Senna Co., Ltd., the Plaintiff, the store of the Plaintiff corporation, KRW 227,50,00,000, KRW 227,500,000, and KRW 841,552,185, and KRW 863,569,159, respectively, in the Vienna, and thereby inducing the Plaintiff corporation to receive a false tax invoice in the name of the Plaintiff corporation, in collusion with Nonparty 4 and the Korea Ginseng Co., Ltd., Ltd., the Plaintiff to receive a false tax invoice for the Plaintiff 2000.

C) Nonparty 1 and Nonparty 2 committed an act of fraud, etc. equivalent to approximately KRW 2 billion (hereinafter “instant payment amount”). Accordingly, on November 1, 2013, the Defendant filed a return and payment of corporate tax with the omission of income for each business year of the Plaintiff. In revising the tax base and tax amount of corporate tax by non-inclusioning the instant payment amount from the tax base for each pertinent business year, the Defendant deemed the unlawful act of receiving false tax invoices and trading manipulation, etc. as the unlawful act of the Plaintiff corporation, and added the corporate tax principal tax applying the 10-year long-term exclusion period of imposition (205 or 207 business year) to the corporate tax, and added the unfair under-reported additional tax and additional tax in excess of the general under-reported amount of corporate tax to the Plaintiff from 2005 to 2010.

2) The judgment of the court below on this part

The lower court determined that the imposition of the above corporate tax (including the additional tax) is lawful, on the ground that the unlawful act by Nonparty 1 and Nonparty 2 constitutes the unlawful act of the Plaintiff corporation and that there is no justifiable ground to exempt the penalty tax, and that the imposition of the above corporate tax (including the additional tax) is imposed with respect to the

3) Issues

The main issue of this case is whether the long-term exclusion period can be applied by deeming that a corporation, which is in the position of a victim of a crime, has evaded tax due to an unlawful act, on the ground of such an employee’s unlawful act, where an employee committed an unlawful act, such as hiding corporate income in the course of committing a crime such as fraud and breach of trust against a corporation, and whether an illegal underreporting penalty can be imposed by deeming that the tax base or tax amount was underreported by an improper method (

B. The Plaintiff’s ground of appeal No. 1

1) Contents and legislative intent of the relevant provisions

A) Long-term exclusion period system

Article 26-2(1) of the former Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 201; hereinafter the same) provides, in principle, five years of the exclusion period of national taxes (Article 3). “Where a taxpayer evades national taxes by fraudulent or other unlawful means,” ten years from the date on which the exclusion period of national taxes can be imposed.” The legislative intent of the aforementioned provision is, in principle, five years of the exclusion period of national tax imposition in order to ensure prompt determination of tax-related relations, but it is difficult for the tax authority to find it difficult to find that there is any omission report, or there is any unlawful act such as creating false facts, and it is difficult for the tax authority to expect the exercise of the exclusion period of national taxes to be extended to ten years (see Supreme Court Decision 2013Du7667, Dec. 12, 2013).

B) An illegal underreported Additional Tax System

Meanwhile, Article 47-3(1) of the former Framework Act on National Taxes provides that the amount of under-reported tax equivalent to 10/100 of the amount calculated by multiplying the calculated tax base by the ratio of the under-reported tax base to the amount of global income shall be added or deducted from the refundable tax amount. Paragraph 2(1)1 of the same Article provides that if a taxpayer has an under-reported tax base in an unjust manner, an amount equivalent to 40/10 of the amount calculated by multiplying the calculated tax amount shall be added or deducted from the refundable tax amount. Article 47-2(2) of the former Framework Act on National Taxes provides that the meaning of “unfair and under-reported tax base” shall be 0/100 of the amount which is the basis for calculating the tax base of national taxes or the amount of under-reported taxes (see, e.g., Supreme Court Decision 200Du16062, Feb. 29, 201).

Article 47-3(2) of the former Framework Act on National Taxes imposes an additional tax on a taxpayer by imposing an additional tax more higher tax rate than that for a general underreporting that is not based on “unfair method” to induce the taxpayer to faithfully report the tax base (see, e.g., Supreme Court Decisions 2013Du12362, Nov. 28, 2013; 2015Du44158, Apr. 13, 2017).

2) "Unlawful conduct" by employees, etc., and the long-term exclusion period and additional tax for underreporting

The term “unlawful act” and “unfair method” as referred to in the aforesaid long-term exclusion period of imposition (hereinafter collectively referred to as “unlawful act”) include not only the taxpayer’s unlawful act, but also the taxpayer’s agent, employee, or other employee (hereinafter referred to as “employee, etc.”) who obtains a benefit from extending the scope of the relevant act by having the taxpayer manage the relevant business by himself/herself, barring any special circumstance (see Supreme Court Decision 2010Du1385, Sept. 10, 2015).

In relation to the scope of application of the aforementioned legal doctrine, if a taxpayer himself/herself was not negligent in due care, management, and supervision to prevent unlawful acts of his/her employees, etc., the taxpayer himself/herself may be deemed to have no error in the unlawful acts of such employees, etc. Therefore, even in such cases, he/she shall include his/her unlawful acts in the long-term exclusion period of imposition and the “illegal acts” as stated in the unfair under-reported penalty tax, thereby extending the exclusion period of imposition of national taxes on the taxpayer himself/herself

Furthermore, even if a taxpayer himself/herself fails to fulfill due care, management, and supervision with respect to unlawful acts of employees, etc., in the instant case, where he/she committed an active unlawful act, such as hiding his/her income in the course of committing a crime of fraud, breach of trust, etc. committed by a representative of a corporation or a person who is not a de facto representative (hereinafter “ de facto representative”) while operating the relevant corporation as seen in the instant case, and his/her employee, etc., committed the crime of fraud, breach of trust, etc. with the taxpayer himself/herself (hereinafter “unlawfully unlawful act”), the issue is whether the penalty tax may be imposed on the taxpayer himself/herself at an excessive tax rate when applying a long-term exclusion period for imposition of national tax on the relevant national tax on the ground that there is such unlawful act of breach of trust. The former Framework Act on National Taxes merely provides that “where a taxpayer evades national tax by unlawful act,” or that “where a taxpayer undergoes a return by unlawful means, a taxpayer, who

3) “Misappropriation in breach of trust” and “unfair underreporting” by employees, etc.

First of all, the penalty tax for underreporting the penalty tax, which is a heavy administrative sanction compared to the ordinary underreporting, is considered to be imposed on the ground of an unlawful act. In a case where unlawful act by a representative or an employee, etc., who is not a representative, is performed as part of a crime, such as fraud, breach of trust, etc. committed by a taxpayer for the purpose of promoting his own or a third party’s interest against his own interest or intent, and where there are special circumstances where a taxpayer could not easily recognize or anticipate his unlawful act due to his participation, etc., the underreporting by a taxpayer due to an unlawful act such as an employee, etc. cannot be deemed as included in “the underreporting by a taxpayer in an unlawful manner” even if the tax base of the taxpayer was found to have been underreporting by such an unlawful act as a result, it is reasonable to deem that the penalty for underreporting penalty tax, which

A) Additional tax is a kind of administrative sanction imposed on taxpayers who have violated their obligations under tax-related Acts in the form of tax in order to facilitate the exercise of the right to impose taxes and the realization of tax claims. Additional tax ought to have a legitimate correlation consistent with the principle of self-responsibility, as well as to maintain a reasonable proportional relationship between the degree of violation of obligations and sanctions. Unlike the general penalty tax imposed by applying 10/100 to under-reported tax amount, unlike the under-reported tax amount by concealing income, etc. which is the basis of tax base, etc., it is naturally premised on the fact that an unjust under-reported additional tax imposed by applying the tax rate of 40/10 much higher than that of 10/100 is a sanction for nonperformance of duties that is highly likely to be subject to criticism.

However, in a case where a taxpayer’s employee, etc. committed an unlawful act solely against the taxpayer’s intent or interest, and thereby, the taxpayer becomes the victim of the crime, and the remaining amount that did not know of such crime was omitted from income and led to underreporting, it would be against the principle of self-responsibility under the Constitution because it imposes a statutory sanction which is much higher than that of underreporting on the taxpayer himself/herself, who is merely the victim of such unlawful act on the ground of an unlawful act in breach of trust, such as an employee, etc. who was aware of or not anticipated by the taxpayer.

B) In the above case, even if a taxpayer failed to fulfill his/her duty of care to appoint, manage, and supervise the pertinent national tax, the liability for such failure is sufficient to pay the general under-reported additional tax and the additional tax for unfaithfully under-reported return for the underreported reported result arising therefrom, and the liability for imposing the penalty for unjust under-reported additional tax on the ground of an unlawful act such as an employee beyond it is against the principle of excessive prohibition, compared with the cause attributable thereto. In light of the effectiveness of the tax return system and the public interest purpose of ensuring the smooth operation of tax administration through the imposition of additional tax, imposing the penalty for unjust under-reported additional tax on the taxpayer is significantly larger than that of the public interest.

C) From a civil law perspective, even if an employee, etc. committed a tort against a legal entity, such an act is conducted for the purpose of promoting one’s own or a third party’s interest against one’s own intent or interest. Such an act of breach of trust, such as an employee, etc., in the event that the other party to a transaction takes part in such an act, as a matter of principle, has no effect on the principal (see, e.g., Supreme Court Decisions 2004Da51542, Apr. 12, 2007; 2006Da43767, Jul. 10, 2008). In addition, in determining “the date when the employee becomes aware of the damage and the perpetrator,” which is the starting point of the short-term extinctive prescription of the right to claim damages due to a tort, if the representative committed a tort against the legal entity, the legal entity and the representative are expected to exercise their right to claim damages due to such an act, and thus, it is generally difficult to say that it would not be 1514.

In a case where an employee, etc. does not engage in a normal act with respect to his/her business within the scope of general authority, but committed an illegal act with the interests of a corporation as a means of preventing a taxpayer from committing an illegal act, which is in conflict with the interests and interests of the corporation, an illegal under-reported penalty tax shall not be imposed in addition to the general under-reported penalty tax. This is because the trust of the tax authority that is infringed due to an under-reported illegal act is related to the exercise of the original right to impose national tax on the under-reported portion, and it does not necessarily lead to the fact that the tax authority may impose an unfair under-reported penalty tax much higher than that of the under-reported portion. Therefore, it is difficult to justify that the validity of such an under-reported act belongs to the taxpayer himself/herself to impose an excessive under-reported penalty tax on the taxpayer.

4) “Cheating in breach of trust,” such as employees, etc., and exclusion period of imposition

However, in the long-term exclusion period for taxation that extends the tax authority's right to impose on the taxpayer on the ground of an unlawful act, even if the unlawful act by an employee, etc. was committed as a means of committing a crime, such as fraud, breach of trust, etc. committed against the taxpayer himself/herself, it is clear that the exercise of the tax authority's right to impose the national tax evaded by such unlawful act as an employee, etc. is difficult. Thus, barring any special circumstance, the unlawful act by such employee, etc. is included in the unlawful act as referred to in the exclusion period for imposition.

A) The purport of the exclusion period for the imposition of national taxes is to extend the exclusion period for the imposition of national taxes to 10 years because it is difficult for the tax authorities to discover that there is any unlawful act, such as making it difficult to find out the fact of taxation requirements on national taxes or writing out false facts, as seen earlier, and it is difficult to expect the exercise of the imposition right as it is difficult for them to find that there is any omission report. The extension of the exclusion period for the imposition of national taxes would put taxpayers at a disadvantage on the ground of such unlawful act, but rather, it is more meaningful to guarantee the taxpayer’s right to impose national taxes, which is obstructed by the taxpayer’s unlawful act.

B) In a case where a taxpayer’s employee, etc. committed an unlawful act against the taxpayer’s intent or interest, and thereby, the taxpayer committed an unlawful act, which led to the failure of the taxpayer to incur damages, such as fraud and breach of trust, and the result of evading national taxes occurred, even though the taxpayer did not anticipate or recognize it, if the taxpayer failed to fulfill his/her duty of care in the appointment, management, and supervision to prevent unlawful act, it cannot be deemed that the taxpayer is legally entitled to legal protection because the tax authority failed to discover it within the ordinary exclusion period of imposition. In such a case, the extension of the exclusion period for imposition of national taxes evaded by applying Article 26-2(1)1 of the former Framework Act on National Taxes on the ground of unlawful act, such as an employee, etc., would be extremely reasonable measure to recover the right to impose tax, which would have been exercised as a matter of course, and enable the taxpayer to fulfill his/her duty to pay taxes on the evaded national taxes.

Therefore, in such a case, the application of the long-term exclusion period for imposition of national taxes evaded for an unlawful act, such as a taxpayer’s own intent or interest, cannot be deemed as contrary to the principle of self-responsibility or as contrary to the principle of excessive prohibition.

C) If an obligor, when seen in civil law, made it impossible or considerably difficult for the obligee to exercise his/her right or extinctive prescription prior to the completion of prescription, the obligor’s assertion of the completion of extinctive prescription cannot be allowed as an abuse of right against the principle of good faith (see Supreme Court Decision 2002Da32332, Oct. 25, 2002). The extension of the exclusion period for imposition of national taxes by the tax authority due to an unlawful act can also be deemed as realizing the spirit of this Act in a tax-related relationship. In short, the taxation authority could not exercise its authority because it was unaware of the taxpayer’s evasion of national taxes due to unlawful act such as the taxpayer’s employees, while the taxpayer could enjoy the benefit of not paying national taxes that the tax authority should have originally paid because the taxpayer failed to fulfill his/her duty of care in appointing, managing, and supervising the employees, etc., the denial of the exclusion period for imposition solely on the ground that such unlawful act such as an employee is a criminal act against himself

D) Unlike the face of the issue of whether to impose the heavy tax rate for underreporting, in the face of the issue of whether to impose the heavy tax rate, the State is similar to the status of the victim that interfered with the exercise of the right to impose the tax due to unlawful acts such as corporate employees, etc.

If an employee’s act of taking personal benefits without an employer’s intent to pursue an employer’s profit is deemed to fall under the scope of his/her duties, the employer is liable for compensating for the loss inflicted upon a third party by his/her employee pursuant to Article 756 of the Civil Act (see Supreme Court Decision 82Meu1875, Feb. 28, 1984, etc.). Likewise, if a juristic person does not fulfill its duty of care for appointment, management, and supervision of employees, etc., it is reasonable to assume disadvantages to the extent that the exclusion period of imposition is extended for the right to impose taxes interfered with an unlawful act, such as an employee, etc.

5) Grounds for different application of penalty tax for underreporting and the exclusion period for long-term exclusion with respect to breach of trust

As can be seen, a taxpayer’s negligence in the appointment, management, and supervision of the taxpayer, but the taxpayer committed a misappropriation committed by a third party, such as an employee who was easily aware of or could not have been anticipated, and denies the imposition of penalty taxes for unlawful underreporting. Meanwhile, the application of the exclusion period for imposition of long-term taxes should be deemed as the result of the constitutional statutory interpretation that takes into account the purpose of each system and the specific feasibility, without going against the language and text of the

A) The Supreme Court held that “any fraudulent or other unlawful act that makes it impossible or considerably difficult to impose and collect taxes” as stated in the Punishment of Tax Evaders Act with respect to the unlawful or unjust method in the crime of tax evasion, as in the crime of tax evasion under the Punishment of Tax Evaders Act,” and did not distinguish the form of such act separately (see, e.g., Supreme Court Decisions 2013Du7667, Dec. 12, 2013; 2015Du44158, Apr. 13, 2017). Moreover, with the amendment of the Framework Act on National Taxes by Act No. 111124, the legislative requirements for the long-term or unjust underreporting of taxes are stipulated as “any other unlawful act prescribed by Presidential Decree” and Article 6(1)2 of the Enforcement Decree of the Punishment of Tax Evaders Act or Article 6(2)25 of the Enforcement Decree of the Framework Act on National Taxes, as amended by Presidential Decree No. 11124, Dec. 31, 2011.

B) However, both the former Framework Act on National Taxes and the amended Framework Act on National Taxes, which apply to the instant case, merely provide that “the taxpayer evades national taxes by an unlawful act,” or that “the taxpayer underreporting the tax base by an unlawful act,” and did not provide any provision as to how to regard the unlawful act by a third party, not the taxpayer himself/herself. As such, with respect to the unlawful act by a third party, which is not separately provided for, a reasonable interpretation should be made in accordance with the constitutional and general legal principles, taking into account the purpose and purpose of the introduction of the relevant system, and the purport thereof, and based on

C) In addition to an additional tax for underreporting a certain amount of sanction on the ground of an unlawful act, in a case where a taxpayer’s unlawful act such as a representative or an employee who is not a representative is deemed an unlawful act of the taxpayer himself/herself, such unlawful act is subject to positive sanction against the victim of the crime, and thus, in violation of the principle of self-responsibility or the principle of excessive prohibition under the Constitution. In this case, a third party’s unlawful act is interpreted in a manner consistent with the Constitution that does not include a taxpayer’s unlawful act, thereby infringing on taxpayer’s legal rights cannot be corrected. On the other hand, in the long-term exclusion period, even if such a third party’s unlawful act in breach of trust is deemed an unlawful act of the taxpayer himself/herself, any violation of the Constitution does not occur, and rather, if the exclusion period is not extended, it may result in an unreasonable result that the taxpayer is exempted from bearing the tax even though the taxpayer was recovered through the claim for damages, etc. In such a case, it is reasonable to interpret it in the direction

Even though the basic requirements for the application of the long-term exclusion period and the unfair under-reported additional tax consisting of the same language and text, the long-term exclusion period guarantees the period for the exercise of the right to impose taxes interfered with the unlawful act, and since the penalty tax for unlawful under-declaration itself is a system that imposes a new heavy sanction on the unlawful act, it is nothing more than disregarding the difference between the two systems in the application of the two systems. As such, even if the two are not in violation of the Constitution, a reasonable interpretation is possible in line with the specific validity by taking into account the purport of each system, and it is sufficiently possible in the literal sense that both are identical in the text, and both are related to the literal form that the two forms are identical, and all of the two are different from the taxpayer’s unlawful act or different from the taxpayer’s unlawful act.

D) Such interpretation as above leads to the situation in which the exercise of the right to impose national taxes was hindered due to an employer’s breach of trust, but it was later revealed that national taxes can be assessed. On the other hand, even the taxpayer who suffered from an employer’s breach of trust by an employer, etc. was also subject to a high tax rate for underreporting due to an employer’s breach of trust, etc., rather than an illegal underreporting that is applied with high tax rate for underreporting due to an employer’s breach of trust, thereby promoting harmony between public and private interests.

6) The plaintiff's ground of appeal No. 1

A) As to the long-term exclusion period

Based on the aforementioned factual basis, the lower court determined that the 10-year statute of limitation is applied to the corporate tax for the business year from 2005 to 2007, on the ground that the Plaintiff’s unlawful act was committed in the course of handling the business affairs of the Plaintiff’s employee as the Plaintiff’s employee, and that the evidence submitted by the Plaintiff alone was insufficient to recognize that the Plaintiff had fulfilled considerable care and supervision to prevent the Plaintiff’s unlawful act, and that even if the Plaintiff was found to have committed a crime equivalent to the amount paid, it is reasonable to deem such unlawful act as the taxpayer’s unlawful act.

In light of the relevant provisions, legal principles, and records as seen earlier, such determination by the lower court is justifiable, and contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine on “unlawful act” as stated in

B) As to the portion of unfair underreported additional tax

On the other hand, examining the aforementioned facts in light of the aforementioned legal principles, Nonparty 1 and Nonparty 2’s unlawful act committed against the Plaintiff’s interest or intent, which is the Plaintiff’s principal, against the Plaintiff’s corporate interest or intent, and was committed as a means of committing a crime, such as fraud, against the Plaintiff’s corporate entity, and was involved in the transaction partner, thereby making it difficult for the Plaintiff corporation to easily recognize or have not anticipated such unlawful act. Therefore, it is difficult to view that the amount of the instant payment was underreporting by an unjust method as stated in the penalty tax for underreporting, and even if the Plaintiff’s corporate tax return was omitted in the business year 2005 or 2010, it is reasonable to deem that the penalty for underreporting was not imposed on the Plaintiff corporation exceeding the general penalty tax for underreporting

Nevertheless, the lower court determined otherwise, solely on the ground that there is insufficient evidence to acknowledge that the Plaintiff corporation fulfilled its duty of due care and supervision to prevent unlawful acts by Nonparty 1 and Nonparty 2, etc., thereby imposing an unfair under-reported penalty tax by adding the aforementioned 2005 business year or 2010 business year corporate tax. In so determining, the lower court erred by misapprehending the legal doctrine on “unfair method” as stated in the unfair under-reported penalty tax, thereby adversely affecting the conclusion of the judgment.

C. As to ground of appeal No. 2 by the Plaintiff

In light of the circumstances that, if Nonparty 1 and Nonparty 2 were employees within the scope of the Plaintiff’s control and supervised their duties with due care, they could prevent or correct their unlawful acts, the lower court determined that there was a justifiable reason for the Plaintiff’s failure to properly perform the duty to report and pay corporate tax on the amount paid in the instant case.

In light of the relevant legal principles and records, the lower court did not err in its judgment by misapprehending the legal doctrine on justifiable grounds for exempting penalty, contrary to what is alleged in the grounds of appeal.

3. Determination on the portion of corporate tax (including additional tax) related to non-deductible of depreciation costs

A. As to the Plaintiff’s ground of appeal No. 3

On the grounds indicated in its reasoning, the lower court deemed that the Plaintiff’s business providing Banb service constitutes a communications business under the Korea Standard Industrial Classification, and determined that a non-deductible measure was lawful for the Plaintiff’s depreciable assets in excess of the amount calculated by applying the standard service life to communications business prescribed in Article 15(3) [Attachment 6] of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Ministry of Strategy and Finance No. 325, Feb. 23, 20

Examining the reasoning of the lower judgment in light of relevant provisions, legal principles, and records, the lower judgment did not err by misapprehending the legal doctrine on the classification of business type and the scope of communications business in the Korea Standard Industrial Classification under Article 15(3) [Attachment 6] of the former Enforcement Rule of the Corporate Tax

B. As to the Defendant’s remaining grounds of appeal

Examining the reasoning of the lower judgment in light of the relevant legal doctrine and the record, the lower court did not err by misapprehending the legal doctrine on exemption of additional tax, contrary to what is alleged in the grounds of appeal.

4. Conclusion

Therefore, among the judgment of the court below, the portion of the value-added tax (including the additional tax) for the first year from 2005 to 2008 shall be reversed, and since it is sufficient for the Supreme Court to directly decide thereon, the judgment of the court of first instance as to this part shall be revoked, and this part of the lawsuit shall be dismissed, and this part of the judgment of the court below shall be reversed, and this part of the case shall be remanded to the court below for a new trial and determination, and the remaining appeals of both the plaintiff and the defendant shall be dismissed. It is so decided as per Disposition by the assent of all participating Justices on the separate opinion as to the portion of the unfair under-reported additional tax for the business year from 2005 to 2007, and the part of the long-term exclusion period [including the additional tax for the business year from 205 to 207 business year from the imposition of corporate tax (including the additional tax)] of corporate tax for each business year from 2005 to 207];

5. Appointment and dissenting opinion by Justice Lee Ki-taik, Justice Kim Jae-hyung, Justice Park Jung-hwa, Justice Ahn Jae-hwa, and Justice Noh Jeong-hee as to the imposition period of imposition for an undue and long-term return

A. Summary of separate views and dissenting opinions

The Majority Opinion states that where an employee, etc. actively committed an unlawful act, such as hiding a taxpayer’s income in the course of committing a crime, such as fraud, breach of trust, etc. committed with a taxpayer as a victim for the purpose of pursuing his/her own interest or a third party’s interest, etc., and the taxpayer himself/herself could not be seen as “the taxpayer filed a return by improper means,” and thus, no additional tax for underreporting may be imposed. However, the long-term exclusion period should be applied by deeming that “the taxpayer evaded national tax by unlawful means.”

However, since both the long-term exclusion period and the unfair under-reported penalty are also regulated under the Framework Act on National Taxes, the same requirement as “unlawful act by a taxpayer” is stipulated, if a taxpayer cannot impose penalty tax on an employee due to such unlawful act in breach of trust as above, it is reasonable to interpret that the long-term exclusion period is not applicable. The reasons are as follows.

B. Uniform interpretation of the provision on the long-term exclusion period and unfair underreporting penalty tax

1) The issues of this case are as follows. The issue of this case is whether a representative or an employee, etc., who is not a representative, committed a crime against a taxpayer’s interest or a third party, such as fraud, breach of trust, etc., with the intent of seeking the benefit of the taxpayer against his/her own interest or will, and a taxpayer could not have easily recognized or anticipated his/her unlawful act by participating in the transaction partner. In such cases, whether underreporting due to an employee, etc., constitutes “where the taxpayer underreporting by an improper means” as stated in the penalty tax for underreporting, and whether the act of evading national tax by such unlawful act constitutes “where the taxpayer evades national tax by an unlawful act” as stated in the long-term exclusion period of imposition. Whether this two problems should be uniformly determined or differently should be determined.

Considering the language and structure of the provisions related to the Framework Act on National Taxes, legislative intent, etc., in the event of breach of trust by such employees, etc., it is reasonable to uniformly interpret and apply the long-term exclusion period of imposition and the unfair under-reported additional tax on taxpayers.

2) Article 26-2(1)1 of the former Framework Act on National Taxes provides that the exclusion period shall be extended to 10 years for “where a taxpayer evades national taxes by fraud or other unlawful means” (Article 26-2(1)1 of the former Framework Act on National Taxes) and that “where there exists a tax base for underreporting by improper means (where a taxpayer conceals or disguises all or part of a fact that serves as the basis for calculating the tax base or amount of national taxes, thereby violating the duty to report the tax base or amount of national taxes),” additional tax for underreporting calculated by applying the general underreporting rate of 10/100, not for general underreporting rate of 10/100, and for an unfair underreporting penalty tax calculated by applying the tax rate of 40/100, whichever is earlier (Articles 47-3(2)

In a prior meaning, “unfair” means that “unfair” does not conform to the foregoing rule, and “unfair” means that it does not correct or correct. Therefore, if a “unfair method” does not constitute “unfair method” as stated in an unfair under-reported penalty tax, it shall be deemed that it does not constitute “unfair act” as stated in the long-term exclusion period of imposition. However, the Supreme Court uniformly construed two applicable requirements by stating that “unfair act” as stated in the long-term exclusion period of imposition and collection of taxes and “unfair method” as stated in an unfair under-reported penalty tax are “a deceptive scheme or other active act that makes it impossible or significantly difficult to impose and collect taxes” (see, e.g., Supreme Court Decisions 2013Du7667, Dec. 12, 2013; 2015Du4158, Apr. 13, 2017).

3) The Supreme Court rendered a judgment that “Fraud or other unlawful act” as referred to in Article 9(1) of the former Punishment of Tax Evaders Act (wholly amended by Act No. 9919, Jan. 1, 2010) is “any deceptive scheme or other unlawful act that makes it impossible or considerably difficult to impose and collect taxes” (see, e.g., Supreme Court Decision 9Do5355, Apr. 21, 2000). The term “illegal act” or “unfair method” as referred to in the long-term exclusion period of imposition of taxes can be deemed as uniformly interpreting the same legal concept as used in the crime of tax evasion, the long-term exclusion period of imposition of taxes and the unfair under-reported additional taxes, by citing the above legal doctrine as it is, as regards the concept of the unlawful act of tax evasion.

After January 1, 2010, the Punishment of Tax Evaders Act amended by Act No. 9919 of Jan. 1, 2010 explicitly stated that the legal doctrine on the concept of unlawful act of tax evasion shall be introduced into the legal regulation and Article 3(6) of the former Enforcement Decree of the Framework Act on National Taxes “Fraud or other unlawful act” shall mean an active act which falls under any of the following subparagraphs and which makes it impossible or considerably difficult to impose and collect taxes. The following subparagraphs shall include preparation and receipt of false evidence or documents (No. 2), “discipation of property, fabrication or concealment of income, profit, or transaction” (No. 4), and “any other fraudulent act or unlawful act” (No. 7) and “any other unlawful method listed as one of the unlawful methods under each subparagraph of Article 27(2) of the former Enforcement Decree of the Framework Act on National Taxes, which amended by Act No. 11243, Dec. 31, 2011; the former Enforcement Decree of the Framework Act on National Taxes shall be amended by Presidential Decree No. 201.

The legislative intent revealed in such legislative background reveals that the legislative intent of the legislators was to equally regulate each of the above systems by complying with the requirements for the long-term exclusion period and the unfair under-reported penalty tax under the Punishment of Tax Evaders Act. The long-term exclusion period is a system extending the exclusion period of the imposition right, and the unfair under-reported penalty tax is an administrative sanction, which is an additional tax, and may be defined by classifying both systems in line with the original purpose and characteristics of each system. Nevertheless, the legislators actively reflected the Supreme Court’s existing attitude on the long-term exclusion period of imposition and the unfair under-reported penalty tax under the former Framework Act on National Taxes in accordance with the former Framework Act, and actively stated the requirements applicable under the amended Framework Act on National Taxes as “the fraudulent and other unlawful act of taxpayers.” Although the amendment of the former Framework Act on National Taxes only applies to this case, the legislative intent of the amended Framework Act on National Taxes should not be neglected.

4) The authority to determine the meaning, content, and scope of application of the Act, and the authority to interpret and apply the Act is the essential content of the judicial authority of a court, but the authority to interpret and apply the Act is not unlimited. Since legislators have broad legislative formation rights within the limits permitted by the Constitution, judges shall interpret the Act in the direction of respecting it, and shall not distort, modify, or substitute the legislative intent expressed in the Act through statutory interpretation. If one of the parties acknowledges the application in the same language and denies the application in the other party, then they cannot be known that they should be the criminal. Ensuring the unity and consistency of the legal order by interpreting and applying the Act without any uniform and contradiction in relation to the entire legal system is the last resort of the rule of law to ensure uniformity and consistency in the legal order by interpreting and applying the Act without any uniform and contradiction in relation to the legal system. “The same is different.” Treatment without any reasonable reason is the inherent title of justice to treat the same differently without any justifiable reason is in violation of the principle of equality. If legislators treat the same differently without any reasonable reason without any justifiable reason, it can maintain the unity of the legal order.

In any case, the application of the long-term exclusion period and the imposition of the unfair under-reported penalty tax is a matter that falls under the territory of legislative policy. When interpreting the law, it should be the direction of maintaining the unity and systematic legitimacy of legal order by respecting the legislative intent expressed in the text of the law as much as possible.

5) In full view of the language and structure of the provisions of the Framework Act on National Taxes, and the legislative intent revealed in the legislative process, it is clear that it cannot be interpreted differently from the “illegal act” and the “unfair under-reported additional tax” (as seen above, if a taxpayer’s expression of “unfair” and “unfair” is presented, it does not constitute “unfair act” as provided in the “unfair under-reported additional tax” within the “unfair under-reported exclusion period.” This also applies not only to cases where a taxpayer himself/herself commits an unlawful act but also where a taxpayer’s employee commits an unlawful act in breach of trust. Unless otherwise prescribed in the Framework Act on National Taxes, if it is deemed that a penalty for under-reported additional tax cannot be imposed on the taxpayer on the taxpayer on the ground of an unlawful act such as an employee, etc. who could not be easily recognized or anticipated by the taxpayer, it is natural to interpret that the exclusion period of imposition does not extend due to such unlawful act as a taxpayer’s breach of trust, and thus, the Majority Opinion does not accept the principle of statutory imposition of under-reported additional tax on the taxpayer.

(c) Issues in the discriminatory treatment of long-term exclusion period and unfair under-reported additional taxes;

1) The extension of the exclusion period by applying the long-term exclusion period to taxpayers infringes on the legal stability and predictability of taxpayers, as well as any unfair underreporting penalty tax.

2) Taxes are to increase the financial demand necessary for the performance of the State’s general task as a member of the State community, without consideration, depending on their respective economic capabilities. The State’s authority to impose taxes inevitably limits the private person’s property and economic freedom. Since the tax law is a norm that establishes a taxation requirement on the tax liability that imposes an economic burden on the people, it should, as far as possible, regulate the tax law in a way that ensures legal stability and predictability.

In general, the period of exclusion is to be determined as soon as possible by allowing a right holder to exercise the pertinent right promptly (see, e.g., Supreme Court Decision 2012Da47074, Aug. 20, 2014). The purpose of the exclusion period of the right to impose national taxes is to ensure the legal stability of taxpayers by promptly establishing a tax law relationship (see, e.g., Supreme Court Decision 2013Du7667, Dec. 12, 2013). The ordinary exclusion period of the right to impose national taxes is five years from the date on which national taxes can be imposed (Article 26-2(1)3 of the Framework Act on National Taxes). The obligation to pay national taxes if national taxes are not imposed even after the expiration of the exclusion period of national taxes (Article 26 subparag. 2 of the Framework Act on National Taxes), but not only the tax authority exercises the right to impose national taxes after the expiration of the exclusion period, but also the taxpayer’s tax obligation related to the relevant national taxes becomes extinct (see, 99Du23, etc.

3) If a taxpayer evades a national tax due to fraud or other unlawful act, it is difficult to expect the tax authority to exercise the right to impose a national tax if the taxpayer committed an unlawful act, such as making it difficult to discover a tax-related fact or making a false fact difficult (see, e.g., Supreme Court Decision 2013Du7667, supra). However, even if the main purpose of the provision is to guarantee the right to impose a national tax that has been obstructed by unlawful act, the measures to extend the period of imposition of a tax-related law for 10 years, which was limited to ensuring the legal stability of the taxpayer, are disadvantageous to the taxpayer. The tax authority cannot exercise the right to impose a national tax after the lapse of 5 years. The taxpayer’s tax liability is extinguished. However, if the long-term period of imposition is applied, the taxpayer can continue to impose not only the principal tax evaded for 10 years but also various additional taxes, etc. incidental to the principal tax.

If a taxpayer himself/herself commits an unlawful act interfering with the exercise of taxing authority, the taxpayer should be at a disadvantage subject to the application of the long-term exclusion period of taxation on the relevant national tax. However, such unlawful act as in this case is not committed by a taxpayer, but committed an unlawful act, such as hiding the taxpayer’s income in the course of committing a crime of fraud, breach of trust, etc., with the taxpayer himself/herself as the victim, and thus, the long-term exclusion period of taxation cannot be applied even when the taxpayer’s national tax is evaded. In such a case, there is only room for recognizing the taxpayer as to the evasion of national tax and failing to fulfill his/her duty of care in the appointment, management, and supervision of the employee, etc. to prevent such unlawful act. Furthermore, even if the taxpayer himself/herself actively participated in the misappropriation of the employee, etc., even if he/she fulfilled his/her duty of care in the appointment, management, and supervision of the employee, etc., it is difficult for him/her to prevent such unlawful act from being committed against him/her even after the exclusion period of national tax liability.

4) Considering that penalty tax imposed upon the time the statutory period of imposition is applied, imposing a long-term unstable tax on a taxpayer can ultimately serve as a punitive measure. In other words, where a taxpayer evades corporate tax by filing a return due to an unlawful act, there is both underreporting and failing to pay corporate tax on the portion of the corporate tax that has been evaded. According to the statutes applicable in this case, the additional tax amount equivalent to 40% of the evaded corporate tax amount, i.e., the amount of corporate tax underreporting, is added, and up to 3/100 per day from the day following the due date for payment (the due date for filing a tax return) to the day when the additional tax is calculated at the rate of 10.95% per annum (Article 47-5(1) of the former Framework Act on National Taxes, which provides that the additional tax imposed on a taxpayer that has not been imposed for a long-term period of 10 years from the date on which the statutory period of imposition of additional tax can not be imposed for the next 10% of the statutory period of imposition.

5) When determining whether to apply both the system that imposes penalty tax on a taxpayer and extends the exclusion period of imposition as a requirement for “unlawful act of a taxpayer,” it is difficult to conclude that a third party’s unlawful act should be interpreted to what extent because it is not specifically prescribed in the former Framework Act on National Taxes. Fundamentally, a taxpayer should be careful in imposing a taxpayer’s disadvantage where the exclusion period of imposition is extended on the ground of a third party’s unlawful act, not a taxpayer’s own act. Inasmuch as it is clear that the penalty tax for underreporting is a sanction against a taxpayer, a taxpayer should not impose an unjust underreporting penalty tax, which is a sanction against a taxpayer for a fraudulent act, on the ground of a taxpayer’s breach of trust, such as an employee who is the victim. However, it is not easy to determine whether to impose a national tax on a taxpayer by misappropriation within a long-term exclusion period, which is a system that guarantees the State’s right to impose a national tax that obstructs a certain illegal act, unlike a clear underreporting penalty tax clearly.

However, taking into account the general principle that there should be no contradiction, the legal order should make the same conclusion with the unfair underreporting penalty tax. As the majority opinion on two systems that require the same language and text, deeming the unfair underreporting penalty tax as a taxpayer’s unlawful act at the other long-term underreporting penalty tax without deeming it as a taxpayer’s unlawful act is a contradictory interpretation that disregards the unity and unity of the entire system of the Framework Act on National Taxes. Furthermore, even if the long-term underreporting penalty is not a direct sanction against a taxpayer, it is a disadvantageous measure that causes taxpayers to be subject to the legal uncertainty that is not only the principal tax evaded by the national tax but also various additional taxes, etc. incidental thereto, by failing to determine the legal relationship with the taxpayer for a long time, and thus, it is not only to ensure the unity and consistency of the legal order, but also to ensure the legal stability and predictability of the taxpayer.

Although the Majority Opinion considers that the legislators’ intent and legislative purpose to regulate the illegal under-reported additional tax and the tax period for long-term exclusion can not be imposed on the taxpayer on the grounds of unlawful acts such as employees, etc. on the grounds that they do not go beyond the legislative purpose, it presented constitutional interpretation on the basis of discriminatory treatment by applying the long-term exclusion period for exclusion for taxation. However, it is not reasonable to understand the constitutional interpretation in the direction of strengthening and expanding the tax authority’s right to impose taxation without clear grounds. In order to derive the conclusion that the tax authority should not impose the illegal under-reported additional tax on the grounds of unlawful acts such as a taxpayer’s breach of trust, there is no need to mobilization of the constitutional interpretation.In addition, to extend the period for exercising the right to impose tax by applying the long-term exclusion period for exclusion for taxation can not be deemed to go against the uniform interpretation of the law, and it is the system to guarantee the fundamental rights of the people. The Constitution is not to guarantee fundamental rights of the people, but rather it is unreasonable to exercise the right to impose tax on under-reported employees and to resolve the problem of statutory interpretation.

D. Comparison with the provisions of the Framework Act on National Taxes and other relevant laws of countries;

1) There is a need to examine the legislation cases of other countries with respect to the right to impose taxes on tax evasion or fraudulent acts. In particular, in Germany or the United States, if an employee, etc. abused his authority and commits a fraudulent act contrary to the interests of a taxpayer, the exclusion period of imposition on the relevant taxpayer for the reason of a fraudulent act such as an employee, etc. is not extended. On the other hand, in Japan, there is no reason to choose the same method as Japan when interpreting and applying the Framework Act on National Taxes which regulates two different terms, while the exclusion period of imposition on the relevant taxpayer cannot be imposed on the taxpayer for the reason of a fraudulent act such as such employee's breach of trust.

2) The Framework Act on National Taxes of the Republic of Korea provides that the period of exclusion from the imposition of national taxes is considerably long-term compared to other countries. Germany ordinarily sets the period of exclusion from the imposition of national taxes. The period of exclusion from the imposition of national taxes is 4 years, 10 years in cases of evasion of taxes, and 5 years in cases of omission of taxes (see Article 169 of the German Framework Act on Tax) (where no intention is recognized to evade taxes). While the period of the imposition of the imposition authority is ordinarily 3 years, the United States may impose taxes at any time without the restriction of the imposition period in cases of filing a false report (referring to the concept corresponding to fraudulent and illegal acts) with intent to evade taxes, or attempted to evade or infringe taxes intentionally (see Article 6501 of the United States Internal Tax Act). Japan is normally setting the period of exclusion from the imposition period of national taxes, and seven years in cases where any false or other unlawful act is involved (see Article 70 of the

Whether to impose a certain limitation on the exclusion period of the right to impose tax is a territory belonging to the legislative policy, but in principle, it is a matter of principle that a taxpayer goes beyond the risk of imposing taxes that restrict taxpayer's property and economic freedom by promptly determining tax relations. Nevertheless, extending the exclusion period on the grounds of fraudulent act, tax evasion, deception, etc. is a disadvantageous measure because taxpayers are in an unstable state on the tax law relations for a long time. The imposition period of the exclusion period of ten years is an unfavorable measure because taxpayers are in an unstable state on the tax law relations. The imposition period of the National Tax Act for the ten-year long-term exclusion period of the exclusion period of the exclusion period of the imposition of taxes does not constitute a strong sanction like the United States where the imposition period of taxes is extended without limitation for intentional tax evasion, etc., even if it does not fall under a strong sanction as in the United States where the imposition period of taxes is extended without limitation for the unlimited extension of the exclusion period of five-year period of the exclusion period of the imposition period of taxes by intentional act, or Japan which extends the exclusion period to seven

3) As in the instant case, if an employee, etc. abused his authority to commit a misappropriation against the taxpayer’s interest, the United States and Germany deem that the exclusion period for taxation on the relevant taxpayer’s tax does not extend on the ground of a misappropriation such as an employee’s misappropriation.

First of all, the United States deemed that the imposition period was lapsed because the act of deception was not attributed to the company, and the company is not responsible for the fraudulent act of its officers and employees, in conflict with the interests of the company. The United States imposes penalty tax equivalent to 20% of the under-reported tax amount, but imposes heavy penalty tax equivalent to 75% of the under-paid tax amount if the under-paid tax was overpaid and under-paid by deception (see Articles 662 and 663 of the United States Internal Tax Act).

In Germany, if “if a third party evades or omits a tax, the tax obligor did not obtain any financial benefits through the third party’s act, and if the tax obligor proves that the tax evasion or the tax evasion did not occur due to the failure to take preventive measures required for the transaction in order to prevent the tax evasion, the provision on the extension of the exclusion period does not apply (see Article 169(2)2 of the German Tax Act).” As seen in this case, if the result of the tax evasion occurred by acquiring the funds of the tax obligor, the tax obligor cannot be deemed to have obtained the financial benefits by the third party’s act, and it cannot be deemed that the result of the taxpayer’s tax evasion due to the taxpayer’s fraudulent act did not take preventive measures required for the transaction to prevent the tax evasion, and the provision on the extension of the exclusion period of exclusion period does not apply to the taxpayer.

In the case of Japan, an additional tax amounting to 10% of the omitted amount of under-reported return (see Article 65(1) of the General Rules of the National Tax Act of Japan) shall be imposed on the whole or part of a fact that serves as the basis for calculating the amount of tax (see Article 65(1) of the General Rules of the Republic of Korea). In other words, where an unlawful act, such as the Framework Act on National Taxes, has been involved, an additional tax amounting to 35% of the underreported amount of tax shall be imposed (see Article 68 of the General Rules of the National Tax Act of Japan). If an agent, regardless of whether a taxpayer was a taxpayer, commits an act of hiding or causing concealment without permission, thereby taking away or under-reporting a taxpayer’s money without permission, and even if a taxpayer was negligent in appointing or supervising the agent, such act cannot be deemed as identical to the taxpayer’s act, and thus, the period of exclusion from imposition of additional tax shall not be applied even if there is no awareness of the taxpayer’s unlawful act in relation to the extension of the period of imposition of tax by legislators.

E. Consideration of the nature of tax liabilities

A taxpayer’s tax liability, i.e., a tax liability is established if the tax liability satisfies the taxation requirements prescribed by the tax law (Article 21(1) of the Framework Act on National Taxes). However, this is merely an abstract establishment of the taxpayer’s tax liability and the State ought to confirm the details of the tax liability in order to proceed to the collection procedure upon the commencement of a claim for performance thereof. In other words, a specific tax liability and obligation relationship is established where the tax base and amount of tax are to be specifically determined through a disposition of return by the taxpayer or a disposition of decision or rectification by the taxation authority as a procedure for determination of the tax liability. There are many cases where the assessment of tax base and amount of tax are complicated and there are differences in opinions, and such determination procedure is necessary and the status of the taxpayer and the taxation authority are clearly distinguishable before and after such determination procedure. The tax authority can only file a claim for performance of the tax liability before and after the determination of the tax liability due to a disposition of imposition or declaration. Although a taxpayer bears an abstract tax liability and the tax liability is not required to fulfill the specific amount of tax liability without an appeal procedure.

As can be seen, the status of the tax imposing authority under the tax law established simply prior to the exercise of the right to impose taxes is distinguishable from that of the general creditor whose liability is established and determined immediately in accordance with the contract or legal provisions under civil law. Even if there is an unlawful act in the taxpayer’s territory prior to the determination of tax liability, it is different from that of a claim already established since it was prior to the occurrence of a specific tax claim. As indicated in the Majority Opinion, deeming the status of the taxpayer and the imposing authority of the tax as similar to the status of the obligor and the creditor under private law, the taxpayer should be subject to the application of the statute of limitations as part of the employer’s liability, and the claim that the statute of limitations period has expired due to the denial of the application of the statute of limitations period of limitations, is difficult to accept as

F. Whether the case goes against the precedent

As to whether to apply the long-term exclusion period to a taxpayer on the ground of a third party’s unlawful act, such as an agent, etc. conducted without contact with the taxpayer himself/herself, the Supreme Court ruled that “any unlawful act such as a taxpayer’s agent or performance assistant, etc., is also included in the act of illegality stipulated in the long-term exclusion period, barring any special circumstances (see Supreme Court Decisions 2009Du15104, Sept. 29, 201; 2010Du1385, Sept. 10, 2015).” However, as in the instant case, the above two rulings are different from cases where the unlawful act by employees, etc. is committed while the taxpayer committed the crime of fraud, breach of trust, etc. committed by the taxpayer as the victim, and the taxpayer cannot be easily perceived or anticipated, and thus, it does not conflict with the purport of the above Supreme Court Decision.

G. Determination on the instant case

In light of the above legal principles, the judgment of the court below is examined. According to the above facts, the illegal act committed by the non-party 1 and the non-party 2 by the plaintiff corporation against the interests or will of the plaintiff corporation, which is the taxpayer himself, was committed as a means of committing the crime, such as fraud against the plaintiff corporation, and it was not possible for the plaintiff corporation to easily recognize or expect such unlawful act by participating in the transaction counterpart. Therefore, even if the taxpayer was evaded national tax due to his fraudulent act in breach of trust, it cannot be deemed to constitute "the case where the taxpayer evaded national tax by an illegal act" as referred to in the long-term exclusion period of imposition. Thus, the exclusion period of imposition

Therefore, the imposition of corporate tax (including additional tax) from 2005 to 2007, among the imposition disposition of corporate tax on the amount of the instant payment, is unlawful since the exclusion period for imposition expires of five years.

Nevertheless, the lower court determined that the imposition of corporate tax (including additional tax) from the above 2005 to the 2007 business year was lawful on the ground that it was insufficient to recognize that the Plaintiff corporation fulfilled due diligence and supervision in order to prevent unlawful acts by Nonparty 1 and Nonparty 2. The lower court erred by misapprehending the legal doctrine on “unlawful act” as referred to in the exclusion period of imposition, thereby adversely affecting the conclusion of the judgment.

H. Conclusion

The Majority Opinion should reverse not only the portion of corporate tax underreporting but also the portion of corporate tax from 2005 up to 2010 until the business year from 2005 to 2007, and remand the case to the lower court for further proceedings consistent with this Opinion.

For the same reason, we oppose the majority opinion on the imposition disposition of corporate tax (including additional tax) from 2005 to 2007, excluding the penalty tax for unfair underreporting. The reason why the separate opinion as to the portion of penalty tax for unfair underreporting from 2005 to 2007 is the same as the majority opinion, but the reason is different.

Chief Justice Kim Jong-soo (Presiding Justice)