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

Mapo Tax Office (Law Firm Dongin, Attorneys Lee Han-tae et al., Counsel for the plaintiff-appellant)

December 16, 2016

Seoul Administrative Court Decision 2015Guhap69232 decided April 22, 2016

1. Of the judgment of the court of first instance, the part against the plaintiff falling under the order of additional cancellation shall be revoked.

The Defendant’s disposition of imposition of corporate tax of KRW 416,47,580 for the business year 2008 against the Plaintiff on November 1, 2013 in excess of KRW 325,624,881, the amount exceeding KRW 545,434,740 for the business year 209, the amount exceeding KRW 465,841,263 among the disposition of imposition of KRW 932,598,980 for the business year 2010, the amount exceeding KRW 703,729,928 among the disposition of imposition of KRW 628,239,020 for the business year 20, the amount exceeding KRW 494,306,186, the amount exceeding KRW 332,832,040 for the business year 20, and the amount exceeding KRW 286,390 for each disposition of imposition of corporate tax of KRW 93,90 for the business year 20.

2. The remaining appeal by the plaintiff and the defendant are dismissed, respectively.

3. Of the total litigation costs, 60% is borne by the Plaintiff, and the remainder is borne by the Defendant, respectively.

1. Purport of claim

Each of the value-added taxes and corporate tax imposed on the Plaintiff on November 1, 2013 as stated in the separate sheet No. 1, which the Defendant rendered to the Plaintiff on the same day.

2. Purport of appeal

A. The plaintiff

The part of the judgment of the court of first instance against the plaintiff shall be revoked. Each disposition of value-added tax on November 1, 2013 by the defendant as stated in the separate sheet against the plaintiff on November 1, 2013 shall be revoked in both the imposition of value-added tax on the second to 2008 and the imposition of each corporate tax for the second to 205 through 2012.

B. Defendant

The part against the defendant in the judgment of the first instance shall be revoked, and the plaintiff's claim corresponding to that part shall be dismissed.

1. Quotation of the reasons for the judgment of the first instance;

This judgment is based on the reasoning of the judgment of the court of first instance, except for adding the following matters to the reasoning of the judgment of the court of first instance, and thus, it is based on Article 8(2) of the Administrative Litigation Act and the main text of Article 420 of the Civil Procedure Act.

(1) The following parts shall be added to the pages 6, 19 and below:

(D) In addition, the Plaintiff asserts that the Plaintiff’s act cannot be assessed as the Plaintiff’s act since he faithfully performed his duty of care to prevent Nonparty 1 and Nonparty 2, who are the actual actors. However, in light of the contents and circumstances of the act committed by the actual actors, the evidence submitted by the Plaintiff, such as evidence Nos. 9, 10, 11, and 12, is insufficient to recognize that the Plaintiff had fulfilled his duty of due care and supervision to prevent the act committed by the actual actors, and there is no other evidence to acknowledge this otherwise, the Plaintiff’s assertion is without merit

E) The Plaintiff asserts that even if the validity of Nonparty 1 and Nonparty 2’s unlawful act belongs to the Plaintiff, the penalty tax, which is a sanction for neglecting the obligation to report corporate tax, may not be imposed on the Plaintiff, a bona fide victim.

Under the tax law, where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, administrative sanctions imposed as prescribed by the Act may not be imposed if there is a justifiable reason to believe that it is unreasonable to expect the taxpayer to fulfill his/her obligations (see Supreme Court Decision 2009Du3682, Oct. 27, 201, etc.).

However, even though the plaintiff knew that the act of improper act was committed by the executor, if the plaintiff supervised the actor's business with due care within the control scope of the plaintiff's employee, the executor could have become aware of the act of improper act of the executor and prevented or corrected it. Thus, only because the plaintiff knew that the act of improper act was committed by the executor, it cannot be deemed that the plaintiff has a justifiable reason in violation of the duty to report and pay taxes under the law. Accordingly, the plaintiff's above assertion is without merit.

(2) On face 11, the following shall be added to the pages 11:

“. As to the imposition of penalty tax for the business year 2008 to 2012

1) Under the Corporate Tax Act, an additional tax is a kind of administrative sanction imposed on a tax obligor, a juristic person, the duty to return a tax base and pay the amount of tax in good faith in order to ensure the propriety of taxation, and if such a person neglects the performance of his/her duty as a means of securing the obligation. Such a sanction cannot be imposed where there is a circumstance where the taxpayer can be deemed legitimate, or where there is a circumstance where it is deemed that the performance of his/her duty cannot be easily expected to be not attributable to the fact that the taxpayer neglected his/her duty, such as when there is a conflict of opinion due to the intention in the interpretation of the tax law beyond the scope of mere land or misunderstanding (see, e.g., Supreme Court Decision 2008Du2330, Feb. 10, 2011).

2) As seen earlier, it is difficult to determine which business constitutes “communication business,” but on the other hand, the following circumstances, i.e., the overall purport of the evidence and arguments, including the above, can be seen as part of the provisions of the tax law that specify the contents of the Corporate Tax Act when determining the lifespan of the asset subject to depreciation in accordance with the provisions of the relevant corporate tax law. However, there is room for controversy as to the interpretation of the Korea Standard Industrial Classification does not directly classify the scope of the business as to which category of business is not classified, and ② The broadband service business provides the combined service such as the transaction approval service of credit cards, automatic transfer service, automatic purchase service, digital signature service, and credit card purchase service, etc. through its independent computer network, and it is not easy to determine what category of business under the Korea Standard Industrial Classification; ③ the Statistics Korea Standard Industrial Classification, which is the main institution in charge of the establishment and amendment of the Korea Standard Industrial Classification and administrative interpretation of the Korea Standard Industrial Classification, providing information service business as well as the information service business under the Korea Standard Industrial Classification, which appears to fall under the Korea Industrial Classification Association’s Act’s.

(iii)the calculation of the amount of penalty to be cancelled;

The amount of the penalty tax to be revoked is related to the increased corporate tax amount due to the inclusion of depreciation costs in the instant case in the corporate tax for 208 through 2012 / [2] 30, 15, 639, 353 [1] general under-reported additional tax for the business year 208 / 16, 47, 368, 47, 286, 47, 286, 47, 286, 47, 47, 285, 47, 286, 47, 47, 286, 47, 97, 47, 97, 97, 47, 97, 47, 97, 965, 47, 97, 209

Therefore, the part of the disposition of this case which exceeds KRW 325,624,881 (=416,47,580 - 90 - 90,852,699) of the disposition of this case in excess of KRW 545,434,740 of the disposition of this case in excess of KRW 465,841,263 [ = 545,434,740 - 79,740 - 79,593,477] of the disposition of this case in excess of KRW 932,598,980 of the disposition of this case in excess of KRW 32,729,98,980 of the disposition of this case in excess of KRW 932,598, 980 of the disposition of this case in excess of KRW 932,590-28,2289,3638,294,2012] of the disposition of this case in excess

2. Conclusion

Therefore, the plaintiff's claim is accepted within the above scope of recognition, and the remaining claims are dismissed due to reasons. Since the judgment of the court of first instance is partially unfair, the part against the plaintiff in the disposition of imposition of corporate tax for the business year 2008 through 2012 among the part against the plaintiff in the judgment of the court of first instance is revoked, and the corresponding part of the disposition is revoked, and the remaining appeal of the plaintiff and the defendant are dismissed as it is so decided as per Disposition.

(attached Form omitted)

Judges Kim Woo (Presiding Judge)

(1) The Plaintiff asserted to the effect that the Defendant applied an unfair under-reported additional tax rate, not an ordinary under-reported additional tax rate, with respect to this part of the additional tax, but the Defendant applied the general under-reported additional tax rate for this part at the time of the instant disposition

Note 2) Standard for calculation of additional tax for general underreporting = calculated tax amount 】 underreporting tax base-unfair underreporting)/tax base; hereinafter the same shall apply.

(3) Article 47-4 (Additional Tax for Indecent Payment or Refund) (1) Where a taxpayer (including a joint and several tax obligor, a secondary tax obligor, or a guarantor who is liable to pay on behalf of a taxpayer) fails to pay national taxes (including interim prepayment, preliminary return, payment by interim return, and interim return) by the due date under the tax-related Acts, or has paid tax less than the amount to be paid (hereinafter referred to as "excess refund") or has been refunded more than the amount to be refunded (hereinafter referred to as "excess refund"), the total of the following amounts shall be the penalty tax:

4) The amount divided in proportion to the amount equivalent to the increased tax amount due to the inclusion of the depreciation costs in deductible expenses for the business year 2008, out of the total of KRW 121,081,970.

5) The amount divided in proportion to the amount equivalent to the increased tax amount due to the non-deductible expenses of depreciation costs in the aggregate of KRW 130,129,454 for the business year 209.

6) The amount divided in proportion to the amount equivalent to the increased tax amount due to the non-deductible expenses of depreciation costs in the aggregate of KRW 186,741,136 for the business year 2010.