Early High Court Decision 2016Du23578 ( June 8, 2017)

A disposition of reduction or correction shall not be subject to an appeal litigation independently, and penalty tax shall be revoked in full and shall not have any interest in litigation.

The principal tax is a reduction and correction disposition that revokes part of the tax base under the report of this case, and itself is not subject to an appeal litigation independently, and the penalty tax does not have a benefit of lawsuit due to the full revocation.

Articles 56 and 61 of the Framework Act on National Taxes

2017Guhap7213 global income and revocation of such disposition

KimA and 9

Head of Suwon Tax Office and seven others

July 11, 2019

September 26, 2019

1. All plaintiffs' lawsuits are dismissed.

2. The costs of lawsuit shall be borne by each person;

Cheong-gu Office

Each part of the list submitted by the Defendants to the Plaintiffs is revoked.

1. Basic facts

A. The KimB is the actual owner of each dental hospital affiliated with theCCP and each dental hospital affiliated with the network, and the Plaintiffs are the workers who, in accordance with the agreement with the KimB, receive 20% or 10% of the monthly sales as the president of the pertinent medical institution after completing the business registration of the agency affiliated with theCCP and the network as follows.

B. The Plaintiffs reported and paid the global income tax base and tax amount to the Defendants under the pretext of global income tax on their business income (hereinafter collectively referred to as the “declaration of this case”). [Attachment omitted]

C. The Seoul Southern District Prosecutors' Office notified the head of the Seoul Regional Tax Office of the investigation results, such as omitting cash revenue sales, using the disguised business operator of KimB. The head of the Seoul Regional Tax Office, after conducting a tax investigation on KimB, corrected the amount of income reflecting the omission in sales at theCC and each medical institution affiliated with the network as the actual business income of KimB, the actual business operator, and then deducted out-of-the-counter benefits to the nominal business operator, including the plaintiffs, as necessary expenses, and notified the competent tax office including the defendants

D. Accordingly, the Defendants issued each correction and notification of the comprehensive income tax, including the non-returning additional tax and non-payment tax, to the Plaintiffs as global income tax for wage and salary income (hereinafter collectively referred to as the "disposition in this case", but only the portion of the principal tax in this case shall be referred to as the "assessment disposition of principal tax", and "the imposition disposition of additional tax in this case" shall be referred to as "the imposition disposition of additional tax in this case" on the ground that KimB is the actual business operator. In addition, the Defendants denied all the existing business income reported by the Plaintiffs on the ground that KimB is the actual business operator, and appropriated the amount of tax paid by the Plaintiffs on the return in this case as the amount

E. The Plaintiffs were dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal from February 17, 2016 to July 6, 2016. However, the Tax Tribunal dismissed all the appeals by the Plaintiffs from June 8, 2017 to June 14, 2017.

F. Meanwhile, the Defendants revoked the disposition imposing the penalty tax of this case ex officio on September 2019, which was subsequent to the instant lawsuit.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3, 6, Eul evidence Nos. 4 through 13 (including each number; hereinafter the same shall apply), the purport of the whole pleadings

2. Determination of legality of the plaintiffs' lawsuits

We examine the legitimacy of the plaintiffs' lawsuits ex officio.

A. Principal tax of this case

1) In a case where a correction disposition that reduces the tax base and amount of tax is not the initial and separate taxation disposition, but the substance of the disposition is not the initial and separate taxation disposition, and thereby, is a disposition that has the favorable effect to taxpayers, which leads to a partial revocation of the amount of tax, and thus, the determination of the amount of tax is not yet revoked, and the remaining part of the disposition that remains illegal, the subject of an appeal litigation is not revoked by the decision of correction in the initial disposition of tax amount, and the decision of correction is not the subject of an appeal litigation, and is not the subject of an appeal litigation. In this case, whether the decision of correction was lawful procedure should also be determined on the basis of the initial disposition (see, e.g.

2) In full view of the contents of evidence Nos. 4 through 13, the instant disposition constitutes a disposition of reduction or correction to cancel part of the tax base of the instant report. In addition, even if the Plaintiffs filed a false return on classification and amount of global income at the time of the instant report, deeming that a return on global income tax base itself cannot be imposed with respect to global income, and thus, the instant disposition cannot be deemed as denying the validity of the instant report, which is the initial return and payment of business income of the Plaintiffs, or that the instant disposition constitutes a new disposition of imposition of global income tax on earned income against the Plaintiffs.

Therefore, the disposition of imposition of principal tax of this case is a disposition of reduction to revoke a part of the tax base under the instant report, and it does not themselves become an independent subject to appeal litigation ( even if the portion for which the Plaintiffs seek revocation is the Plaintiff’s request for correction as to the relevant portion of the instant report, and the Defendants’ request for correction was made for correction, and there is no evidence to deem that there was a disposition of refusal to correct the said portion. 4) Furthermore, the Plaintiffs were dissatisfied with the instant disposition and filed a request for adjudication during the period from February 17, 2016 to July 6, 2016, and received a decision of rejection, but only followed the procedure of prior trial on the instant disposition including the instant disposition of imposition of principal tax of this case, and there is no evidence to deem that the Plaintiffs underwent legitimate prior trial on the disposition related to the instant report of this case).

Among the plaintiffs' lawsuits, the part seeking revocation of the main tax imposition disposition of this case is unlawful.

B. The imposition of penalty tax in this case

1) If an administrative disposition is revoked, the disposition becomes null and void, and no longer exists, and a lawsuit seeking revocation against non-existent administrative disposition is unlawful as there is no benefit of lawsuit (see, e.g., Supreme Court Decision 2013Du13655, Oct. 25, 2018).

2) The Defendants’ revocation of the disposition imposing penalty tax in this case around September 2019 is the same as seen earlier. As such, the part of the lawsuit seeking revocation of the disposition imposing penalty tax in this case is seeking revocation of the disposition that does not have effect, and thus, became unlawful as there was no benefit of lawsuit.

Therefore, the part of the plaintiffs' lawsuit seeking revocation of the disposition imposing penalty tax of this case is also unlawful.

3. Conclusion

Therefore, the plaintiffs' lawsuits are inappropriate and all of them are dismissed. It is so decided as per Disposition.