The purport of the Constitutional Court's ruling of inconsistency with the Constitution on Article 60 of the former Income Tax Act concerning the determination of standard market price, and whether the amended law is retroactively applied (negative)

Notwithstanding Article 60 of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994), where the Constitutional Court made a decision of inconsistency with the Constitution is unconstitutional on Nov. 30, 1995, it is clear that the decision of inconsistency with the Constitution is unconstitutional on the grounds that the decision of inconsistency with the Constitution becomes null and void on the grounds that the decision of inconsistency with the Constitution becomes null and void on the grounds that the decision of inconsistency with the Constitution becomes null and void on the grounds that the decision of inconsistency with the Constitution becomes null and void on the grounds that the decision of inconsistency with the Constitution becomes null and void on the grounds that the decision of inconsistency with the Constitution becomes null and void on the grounds that the decision of inconsistency with the former Act becomes null and void on the grounds that the former Act continues to apply the former Act, while the latter part of the same Act applies, the latter part of the same Act only applies to the case before the amendment of the Act becomes null and void on the grounds that it does not constitute a violation with the Constitution of unconstitutionality.

Article 60 (See current Article 99) of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994), Article 115 (1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14467 of Dec. 31, 1994) (see current Article 99 (1) of the Income Tax Act)

Constitutional Court Order 91Hun-Ba1, 2, 3, and 4, 92Hun-Ba17 and 37, 94Hun-Ba34, 44, 45, 48, 95Hun-Ba12 and 17 (Hun-Ba13, 42), Supreme Court Decision 95Nu17960 delivered on March 28, 1997 (Gong197Sang, 1274), Supreme Court Decision 96Nu1068 delivered on March 28, 1997 (Hun-Ba), Supreme Court Decision 96Nu11327 delivered on March 28, 197 (Hun-Ba)

Lee J. (Attorney Kim Ba-young, Counsel for the defendant-appellant)

Head of North Busan District Tax Office

Busan High Court Decision 95 Jae-gu39 delivered on September 13, 1996

The judgment below is reversed, and the case is remanded to Busan High Court.

We examine the grounds of appeal.

1. On the first ground for appeal

The purport of the provisions of Articles 23(4)1 and 45(1)1(a) of the former Income Tax Act (amended by Act No. 4661 of Dec. 31, 1993), and each subparagraph of Article 170(4) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 14083 of Dec. 31, 1993; hereinafter the same) is to recognize exceptions to the real value taxation principle as it declared that in the case of transfer of assets, the transfer of assets is converted from the existing taxation principle to the standard market price taxation principle in calculating the transfer margin. Thus, in case of transfer of assets, the transfer margin should be calculated based on the actual transfer and acquisition price, and in case of submission of evidential documents which can verify the actual transaction price in making the preliminary return of transfer margin or the final return of tax base, if there is no such report or submission of evidential documents, the transfer margin should be calculated based on the standard market price (see Supreme Court Decision 2005Nu158381, May 198, 1985, 1985. 1985.

Therefore, even if a taxpayer submits a false documentary evidence within the preliminary or final return period under Article 170(4)3 of the Enforcement Decree of the Income Tax Act, the above provision is merely a decoration provision, and it is difficult to accept the argument that if the actual transaction price is revealed until the closing of argument, it should be imposed based on the actual transaction price

However, even in a case where a transfer margin is calculated based on the standard market price, the tax amount calculated based on the basis of the principle of substantial no taxation without law or prohibition against excessive taxation under the Constitution shall not exceed the scope of the transfer margin based on the actual transaction price (Supreme Court Decision 96Nu4022 delivered on December 10, 1996). According to the records, the plaintiff's assertion that the plaintiff acquired the land of this case in 44,730,000 won on September 20, 1989 and transferred it in 57,60,000 won on June 26, 191. Since the defendant can be known that the tax amount determined and notified based on the standard market price is KRW 20,086,00,000, the amount calculated based on the standard market price exceeds the transfer margin based on the actual transaction price. Thus, the court below should have deliberated this.

Since it is reasonable to deem that the Plaintiff’s ground of appeal includes the assertion of this purport, the final appeal on this point is with merit.

2. On the second ground for appeal

On November 30, 1995, the Constitutional Court rendered a ruling of inconsistency with the Constitution as to Article 60 of the former Income Tax Act (amended by Act No. 4803, Dec. 22, 1994) applied by the defendant while imposing capital gains tax of this case according to the standard market price in the decision of consolidation cases such as 95Hun-Ba12, etc. filed by the plaintiff of this case on November 30, 1995.

With respect to the above decision, the Constitutional Court shall make a decision of unconstitutionality as it violates the Constitution that provides for the limitation of the no taxation without law and delegated legislation. However, if the above provision becomes null and void due to a mere decision of unconstitutionality, capital gains tax can not be imposed on the standard market price, and as well as Article 124-2(8) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 9230, Dec. 30, 1978; Presidential Decree No. 14468, Dec. 31, 1994) which cited Article 115 of the Enforcement Decree of the Income Tax Act based on delegation of the above provision, may not be enforced. Accordingly, the above provision causes legal gaps, such as the reduction of tax revenue and considerable influence on the national finance, and the delegation of the above provision does not go against the principle of equity between taxpayers who paid capital gains tax under this Article and taxpayers who paid capital gains tax under this Article, and thus, it is extremely unreasonable to apply the amendment of the Constitution.

As above, the Constitutional Court's ruling of inconsistency with the Constitution becomes unconstitutional even though Article 60 of the former Income Tax Act is unconstitutional, it is clear that the decision of inconsistency with the Constitution is justified to maintain the disposition of imposition by applying the previous Acts and subordinate statutes before the enforcement date of the amended Acts and subordinate statutes in order to avoid such side effects as the occurrence of legal gap, the failure of national finance due to the reduction of tax revenue, and the violation of equity with the former taxpayers as pointed out as a result of the wide effect of the decision of inconsistency with the Constitution where the decision of inconsistency with the Constitution is unconstitutional.

However, the former part of the reasons for the above decision states that the amended law shall be applied retroactively to the case in question, etc. on the grounds that the unconstitutionality of the existing law is removed, but there is no ground for its retroactive application. In addition, in the case of transfer prior to the enforcement of the officially assessed individual land price, the above amended law has a provision converting the standard market price based on the standard market price at the time of transfer into the officially assessed individual land price as provided by the above amended law. Thus, in the above case, the above decision of inconsistency with the former part of the reasons for the ruling of inconsistency with the Constitution is inevitable to be completely cancelled, and thus, it results in the evasion of legal gap, the prevention of the national financial difference, and the maintenance of equity among taxpayers.

Thus, the decision of inconsistency with the Constitution of this case can only be understood as a decision allowing the provisional application of Article 60 of the former Income Tax Act, as it is, until the amendment of the Act to which the unconstitutionality of the pertinent provision has been removed is enforced, and there is no reason to treat the pertinent case differently.

The judgment below to the same purport is just and there is no reason to argue otherwise.

3. Therefore, the lower judgment is reversed by accepting the first ground of appeal, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Yong-hun (Presiding Justice)