Plaintiff (Attorney Limited-hwan, Counsel for the plaintiff-appellant)

Head of the High Tax Office

April 14, 2009

1. On May 8, 2008, the Defendant: (a) designated the Plaintiff as the secondary taxpayer of the Flusty Bank Co., Ltd. on May 8, 2008; and (b) confirmed that the imposition of value-added tax of KRW 33,035,550 for the second period of February 2, 2007 against the Plaintiff is null and void.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On October 31, 2007, the Plaintiff entered into a contract for transfer and acquisition with the content that the Plaintiff would take over all of the business (hereinafter “instant business”) such as the facilities and business rights, etc. (hereinafter “instant business”), such as the Goyang-gu Seoyang-dong 966-1, Goyang-gu, Seoyang-gu, Seoyang-gu, Seoyang-gu, the said company’s operation from November 9, 2007 to the delivery of the above film museum.

B. On May 8, 2008, pursuant to Article 41(1) of the Framework Act on National Taxes, the Defendant: (a) designated the Plaintiff as the secondary taxpayer by Nonparty Company; and (b) imposed the Plaintiff the value-added tax amounting to KRW 33,035,550, additional tax amounting to KRW 91,060, increased additional tax amounting to KRW 1,585,680 (hereinafter “instant value-added tax”); and (c) imposed the Plaintiff’s additional tax amounting to KRW 1,585,680 (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence 1, Gap evidence 2-1, Eul evidence 4-1 to 8, the purport of the whole pleadings

2. Main safety defenses;

Although the defendant asserts that the lawsuit of this case is illegal without going through a prior trial procedure such as a request for review or a request for trial under the Framework Act on National Taxes, in the case of this case seeking confirmation of invalidity, which is not a revocation lawsuit against an administrative disposition, it is not necessary to go through a prior trial procedure since Article 18 of the Administrative Litigation Act does not apply mutatis mutandis under Article 38(1) of the Administrative Litigation Act. Thus, the defendant's above assertion

3. Whether the disposition is lawful;

A. The parties' assertion

1) The plaintiff's assertion

Since the obligation to pay the value-added tax of the non-party company was not yet finalized on November 2007, when the plaintiff acquired the business of this case from the non-party company and commenced the business of this case, the disposition of this case that the non-party company deemed the non-party company as the secondary taxpayer is unlawful even though it cannot be deemed that the plaintiff is liable for the value-added tax of this case in arrears.

2) The defendant's assertion

The value-added tax of this case was determined by the scheduled return of October 24, 2007 by the non-party company prior to the Plaintiff’s transfer of the business of this case pursuant to Article 22 of the Framework Act on National Taxes and Article 10-2 of the Enforcement Decree of the same Act. Thus, the disposition of this case that the Plaintiff deemed the secondary taxpayer is legitimate.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

According to Article 41 (1) of the Framework Act on National Taxes, in order to establish the secondary tax liability of a business transferee, it is required that the transferor's tax liability has already been determined at the time of transfer of the national tax, etc., and it shall be deemed that the business transferee cannot be held liable to pay the secondary tax for the national tax, etc. for which the transferor's

In full view of the purport of each statement in Gap evidence Nos. 4 through 7, the plaintiff entered into a contract for transfer and takeover of the business of this case 4 billion won on October 31, 2007 with the non-party company, and paid the down payment of KRW 100 million on the same day. The plaintiff entered into a business license with the competent authority on November 8, 2007 and completed business registration with the non-party company's whole delivery of film museum facilities from the non-party company on November 9, 2007. The plaintiff completed business registration on November 8, 2007, and the non-party company, the maximum debt amount of KRW 3.64 billion, the debt amount of the non-party company, the foreign exchange bank, the non-party 1,50 billion, and completed the registration of ownership transfer with respect to the above film museum's name on the same day, and the plaintiff paid the down payment of KRW 1.5 billion to the non-party company and the non-party 1,500 billion.

However, there is no dispute over the fact that the non-party company did not pay the tax base and tax amount of the value-added tax of this case on October 24, 2007, on the other hand, the value-added tax is determined at the time when the taxpayer files a return on the tax base and tax amount, and the preliminary return of value-added tax under Article 18(1) of the Value-Added Tax Act and the subsequent payment are merely prepaid on the premise of settlement at the time when the return is filed after the end of the pertinent taxable period. In light of Article 22 of the Framework Act on National Taxes and Article 10-2 subparagraph 1 of the Enforcement Decree of the Value-Added Tax Act, the determination of the duty to pay value-added tax under Article 19(1) of the Value-Added Tax Act is made at the time of filing the final return pursuant to Article 19(1) of the Value-Added Tax Act after the end of the pertinent taxable period. Thus, the plaintiff cannot be deemed as the transferor at the time of November 15, 2007.

Furthermore, this case’s disposition is objectively apparent in light of the fact that the defect of the disposition of this case, which was acknowledged earlier, is not the cause of revocation or the cause of invalidation of the delay, and there is a serious defect that the disposition of this case was imposed on the Plaintiff, not the second taxpayer under Article 41(1) of the Framework Act on National Taxes. On November 15, 2007, when the Plaintiff acquired the business of this case from the non-party company and commenced the business of this case, it can be interpreted without any particular difficulty in light of the average person’s view that the liability for the payment of the value-added tax of this case was not yet finalized. Thus, the disposition of this case is deemed to be null and void because

3. Conclusion

Therefore, the plaintiff's claim of this case is justified and it is so decided as per Disposition.

[Attachment]

Judges Kim Dong-ho (Presiding Judge)