[1] The tax base date for collecting the acquisition tax and registration tax exempted under Article 290 (1) of the former Local Tax Act

[2] Where a public corporation acquires land and constructs a building to be used directly for its unique duties under the former Enforcement Decree of the Local Tax Act after the amendment of October 1, 1997, whether such land can be deemed as being used directly for its unique duties (negative), and the scope of the land which can be deemed as having justifiable grounds for not being used directly for its unique duties

[1] The taxation requirements for the collection of acquisition tax and registration tax exempted under Article 290(1) of the former Local Tax Act (amended by Act No. 5406 of Aug. 30, 1997) include one year of grace period in addition to the acquisition of the pertinent real estate. Thus, even if there is a justifiable reason to not use the real estate directly for its own business within one year from the date of the acquisition of the real estate, the taxation basis for the collection shall be one year from the date of acquisition of the real estate, and one year from the date of extinguishment of the justifiable reason shall not be the date of expiration

[2] Article 290 (1) of the former Local Tax Act (amended by Act No. 5406 of Aug. 30, 1997), where a public corporation acquires real estate to use directly for its unique activities, the purpose of the proviso is to exempt the acquisition tax and registration tax for the acquired real estate, but to establish provisions for additional collection of reduced or exempted acquisition tax and registration tax, building construction works for a building are merely preparatory activities rather than those for the use of land directly for the use of buildings, etc. in principle, and the contents of Article 230 of the former Enforcement Decree of the Local Tax Act before and after the amendment of the Local Tax Act (amended by Presidential Decree No. 15849 of Oct. 1, 1997) and its amendment process. In light of the above provisions, construction works for a building are merely those for the direct use of the land without any justifiable reason under Article 230 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 15849 of Oct. 1, 1997).

[1] Article 290 (1) (see current Article 287 (1)) of the former Local Tax Act (amended by Act No. 5406 of Aug. 30, 1997) / [2] Article 290 (1) (see current Article 287 (1)) of the former Local Tax Act (amended by Act No. 5406 of Aug. 30, 1997), Article 84-4 (1) 1, (2), and 230 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 15489 of Oct. 1, 1997), Article 230 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 15569 of Dec. 31, 1997)

[1] Supreme Court Decision 90Nu7050 decided Feb. 26, 1991 (Gong1991, 1116) Supreme Court Decision 96Nu1494 decided Jul. 11, 1997 (Gong1997Ha, 2543 decided Oct. 14, 1997) 97Nu9253 decided Oct. 14, 1997 (Gong1997Ha, 3524) / [2] Supreme Court Decision 92Nu19279 decided Mar. 25, 199 (Gong194Sang, 1363), Supreme Court Decision 98Du6012 decided Nov. 26, 199 (Gong200Sang, 82 decided May 29, 2008)

Plaintiff (Law Firm Seog, Attorneys Yang Young-young et al., Counsel for the plaintiff-appellant)

The head of Sungnam-si Subdivision

Seoul High Court Decision 2005Nu18145 decided June 16, 2006

The appeal is dismissed. The costs of appeal are assessed against the defendant.

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

1. As to whether the taxation requirement of collection is satisfied

A. Under the principle of no taxation without law, the tax obligation is established when the taxation requirements under each tax law are completed (see Supreme Court Decision 92Nu18399, May 11, 1993, etc.), and the imposition of taxes shall be governed by the provisions of the law in force at the time of the completion of taxation requirements, i.e., the tax liability is established, and the Acts and subordinate statutes at the time of establishment of tax liability shall apply to the case before and after the amendment unless there are special circumstances (see Supreme Court Decision 97Nu9253, Oct. 14, 1997; hereinafter referred to as the "Act No. 5406, Aug. 30, 199; hereinafter referred to as the "former Local Tax Act"), and Article 290 (1) of the former Local Tax Act shall be exempted from the acquisition tax and registration tax for the real estate acquired by the public corporation within 10 years after the expiration of 197 years from the date of acquisition, and it shall not be included in the acquisition tax and registration tax for 14 years after the expiration of 197 years.

B. However, Article 84-4(1)1 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 15489, Oct. 1, 1997; hereinafter “former Enforcement Decree”) which the Plaintiff had enforced prior to the acquisition of the instant building site provides that “land not directly used for the corporation’s unique duties within a grace period of 1 year from the date of its acquisition (1 year in principle) shall be deemed as land for non-business use, and it shall be deemed that there are justifiable grounds not directly used for the corporation’s unique duties during the construction work. However, even if construction is in progress, it shall not apply where the total period of time during which construction is suspended without justifiable grounds exceeds 1 year.” In Article 230 of the Local Tax Act, “high-water business” under Chapter 5 of the Local Tax Act refers to the unique business under Article 84-4(2). In this case, it shall be deemed that the land annexed to the relevant building is used for the unique business, but it shall be included in the amended Local Tax Act No. 158, etc.

In light of the language and text of Article 290(1) of the Local Tax Act before and after the amendment, where a public corporation, including the plaintiff, acquires real estate to use directly for its unique activities, it is exempted from the acquisition tax and registration tax for the real estate acquired, and the proviso provides for the additional collection of reduced or exempted acquisition tax and registration tax, construction work for a building, in principle, rather than directly using the land for the purpose of use of the building, etc. (see Supreme Court Decisions 92Nu19279 delivered on March 25, 1994; 98Du6012 delivered on November 26, 199, etc.). In light of the language and text of Article 230 of the former Enforcement Decree of the Local Tax Act before and after the amendment, the scope of its unique activities under Chapter 5 of the Local Tax Act can not be viewed as directly using the land unless there are justifiable reasons to directly use the land.

C. According to the records, on October 8, 1996, prior to the acquisition of the land of this case, the Plaintiff continued construction of the instant building, which is a neighborhood living facility after completing construction of the instant hospital and obtaining permission for temporary use from the Defendant on April 4, 2003. Meanwhile, on the instant land around March 2003, the Plaintiff started construction of the instant hospital’s funeral hall building (the total floor area of 5,804m28mm2) and completed construction on November 8, 2004, and used it for the purpose of the funeral hall from around that time.

According to this, on December 1, 1998, the date of the grace period of one year from the date of the acquisition of the land in this case, "the part of the land corresponding to the ratio of the part of the neighborhood living facilities to the total floor area of the hospital in this case" as of December 1, 1998, shall not be used directly for its unique business without any justifiable reason within one year from the date of acquisition. Thus, this part of the exempted registration tax and acquisition tax shall be additionally collected. However, since "the part of the land corresponding to the ratio of the part except the neighborhood living facilities to the total floor area of the hospital in this case" is a case where there are justifiable reasons for not being used directly for its own business, the exempted acquisition tax and registration tax shall not be collected additionally. Thus, so long as it is confirmed that acquisition tax, etc. from the acquisition of the land in this case is exempted, even if the plaintiff newly constructed the funeral hall

Therefore, the court below erred in holding that the plaintiff directly used the land of this case by acquiring the land of this case on November 30, 1997 and carrying out construction works on the building of the hospital of this case on the land of this case for not less than one year. However, the court below's determination that the court below's determination that the tax disposition on the land of this case on the land of this case on the funeral hall of this case was unlawful is justified and the above error of the court below did not affect

2. As to the legitimacy of taxation disposition on “the portion of land corresponding to the ratio of the part of neighborhood living facilities to the total floor area of the instant hospital”

A. Article 26-2(1) of the former Framework Act on National Taxes (amended by Act No. 8139 of Dec. 30, 2006) provides that, in principle, the exclusion period of imposition of national taxes excluding inheritance and gift taxes shall be five years from the date on which the national taxes are assessable (Provided, That where a taxpayer evades national taxes, or is refunded or deducted by fraudulent or other unlawful means, it shall be ten years from the date on which the national taxes are assessable, and where a taxpayer fails to file a tax base within the statutory period of return, it shall be seven years from the date on which the national taxes are assessable). Article 30-4 subparag. 1 of the former Local Tax Act provides that, “The tax base and tax amount to be imposed shall be reduced by 30 years from the date on which the tax base and tax base are reported and paid within the statutory period of return and payment, and Article 30-4(1) of the Local Tax Act provides that, “The tax amount to be imposed within the statutory period of tax return and payment, etc. shall be imposed within 10.

B. Therefore, even if land annexed to the ratio of the area of neighborhood living facilities among the total floor area of the instant hospital becomes subject to the collection of acquisition tax, registration tax, etc., in this case, since the Plaintiff did not report or pay the amount of the additional tax on the said land within 30 days from December 1, 1998, which was the date on which the cause for the additional collection occurred ( December 31, 1998), the Defendant can impose and collect the additional tax of acquisition tax, registration tax, etc. on the Plaintiff for 5 years from January 1, 1999, the following day of the said report and payment deadline (On the other hand, the Plaintiff submitted an application for reduction and exemption of acquisition tax, registration tax, etc. on the land of this case to the Defendant around December 12, 1997, the submission of the application for reduction and exemption should be the same as the “where the Plaintiff, a taxpayer, has filed a tax base return within the statutory period for special rural development tax,” and the Defendant’s imposition period of acquisition tax on the land of this case.

Therefore, the court below erred in holding that the plaintiff acquired the land of this case on November 30, 1997 and constructed the hospital on the land of this case for not less than one year, and used the whole land of this case directly. However, the court below's conclusion that the tax disposition on the part of the land attached to the ratio of the area of the neighborhood living facilities to the total area of the hospital of this case was unlawful. The ground of appeal on this part is without merit.

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Young-ran (Presiding Justice)