Busan District Court-2014-Gu Partnership-2998 ( September 9, 2016)

Tax litigation without going through the preceding trial, such as tax trial, is unlawful.

In the absence of justifiable grounds, filing an administrative lawsuit claiming the revocation of a taxation disposition without going through the previous trial procedure is unlawful.

Article 56 of the Framework Act on National Taxes concerning other Acts

Busan High Court 2016Nu23165 Revocation of Disposition of Imposing income tax

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00. Head of tax office

Busan District Court Decision 2016Guhap2998 Decided September 9, 2016

April 12, 2017

May 24, 2017

1. Revocation of a judgment of the first instance;

2. The instant lawsuit shall be dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

The decision of the first instance court shall be revoked. On March 3, 2014, the part of the Defendant’s global income tax of KRW 40,036,719 against the Plaintiff, which exceeds KRW 13,073,602, out of the global income tax of KRW 40,036,719,

1. Details of the disposition;

A. The Plaintiff reported and paid KRW 823,328 as global income tax for the year 201, as the former representative director of a corporation Aaa proceeding (hereinafter referred to as “aaullet”), and the head of a tax office, around April 2012, issued a bonus disposition against the Plaintiff, who is the representative director, at the time of the failure in filing the return of KRW 507,485,000, the credit card sales amount of KRW 507,485,000, and notified the Defendant of the taxation data. On July 2, 2013, the Defendant adjusted the total income tax for the Plaintiff’s year 201 to KRW 189,372,087 (hereinafter referred to as “the primary increase and decrease disposition”).

B. Accordingly, on November 18, 2013, the Plaintiff filed an appeal with the Tax Tribunal seeking revocation of the first adjustment disposition.

C. Meanwhile, the head of BB Tax office received 70,887,553 won from CD Co., Ltd. (hereinafter “CD”) in 2011, and notified the Defendant of the taxation data. On March 3, 2014, when the trial was in progress, the Defendant increased the Plaintiff’s total income tax of 30,277,730 won in 201 and notified the Plaintiff to pay the total income tax of 219,649,817 won (=189,372,087 won + 30,277,730 won) (hereinafter “the second increase or decrease disposition”).

D. On September 15, 2014, the Plaintiff filed the instant lawsuit seeking revocation of the first increase disposition, and claimed that the Plaintiff paid KRW 507,650,481, excluding KRW 61,122,219, out of the sales, to 00,000,000, which was the 568,772,70 franchise store of the accounting staff (hereinafter “00 franchise store”) for September 201.

E. On June 30, 2015, the court of the first instance rendered a recommendation for adjustment that “the amount of income tax imposed on the Plaintiff on July 2, 2013, calculated as the tax base of KRW 61,122,219, the Defendant imposed on the Plaintiff on July 2, 2013.” The Defendant accepted the recommendation for adjustment, and subsequently, on July 24, 2015, reduced the amount of KRW 179,613,098, out of KRW 219,649,81, global income tax reverted to year 2011, KRW 40,036,719 (=219,649,817 – KRW 179,613,098; KRW 179,613,098; KRW 179,097; KRW 2036,7136,719; KRW 206,3719,297, etc. (hereinafter referred to as “the third correction”).

F. As such, the third reduction and correction disposition was taken on November 19, 2015, and the Plaintiff asserted that the second increase and decrease disposition was not a processing transaction. The Plaintiff amended the first increase and decrease disposition and the 149,909,772 won (which appears to be a clerical error in KRW 40,036,719) so as to revoke the income tax assessment disposition. On July 7, 2016, the Plaintiff sought the cancellation of the imposition of global income tax amount of KRW 70,887,53 (which appears to be a clerical error in KRW 30,277,730) for the Plaintiff on March 3, 2014, and then, the Plaintiff subsequently amended the purport of the imposition disposition, i.e., the part related to the first increase and decrease of KRW 149,909,772 (which appears to be a clerical error in the amount of KRW 30,730 won) for the Plaintiff on March 3, 2014.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 4, Eul evidence Nos. 1 through 4, 9 through 11, 14 through 21, and the purport of the whole pleadings

2. Ex officio, we examine the legitimacy of the instant lawsuit.

A. The main sentence of Article 56(2) of the Framework Act on National Taxes and Article 56(2) of the former Framework Act on National Taxes (amended by Act No. 14382, Dec. 20, 2016) provide that “Notwithstanding the main sentence of Article 18(1), Article 18(2) and Article 56(3) of the Administrative Litigation Act, an administrative litigation against an illegal disposition under Article 55 shall not be filed unless a request for examination or adjudgment under this Act and a decision thereon are made.”

As such, the provisions of Articles 18(2) and (3), and 20 of the Administrative Litigation Act are not applicable to tax litigation pursuant to the provisions of the Framework Act on National Taxes. However, if two or more administrative dispositions are conducted in the course of a phased and developmental process, and are related to each other, or if the tax authorities change the taxation disposition subject to the ongoing tax litigation and the grounds for illegality are common, or if several persons are jointly liable for the same tax disposition due to the same administrative disposition, one of the taxpayers is given an opportunity for the National Tax Service and the National Tax Tribunal to re-determine the basic facts and legal issues, and the taxpayer can file an administrative litigation without going through the previous trial procedure if there are justifiable grounds such as where it seems that the failure of the taxpayer would be harsh to make a decision on the basic facts and legal issues, and it is unlawful to file an administrative litigation seeking the revocation of the taxation disposition without going through the previous trial procedure (see Supreme Court Decision 201Du21618, Dec. 11, 2014).

B. In the case of this case, it is clear that the Plaintiff was subject to the procedure of the previous trial only for the first increase disposition, and the second increase disposition was not subject to the previous trial procedure. In light of the following circumstances known in the above facts, it is difficult to view that there is a justifiable reason to view that there is no prior trial procedure for the second increase disposition.

In other words, the first increase disposition was made on the ground that aaaulth was omitted from reporting the credit card sales amount of KRW 568,772,70 to 00, while the second increase disposition was made on the ground that aadaulth received a false tax invoice from cra, and thus each of the above dispositions is entirely different from the basic facts constituting the premise, and thus, it cannot be deemed that each of the above dispositions is related to each other or that the grounds for illegality are common.

If there are some circumstances, it cannot be deemed that the Commissioner of the National Tax Service or the Tax Tribunal has an opportunity to re-determine the basic facts and legal issues concerning the second increase and decrease disposition in the trial procedure on the first increase and decrease disposition, and it is also difficult to view that it is improper for the Plaintiff to go through a prior trial procedure on the second increase and decrease disposition.

C. Therefore, the instant lawsuit is unlawful as it was filed without going through the pre-trial procedure as prescribed by the Framework Act on National Taxes.

3. Conclusion

Therefore, the lawsuit of this case shall be dismissed, and since the judgment of the court of first instance differs from this conclusion, the judgment of the court of first instance shall be revoked and the lawsuit of this case shall be dismissed as per Disposition.