The plaintiff is an oligopolistic stockholder who has the secondary tax liability of the investor.

It is insufficient to recognize that the Plaintiff was entrusted with the stock of this case, and it is reasonable to deem that the Plaintiff falls under an oligopolistic shareholder as a person who actually exercises the right to the stock of this case.

Article 39 of the Framework Act on National Taxes

2014Guhap50293 Revocation of Disposition of Imposition of Value-Added Tax, etc.

AA

BB Director of the Tax Office

June 3, 2016

August 12, 2015

1. The part of the claim for revocation of the imposition of additional dues as stated in the separate sheet No. 1 of the instant lawsuit is dismissed.

2. On November 29, 2013, the part of the disposition imposing each value-added tax and corporate tax on the attached Table 1, which the Defendant designated the Plaintiff as the second taxpayer of FF FF, as the secondary taxpayer of FF, and against the Plaintiff, is revoked in excess of the amount stated in the attached Table 2, the remaining amount in the attached Table 2, the remaining amount in the attached Table, shall be revoked.

3. The plaintiff's remaining claims are dismissed.

4. The costs of lawsuit shall be borne by the Plaintiff, including the part resulting from the supplementary participation.

Cheong-gu Office

Each disposition of imposition under paragraphs (1) and (2) shall be revoked.

1. Details of the disposition;

A. The Plaintiff held 93.18% from 2003 to 2005, and 96.74% from 2006 to 2012 on the register of shareholders among the issued shares of FF, a corporation engaged in clothing wholesale and retail business, export and import business, etc. (hereinafter referred to as “FFF”), and held 93.18% from 2003 to 2006 to 2012 on the register of shareholders (hereinafter referred to as “instant shares”); from November 17, 2000 to January 17, 2003; and from February 25, 2005 to December 17, 2013, which was closed by FFF.

B. The Defendant imposed KRW 4,964,054,460 on October 2, 201, the aggregate of 8 corporate tax and 12 value-added tax from 2004 to 2011, on the grounds of the omission of FF’s labeling sales and omission of agency revenue due to the use of borrowed accounts (hereinafter “FF taxation”).

C. The Defendant: FF’s oligopolistic shareholder of FF with the amount of tax in arrears of KRW 4,922,377,930 out of the amount in arrears on November 29, 2013; the Plaintiff constitutes an oligopolistic shareholder of FF with respect to the amount of tax in 2004 and 2005, prior to the amendment by Act No. 7930 of April 28, 2006; with respect to the amount of tax in 2006, prior to the amendment by Act No. 8139 of Dec. 30, 2006; with respect to the amount of tax in 2007 and 208, the Defendant deemed that the amount of tax in 209 constituted “the person liable for tax payment” and “the amount of tax in 2009 and the amount of tax in 209” under the respective provisions of the Framework Act on National Taxes (amended by Act No. 92631, Dec. 11, 2010).

[Ground of recognition] Facts without dispute, Gap evidence 1 through 3 (including branch numbers for those with additional numbers; hereinafter the same shall apply), Eul evidence 1 to 4, the purport of the whole pleadings

2. Related statutes;

Attached Table 3 shall be as stated in the relevant statutes.

3. Whether the part concerning the claim for revocation of the disposition imposing additional dues in the instant lawsuit is legitimate

The additional dues prescribed in Article 21 of the National Tax Collection Act are the kind of incidental dues imposed in the meaning of interest in arrears where national taxes are not paid by the due date. If national taxes are not paid by the due date without the due date of payment by the due date without the due date of payment by the due date of payment by the due date, the additional dues under Article 21 of the same Act are inevitably incurred and the amount thereof is determined. Thus, even if the tax authority issued a tax notice and notified the additional dues along with the due date, they cannot be deemed as a disposition subject to appeal litigation (see Supreme Court Decision 200Du201

According to the evidence Nos. 2 and 3, the defendant's notice of the second taxpayer's designation and payment is deemed to have been given to the plaintiff along with the additional dues as stated in the attached Table No. 1, but this does not constitute a disposition subject to appeal, and thus, the plaintiff's lawsuit seeking the revocation of the above additional dues is unlawful.

4. Whether the instant disposition is lawful

(a) Facts of recognition;

1) An intervenor started to establish and operate FF on March 16, 1999, and married with the Plaintiff on November 9, 200.

2) On November 17, 200, the Plaintiff was appointed as the representative director of FF, and around that time, acquired 25% (2,500 shares) of the FF shares issued. At the time, the shareholders of FF, other than the Plaintiff, were HH, his father, J, the Intervenor’s South Dong-ins, and KK, both of which were 25% shares.

3) Around 2003, FF issued 100,000 new shares with capital increase of KRW 500 million. around 2006, FF issued 120,000 new shares with capital increase of KRW 600,000. The Plaintiff acquired all of the above new shares and owned 22,50,000 shares for total amount of KRW 96.74%.

4) Meanwhile, after taking office as the representative director of the FF, the Plaintiff was at work in the Chairperson’s office and received a report on the work from the Chairperson. On the other hand, the Plaintiff signed the work log including the details of the payment of employee benefits, the details of the conclusion of new agency contracts and the receipt of deposit money, the details of the payment of the initial agency's early payment of the new agency fees, the employee's job placement, resignation, dismissal, and early retirement, and managed and used the newly established agency deposits, member company rents and management fees, labels sales amount, and the sales amount of the FF's clothes.

5) On July 9, 2013, the Plaintiff and the Intervenor jointly participated in the management of the Company, and on June 4, 2013, the Plaintiff and the Intervenor considered all of the taxes and fines imposed on individuals or companies as a single case as of the date of the National Tax Service’s tax investigation, and recognized one half of each of them as to the amount of additional tax collected. However, on the condition that all of the rights related to the Company, such as the bonds and debts of this company, are comprehensively transferred to and taken over by the intervenors who are joint equity right holders, the Plaintiff shall bear part of the amount of additional tax and the Intervenor shall be liable for a considerable portion of the amount of the additional tax.” As to the burden of additional tax collected, the Plaintiff agreed upon the execution letter of agreement that “The participant shall be liable for a considerable portion of the amount of the additional tax” (hereinafter referred to as “written execution letter of agreement”). With respect to the burden of additional tax collected, the Plaintiff’s total share of KRW 5 billion to KRW 4 billion, KRW 1.2 billion to KRW 6 billion, KRW 1.5 billion to the Plaintiff 7 billion.3 billion.

6) On July 16, 2013, the Intervenor filed an application for divorce and for the division of property against the Plaintiff. On September 13, 2013, the Plaintiff and the Intervenor shared the amount of additional tax as stated in the letter of performance of the instant agreement, and the Plaintiff resigned from the office of FF’s director and representative director, and does not exercise all rights related to the said company. The instant shares owned by the Plaintiff were transferred to the Intervenor, and the conciliation was concluded including the content that the Intervenor comprehensively acquired all rights related thereto, including the FF’s overall authority and shares (hereinafter “instant conciliation protocol”).

7) The Plaintiff closed the FF on December 17, 2013, while the Plaintiff did not pay the amount of additional tax imposed on the instant protocol and did not transfer the instant shares to the intervenors.

8) On April 23, 2014, Korea filed a lawsuit against the Intervenor on the part of the Intervenor claiming for the collection of the agreed amount claim under the instant conciliation protocol against the Intervenor, claiming for the collection of the agreed amount claim against the Plaintiff as the preserved claim. Accordingly, the Intervenor asserted to the effect that the Plaintiff did not have any claim against the Intervenor due to the Plaintiff’s breach of the contractual obligation under the instant conciliation protocol and the memorandum of Implementation. On February 26, 2016, in the said lawsuit, the decision was rendered in lieu of conciliation, which included the payment of KRW 2,59,216,820, which is part of the delinquent tax amount, and became final and conclusive.

9) The subsequent intervenor paid each amount indicated in the column of “the remaining amount of the FF taxation” in the attached Table 2 of the FF taxation on March 30, 2016, April 25, 2016, and May 25, 2016.

10) Meanwhile, while FF filed a lawsuit against the Defendant seeking the revocation of FF taxation (hereinafter referred to as “related lawsuit”), it was sentenced to the dismissal judgment, and both appeals and final appeals were dismissed (hereinafter referred to as “related judgment” in this Court Decision 2014Guhap53148 Decided March 27, 2015; Seoul High Court Decision 2015Nu4011 Decided August 26, 2015; Supreme Court Decision 2015Du52333 Decided December 23, 2015; hereinafter referred to as “related judgment”).

[Ground of recognition] Facts without dispute, Gap's evidence 7, 31, 32, Eul's evidence 17 to 19, Eul's evidence 1 to 34, and the purport of whole pleadings

B. As to whether the FF taxation is unlawful

1) The plaintiff's assertion

FF taxation was conducted with the exclusion period imposed, based on a duplicate tax investigation, and it cannot be recognized as omission of agency sales or omission of Belgium usage fee, which is the premise of the above disposition. Therefore, the above taxation is unlawful, and the disposition in this case is also unlawful.

2) Determination

In addition to the purport of the entire argument in the above evidence, although FF asserted the same purport in the relevant lawsuit, it can be acknowledged that the relevant judgment that dismissed FF’s claim without accepting all of the aforementioned claims became final and conclusive. As long as the aforementioned taxation disposition is not deemed unlawful, the Plaintiff’s assertion on a different premise cannot be accepted without examining any further.

C. As to whether it is an oligopolistic stockholder

1) The plaintiff's assertion

The Plaintiff received title trust from the Intervenor, the actual operator of FF, and only registered as a representative director and an in-house director on the pretext, and did not actually run the FF.

2) Determination

A) Determination as to whether a case constitutes an oligopolistic shareholder as stipulated in the instant provision is based on the cause of the group of shares owned by 51/100 or more in a special relationship, and the fact of ownership of shares is required to be proven by the tax authority based on the data such as the register of shareholders, the statement of stock movement, or the register of corporate registers, etc. However, even in cases where a shareholder appears to be a single shareholder in light of the above data, if there are circumstances, such as where a shareholder was stolen or registered in a name other than the name of the de facto owner, it cannot be deemed as a shareholder only in that name, but the nominal owner who asserts that he is not a shareholder should prove that he/she is not a shareholder (see, e.g., Supreme Court Decision 2008Du9

B) As seen earlier, the Plaintiff is registered as an owner of the instant shares equivalent to 96.74% of the total number of FF’s issued shares in the FF’s shareholder registry or statement of stock transfer status. In light of the following facts and circumstances, it is insufficient to recognize that the Plaintiff was entrusted with the instant shares solely by the evidence submitted, and it is reasonable to deem that the Plaintiff is an oligopolistic shareholder who actually exercises the right to the instant shares and falls under an oligopolistic shareholder as defined in item (a) of the instant provision.

① The Plaintiff acquired 25% of the total issued shares of FF after marriage with the Intervenor, and conducted capital increase in 2003 and 2006, and acquired all of the new shares to hold 96.74% of the total issued shares. As a result, the share ratio of HH, JJ and K, which is the FF shareholders other than the Plaintiff, fell from 75% to 2.27%. The share ratio of the FF capital acquired by the Plaintiff is considerably higher, and each of the above issued shares was substantially increased, and all of the other shareholders were excluded from the process of capital increase. There is a high possibility that the Plaintiff’s intent was reflected in the process.

② The Plaintiff, as a representative director on the FF’s registration, worked daily at the FF’s office room, received a report on the business affairs related to the overall operation of the company from the LL director, and obtained approval from the FF’s office. From 2002 to 2007, the Plaintiff intended to obtain approval for signature on several occasions in the regional agency contract status, and received and managed and used the agency deposit, labels sales proceeds, and clothes sales proceeds directly produced, in cash from the employees. As such, the Plaintiff may be deemed to have actually participated in the FF’s management. However, when a tax audit on FF was conducted on January 208, the Plaintiff instructed LLL to abolish documents, such as the pertinent business affairs, etc.

③ In the instant protocol, the Plaintiff resigned from the FF’s internal director and representative director, and waiver of all rights related to the said company, and the Plaintiff’s instant shares are not exercised. All of the instant shares are transferred to the Intervenor, and the Intervenor acquired all the rights related thereto, including the FF’s overall authority and stocks, and the Intervenor took over all the rights related thereto, and the FF’s delinquent tax amount is imposed more burdens than the Plaintiff. However, solely on the above facts, it is difficult to deem that the original Intervenor actually owned the FF stocks or operated the FF independently, and rather, on the premise that the Plaintiff exercised its rights to the FF, it may be deemed that the agreement was reached to waive the agreement on the premise that the Plaintiff had exercised its rights to the FF. The Plaintiff and the Intervenor took part in the FF’s management on July 9, 2013 while preparing a letter of agreement performance.

④ The Plaintiff did not perform the obligation to transfer stocks without fulfilling the part of the instant protocol of conciliation, but discontinued FF on December 17, 2013. The Intervenor asserted that the Plaintiff’s nonperformance of the obligation is not recognized as an intervenor’s obligation under the protocol of conciliation in the instant claim for collection, but paid part of the amount of delinquent taxes by accepting a decision in lieu of the conciliation and recognition of partial liability as a joint manager and a decision in lieu of the conciliation. In light of such circumstances, it is difficult to deem that the Intervenor, solely on the basis of the fact of payment of delinquent taxes, recognized that the Intervenor independently managed FF.

⑤ No grounds can be found to limit the exercise of the Plaintiff’s right to shares of this case, and the Plaintiff appears to have been in a position to exercise the right at any time.

D. As to whether the supplement of the secondary tax liability is contrary to the supplement of the secondary tax liability

1) The plaintiff's assertion

From 2004 to 2011, the FF had sufficient property to pay taxes, and even after FF taxation, the FF’s property was insufficient to cover the shortage of the FF to pay delinquent taxes. Accordingly, the instant disposition was unlawful since it did not meet the requirements for the designation of the secondary taxpayer.

2) Determination

A) The designation of the secondary taxpayer requires that the primary tax liability should be collected at the time of designation rather than the date when the liability for tax payment was established. Thus, even if there was sufficient property to pay the FF tax at the time when the FF tax liability was established, such circumstance does not interfere with the designation of the secondary taxpayer.

B) In order to establish the secondary tax liability, there is a shortage of collection in the primary tax liability. However, once the main tax liability is delinquent, so long as the main tax liability is delinquent, the occurrence of the shortage does not necessarily require the main taxpayer to execute the disposition on default in reality, and it does not necessarily require the specific occurrence of the shortage. However, it is sufficient that the disposition on default would lead to an objective shortage of collection (see Supreme Court Decision 2003Du10718, May 14, 2004).

According to the aforementioned evidence and the overall purport of the evidence and evidence evidence Nos. 10 through 16, the Defendant’s procedure for delinquency in payment was conducted with respect to golf membership fees, deposits, automobiles, agency contracts, and the right to collateral security established as a customer’s property as a security for the provision of clothing by FFF, but the shortage in collection still remains, and other additional properties have not been secured at the time of the disposition on default, and the fact that the amount of arrears in arrears exceeds KRW 0 billion still remains unpaid until the date of closing argument can also be acknowledged. Thus, even if the FF’s disposition on default on the FF’s property is deemed to constitute a shortage in collection, the instant disposition cannot be deemed to go against the supplementary requirement. Accordingly, the Plaintiff’s assertion on this part is difficult

(e) Scope of the legitimate tax amount;

As seen earlier, the portion of the FF taxation exceeds the stated amount in the column of the remaining amount of the FF taxation, which is the balance remaining after deducting the above amount, is unlawful.

5. Conclusion

Among the lawsuits in this case, the part of the claim for revocation of the imposition of additional dues is dismissed. The plaintiff's claim for revocation of the imposition of value-added tax and corporate tax is accepted within the scope of the above recognition, and the remaining claims