[1] Legal nature and requirements for imposition of penalty tax

[2] Where capital gains tax is reduced or exempted under the Regulation of Tax Reduction and Exemption Act, whether additional tax is reduced or exempted (negative)

[1] Under the tax law, where a taxpayer violates various obligations, such as a tax return and tax payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, the taxpayer's intent or negligence is not considered. However, if the taxpayer's failure to know his/her duty is unreasonable or it is unreasonable to expect the party to fulfill his/her duty, etc., and there is a justifiable reason to believe that the taxpayer's failure to perform his/her duty can not be imposed.

[2] The proviso of Article 47(2) of the Framework Act on National Taxes provides that when a national tax is reduced or exempted, an additional tax shall not be included in the national tax so reduced or exempted. Accordingly, Article 3(2) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4451, Dec. 27, 1991) provides that taxes to be reduced or exempted under this Act shall not include additional tax, except as otherwise provided by the relevant Act, etc.

[1] Articles 2 subparag. 4 and 47(1) of the Framework Act on National Taxes, Article 121 of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994) (see Article 81 of the current Act) / [2] Article 47(2) of the Framework Act on National Taxes, Article 3(2) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4451 of Dec. 27, 1991), Article 121 of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994) (see Article 81 of the current Act)

[1] Supreme Court Decision 90Nu660 delivered on June 25, 1991 (Gong1991, 2060), Supreme Court Decision 92Nu2936, 2943 delivered on October 23, 1992 (Gong1992, 3321) Supreme Court Decision 93Nu674 delivered on June 8, 1993 (Gong1993Ha, 2049), Supreme Court Decision 93Nu15939 delivered on November 23, 1993 (Gong194, 220), Supreme Court Decision 95Nu92 delivered on November 7, 1995 (Gong195Ha, 394) / [2] Supreme Court Decision 95Nu1989 delivered on December 29, 198 (Gong199, 195Ha, 394) / [395Nu1989 delivered on September 29, 1995

Kim Jong-hun (Attorney Park Jong-young, Counsel for the plaintiff-appellant)

Head of the Pakistan Tax Office

Supreme Court Decision 94Nu7331 delivered on February 28, 1995

Seoul High Court Decision 95Gu7040 delivered on August 29, 1995

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

We examine the grounds of appeal together with the supplementary statement.

1. On the first ground for appeal

Under the tax law, where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, the taxpayer's intention and negligence are not considered as administrative sanctions imposed as prescribed by the individual tax law: Provided, That where there is a justifiable reason that it is not unreasonable for the taxpayer to be unaware of his/her duty or it is unreasonable for the taxpayer to expect the fulfillment of his/her duty, etc., it may not be imposed (see Supreme Court Decision 93Nu15939 delivered on November 23, 1993, etc.).

The court below held that even if the plaintiff filed a re-audit request to the competent Mayor because the officially assessed individual land price was excessively high after the transfer of the land in this case, but the decision was not made even after the deadline for the final return on capital gains, such circumstance does not constitute a justifiable reason for the plaintiff to neglect his duty to make a final return on capital gains as to the above transfer income. In light of the above legal principles, the judgment of the court below is just and acceptable, and there is no error in the misapprehension of legal principles such as the theory of lawsuit, and therefore there is no ground for the argument.

2. On the second ground for appeal

According to Articles 57(1) and 88-2 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4451, Dec. 27, 1991; hereinafter the same), capital gains tax on transfer income generated from expropriation under the Land Expropriation Act and other Acts shall be reduced or exempted within a certain scope. However, the proviso of Article 47(2) of the Framework Act on National Taxes provides that where national taxes are reduced or exempted, additional taxes shall not be included in the national taxes subject to such reduction or exemption. Accordingly, Article 3(2) of the Regulation of Tax Reduction and Exemption Act provides that taxes subject to reduction or exemption under this Act shall not include additional taxes except as otherwise provided for in the relevant Act. Accordingly, the capital gains tax, which is the principal tax, shall be reduced or exempted under the Regulation of Tax Reduction and Exemption Act, and its additional taxes shall not

In addition, Article 121 (1) of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994) provides that when a resident fails to make a final return on a tax base or makes a return on a short of the income amount to be returned, the amount equivalent to 10/100 of the amount calculated by multiplying the calculated tax amount by the ratio of the income amount not reported or the relevant income amount short of the amount to be returned to the transfer income amount, etc. shall be added to the calculated tax amount. Article 16 (1) 1 through 3 of the same Act provides that the calculated tax amount shall be calculated by applying the basic tax rate to the tax base of capital gains, and the calculated tax amount shall be calculated by deducting the amount of tax reduced or exempted after deducting the amount of tax

Therefore, the decision of the court below that recognized the amount of additional tax on negligent tax returns as 41,587,371 won equivalent to 10/100 of the calculated tax amount of 415,873,716 won as 41,587,371 won for neglecting the Plaintiff’s duty to file a final return on tax base is justifiable, and as alleged by the Plaintiff, the amount equivalent to 10/100 of the calculated tax amount after deducting 300,000,000 won under the Regulation of Tax Reduction and Exemption Act as 10/100 of the calculated tax amount is not recognized as additional tax on negligent tax returns.

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

Justices Lee Yong-hun (Presiding Justice)