[1] Whether there was an inevitable circumstance for failure to operate a factory for two years or more constitutes an exception to the factory subject to exemption from capital gains tax

[2] The principle of good faith and the requirements for applying non-taxation practices in tax legal relations

[3] The legal nature of the additional tax and the reasonable ground for exemption from the additional tax

[1] If a factory fails to operate at all for two years retroactively from the date of transfer, it cannot be deemed as a "factory continuously operated for two years or more" under Article 6 (2) 2 of the former Income Tax Act (amended by Act No. 4019 of Dec. 26, 1988) and whether there was an inevitable circumstance for the failure to operate the factory does not constitute an exception to the above provision.

[2] In general, in tax legal relations, in order to apply the principle of trust and good faith to the tax authority's act, the tax authority must name a public opinion statement that is the object of trust to the taxpayer. In addition, in order to establish non-taxable practices under Article 18 (3) of the Framework Act on National Taxes, there exists an objective fact that has not been taxed for a considerable period of time, and the tax authority must have an intention not to impose taxes due to any special circumstance despite being aware that it is able to impose taxes on the matter. Such public opinion or opinion must be expressed explicitly or implicitly, but it must be viewed that the tax authority expressed its intention not to impose taxes on the state of non-taxation for a considerable period of time, unlike simple omission of taxation. In such cases, the application of the above principle should be denied if the declaration of intention by the tax authority is merely a general opinion statement.

[3] 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 intent or negligence is not considered. On the other hand, such a sanction cannot be imposed if there is a justifiable reason that it is unreasonable for the taxpayer to be unaware of his/her duty, such as where there is a circumstance that it is reasonable to present it, or where it is unreasonable for the taxpayer to expect the fulfillment of his/her duty to do so, or where there is a justifiable reason that it is unreasonable to do so.

[1] Article 6 (2) 2 of the former Income Tax Act (amended by Act No. 4019 of Dec. 26, 1988) / [2] Articles 15 and 18 (3) of the Framework Act on National Taxes / [3] Article 47 of the Framework Act on National Taxes, Article 121 of the Income Tax Act

[2] Supreme Court Decision 90Nu8947 delivered on May 28, 1991 (Gong1991, 1807) Supreme Court Decision 92Nu12919 delivered on February 23, 1993 (Gong1993Sang, 1104) Supreme Court Decision 90Nu10384 delivered on July 27, 1993 (Gong1993Ha, 2442), Supreme Court Decision 94Nu6574 delivered on April 21, 1995 (Gong195Sang, 199Sang, 194) / [3] Supreme Court Decision 90Nu660 delivered on June 25, 199 (Gong191, 2060), Supreme Court Decision 90Nu293939 delivered on October 23, 192, 293; Supreme Court Decision 93Nu2939439 delivered on September 39, 29394

[Judgment of the court below]

Head of the Office of Government

Supreme Court Decision 94Nu12074 Delivered on March 10, 1995

Seoul High Court Decision 95Gu9589 delivered on June 15, 1995

All appeals are dismissed. The costs of appeal are assessed against each appellant.

1. We examine the Plaintiff’s grounds of appeal.

(1) As to the first ground for appeal

The court below held that since the factory of this case was not operated entirely for two years retroactively from the date of transfer, it cannot be viewed as "factory continuously operated for two years or more" subject to exemption from capital gains tax under Article 6 (2) 2 of the former Income Tax Act (amended by Act No. 4019 of Dec. 26, 1988), and whether there are unavoidable circumstances for the plaintiff to fail to operate the factory of this case does not constitute an exception to the above provision. This decision of the court below is just in accordance with the purport of the Supreme Court's judgment of remand, and it is not erroneous in the misapprehension of legal principles such as theory of remanded case. Ultimately, the theory of the court below cannot be accepted merely because it argues that the purport of the judgment of remanded case is unjustifiable. The argument is without merit.

(2) As to the second ground for appeal

In general, in order to apply the principle of trust and good faith to the tax authority's acts in tax law relations, the tax authority must name a public opinion statement that is the object of trust to the taxpayer. In addition, in order to establish a non-taxable practice under Article 18 (3) of the Framework Act on National Taxes, there exists an objective fact that has not been imposed for a considerable period of time, and there must be an intention not to impose taxes due to any special circumstance even though the tax authority knew that it is able to impose taxes on the matter, and such public opinion or opinion should be expressed explicitly or implicitly, but there must be circumstances where it can be deemed that the tax authority expressed its intention not to impose taxes on the state of non-taxation for a considerable period of time (see Supreme Court Decision 90Nu8947 delivered on May 28, 191). In particular, in cases where the declaration of intention of the tax authority is merely a general theoretical opinion statement, the application of the above principle should be denied (see Supreme Court Decision 90Nu1084 delivered on July 27, 1993).

On May 10, 198, the court below asked the Commissioner of the National Tax Service as to whether the Plaintiff is subject to the imposition of capital gains tax on May 10, 198. The Commissioner of the National Tax Service sent a reply to the purport that "if the Plaintiff transfers the building and land for a factory under the closure or suspension of business, it shall not be considered as a factory continuously operated, or if it is objectively evident that the transfer of the factory was made under the closure or suspension of business due to unavoidable reasons under the statutes or administrative orders, it shall be judged by the head of the competent tax office as to whether there is such inevitable reasons as above." Accordingly, the court below did not err by misapprehending the legal principles on the transfer income tax on the transfer of the real estate of this case on the date of filing an application for exemption or reduction of capital gains tax on May 30, 1988, and the Defendant also determined that the above transfer income tax was not subject to the tax exemption or reduction of capital gains tax on the ground that there was no error in the misapprehension of the legal principles on the transfer of the real estate of this case.

2. The defendant's grounds of appeal (to the extent of supplement in case of supplemental appellate briefs not timely filed) are examined as follows.

Under the tax law, in cases where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, as prescribed by the individual tax law, 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. On the other hand, such sanctions cannot be imposed in cases where there is a justifiable reason that it is unreasonable for the taxpayer to be unaware of his/her duty, such as where there is a circumstance where it is unreasonable for him/her to reasonably present his/her duty or where it is unreasonable for him/her to expect the fulfillment of his/her duty, etc. (see Supreme Court Decision 93Nu15939 delivered on November 23, 1993).

In relation to the transfer of the real estate of this case, the court below asked the Commissioner of the National Tax Service as to whether the Plaintiff is subject to the imposition of capital gains tax, and the Commissioner of the National Tax Service made a reply to the Plaintiff's question that "if it is objectively clear that the transfer of the factory was made under the closure or suspension of business due to unavoidable reasons under the statutes or administrative orders, the transfer income tax shall be deemed to be the relocation of the factory continuously operated." Accordingly, the Plaintiff made a decision on the transfer of the real estate along with the Plaintiff's application for reduction or exemption of capital gains tax, etc., which was accepted the Plaintiff's application for reduction or exemption, and the Defendant was also believed to have concluded that the issue of capital gains tax, etc. of this case was terminated, and the Plaintiff was also believed to have been reduced or exempted. After that, the Board of Audit and Inspection made a decision on whether the real estate of this case is subject to the reduction or exemption of capital gains tax, since it was a factory closed for more than 3 years prior to its transfer, the Defendant later corrected the amount of tax reduction or exemption, and exemption of capital gains tax.

3. Therefore, all appeals by the plaintiff and the defendant are dismissed, and the costs of appeal are assessed against each appellant. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Don-hee (Presiding Justice)