Korean Bank (Attorney Jeon Soo-soo, Counsel for the defendant-appellant)

The head of Gangseo-gu Seoul Metropolitan Government (Attorney Kim Chang-soo et al., Counsel for the plaintiff-appellant)

November 16, 2004

1. The Defendant’s imposition disposition of KRW 884,400,000 against the Plaintiff on April 10, 2004 shall be revoked.

2. The costs of lawsuit shall be borne by the defendant.

The same shall apply to the order.

1. Details of the disposition;

The following facts are not disputed between the parties:

A. According to the restructuring plan announced by the Financial Supervisory Commission, on November 3, 2000, the Korea Deposit Insurance Corporation established a non-party comprehensive financial company (hereinafter “one paper”) as one of the non-party comprehensive financial companies (hereinafter “one paper”) for the purpose of arranging four insolvent financial institutions, including the non-party comprehensive financial company (hereinafter “the non-party comprehensive financial company”), and placed the headquarters of the paper paper in the Seoul Central Deposit Insurance Corporation, the location of the building of the Korea Deposit Insurance Corporation.

B. On December 5, 200, as part of the “decision on the transfer of contract” by the Financial Supervisory Commission issued pursuant to Article 14(2) of the Act on the Structural Improvement of the Financial Industry (hereinafter “the Financial Supervisory Commission”), the head office was transferred to 826-20, which is the seat of the head office of Sejong Sejong, the office of which is the head office of Gangnam-gu, Gangnam-gu, Seoul. The above land and the building, are 826-20,457 square meters and 7 square meters of the above land and 32,62.7 square meters of the total floor area of the above land and 20 stories of the above land and 32,62.7 square meters of the above land and the above building (hereinafter “the above land and the building,”) on March 30, 201, the registration tax of this case was completed by reason of the “decision on transfer of contract” under the name of Sejong, which was exempted under Article 14(2) of the former Act (amended by Act No. 12194, May 16, 2018, 4, 209).

C. On the other hand, the amount of the registration tax exempted as above on the same day shall be deemed to be the amount calculated at the general tax rate, and the special rural development tax was calculated at 402,000,000 won with the tax base.

D. On September 6, 2001, the name of the paper was changed to that of the non-party Korean financial company (hereinafter referred to as “Korea financial company”), and on August 1, 2003, our financial company was merged with the Plaintiff on August 1, 2003 (hereinafter referred to as “the Plaintiff”), except where it is particularly necessary to distinguish it, all “one paper” and “Korea financial company” are “the Plaintiff.”

E. However, on April 10, 2004, the Defendant imposed imposition of special rural development tax on the remainder of 884,400,000 won (including additional tax, 80,400,000 won) calculated by applying the heavy tax rate (30/100/100) under Article 138(1)3 of the former Local Tax Act, not by applying the general tax rate (30/100; hereinafter the same shall apply), which is the tax base of the special rural development tax to be paid by the Plaintiff. The Defendant imposed special rural development tax on the Plaintiff under the imposition of additional tax (including additional tax, 80,400,400,000) calculated by applying the heavy tax rate to the Plaintiff as the tax base.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff succeeded to the contractual relationship with the customer of the central amount upon the decision for the transfer of contracts, and completed the registration of ownership transfer of the instant real estate in which the head office of the central amount was located, and the central amount was extinguished following the said decision for the transfer of contracts. In fact, the legal nature of the transfer of contracts can be deemed as similar to the merger. Furthermore, the former Local Tax Act does not go against the purport of imposing the registration tax, and thus, the instant disposition for transfer of contracts is unlawful.

Even if not, it is unreasonable to expect the Plaintiff to fulfill the duty to pay taxes as alleged by the Defendant, if the circumstances are the same as above, and thus, the penalty tax imposition of the instant disposition is unlawful.

(b) Related statutes;

Financial Industry Promotion

Article 14 (Administrative Dispositions)

(2) Where any insolvent financial institution falls under any of the following subparagraphs, the Financial Supervisory Commission may take necessary measures for the decision on contract transfer, business suspension for a certain period within the limit of six months, and the cancellation of authorization and permission for business, etc. against the insolvent financial institution: Provided, That where it falls under subparagraph 4, it may take only a disposition of business suspension for a certain period within the limit of six months, and where the insolvent financial institution provided for in subparagraphs 1 and 2 ceases to fall under any insolvent financial

Restriction of Special Taxation Act (amended by Act No. 6538 of Dec. 29, 2001)

Article 119 (Exemption, etc. from Registration Tax)

(1) Registration falling under any of the following subparagraphs shall be exempted from registration tax:

12. Registration concerning any property acquired by a financial institution, the Korea Asset Management Corporation, the Korea Deposit Insurance Corporation or a reorganization financing institution from an insolvent financial institution which has been subject to timely corrective measures (limited to an order for business transfer or contract transfer) or a decision on contract transfer under subparagraph 1 of Article

Local Tax Act (amended by Act No. 6549 of Dec. 29, 2001)

Article 138 (Subjects of Registration, etc. of Juristic Person in Large City Area)

(1) Where any registration falling under any of the following subparagraphs is made, the tax rates shall be 300/100 of the relevant tax rates provided for in Articles 131 and 137: Provided, That the same shall not apply to the registration of the types of business prescribed by the Presidential Decree as inevitable to be established in the overconcentration control region (excluding the industrial complex subject to the Industrial Placement and Factory Establishment Promotion Act; hereafter in this Article, referred to as the “large city”) under Article 6 (1) 1 of the Seoul Metropolitan Area Readjustment Planning Act, of residential real estate acquired by a corporation for the purpose of selling in lots or leasing to its members, and real estate registration (limited to the registration of real estate corresponding to the ratio of foreign investment) due to the new establishment or extension of a factory conducted by a foreign-invested enterprise under the Foreign Investment Promotion Act by December 31,

3. Real estate registration and real estate registration after the establishment, establishment and transfer of a juristic person, and the establishment of a branch or sub-office in a large city and the relocation of a head office, main office, branch or sub-office in a large city.

(3) The scope and application standards of heavy taxation of registration tax under the provisions of paragraph (1) and other necessary matters shall be determined by the Presidential Decree, and the scope of factories and application standards under the provisions of paragraph (1) 4 shall be determined by

Enforcement Decree of the Local Tax Act

Article 102 (Scope and Application Criteria of Heavy Taxation on Corporations, etc. in Large Cities)

(2) For the purpose of Article 138 (1) 3 of the Act, the term "real estate registration following the establishment of a corporation, the establishment of a branch or a sub-office, and the relocation of a branch or a sub-office into a large city" means all the real estate registrations (excluding the real estate registration for the purpose of preserving or exercising claims; hereafter the same shall apply in this Article) acquired by the relevant corporation or the relevant branch office, etc. prior to the establishment, establishment, establishment, transfer (in the case of Seoul Metropolitan area, relocation into the Seoul Metropolitan area into the Seoul Metropolitan City shall be deemed relocation into the large city; hereafter the same shall apply in this Article), and "any real estate registration for business, non-business, or non-business, acquired within five years after the establishment, establishment, or transfer. In such cases, all real estate registrations refer to the new establishment or extension of a factory, the acquisition by succession of a factory, the relocation of a factory in the large city, and the registration of real estate acquisition resulting from the change of the business type of a factory in

Act on Special Rural Development Tax.

Article 5 (Tax Base and Tax Rate)

(1) The amount of special rural development tax shall be calculated by multiplying the tax base by the pertinent tax rate under each of the following subparagraphs:

20/100 of the reduced or exempted amount of income tax, corporate tax, customs, acquisition tax or registration tax (excluding the case of subparagraph 2) that has been reduced or exempted under the Restriction of Special Taxation Act, the Customs Act and the Local Tax Act by Table included in the main sentence;

C. Determination

The tax base of the instant disposition is the registered tax amount reduced or exempted by the Plaintiff pursuant to the Act on Special Cases concerning Tax Restriction, so whether the reduced or exempted tax amount is either the tax amount subject to the heavy tax rate or the general tax rate is applied pursuant to Article 138(1) of the former Local Tax Act.

The legislative purpose of Article 138(1)3 and (3) of the Local Tax Act, which provides for heavy taxation in a large city, and Article 102(2) of the Enforcement Decree of the Local Tax Act, is to ensure the preservation and improvement of the living environment of residents in a large city and the balanced development and revitalization of regional economy between regions by suppressing the concentration of population and economic power, taking into account the fact that the concentration effect of population and economic power arising from the establishment and relocation in a large city of a juristic person may much more than that of natural persons, and that the concentration effect of population and economic power arising from the establishment and relocation in a large city may occur more strongly than that of natural persons, as well as that of a juristic person outside a large city may enjoy more convenient and economic benefits than that of a juristic person (see, e.g., Supreme Court Decisions 9Du6309, May 30, 200; 9Du6309, Jun. 6, 198).

However, according to the above facts, one of the types of paper loans is established by the Korea Deposit Insurance Corporation for the purpose of liquidation of insolvent financial institutions and succeeds to all rights and obligations of the central amount according to a decision on contract transfer at the Financial Supervisory Service. On the other hand, the registration of transfer of ownership in this case is completed in the name of a kind of paper as to the real estate in this case, which is the site and building, after the registration of change of the principal office by moving the principal office to the central head office at the Korea Deposit Insurance Corporation. It is reasonable to view that one of the kind of paper loans was not a new office that had not been previously established, but it is merely a fact that the office of the central paper loans already existed in the past is changed to the principal office at the time of a decision by the Financial Supervisory Service for the purpose of liquidation of insolvent financial institutions, and thus, it is not subject to the registration tax and registration tax of the real estate in large cities as provided in Article 138 (1) 3 of the former Local Tax Act.

Therefore, the disposition of this case on the premise that the transfer registration of ownership in this case is subject to heavy registration tax is illegal.

3. Conclusion

Therefore, the plaintiff's claim of this case seeking the revocation of the disposition of this case is reasonable, and it is so decided as per Disposition with the assent of all participating Justices.

Judges Chuncheon (Presiding Judge)