Plaintiff

Korea

June 17, 2010

Seoul Central District Court Decision 2009Da51023 Decided December 18, 2009

1. Revocation of a judgment of the first instance;

2. Of the distribution schedule prepared by the above court on April 29, 2009, the amount of 42,273,730 won against the defendant, and the amount of 9,750,847 won against the plaintiff shall be corrected to 142,024,57 won, respectively.

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

The same shall apply to the order.

1. Basic facts

A. On December 11, 2007, the Nonparty reported the amount of comprehensive real estate holding tax to be voluntarily paid in relation to comprehensive real estate holding tax in 2007 to the Government Tax Office under the Defendant’s control on a regular basis at KRW 31,353,083 and the amount of special rural development tax at KRW 6,270,616.

1) Comprehensive real estate holding tax;

(1) Number of objects of taxation: Housing 117

(2) Tax base: 2,611,123,744 won.

(3) Tariff rates and applicable rates: 2.0% and 80%.

(4) Amount of comprehensive real estate holding tax: 34,977,979 won.

(5) Amount of property tax to be deducted: 2,655,214 won.

(6) Calculated tax amount: 32,322,765 won.

(7) Tax credit (calculated tax amount x 3%): 969,682 won.

(8) Amount of final tax: 31,353,083 won.

(9) The tax amount to be voluntarily paid: 31,353,083 won.

2. Special rural development tax

(1) Tax base: 31,353,083 won.

(2) Tax rate: 20%

(3) Calculated tax amount: 6,270,616 won.

B. On March 5, 2008, the Plaintiff registered the creation of a mortgage on the second floor 201 (hereinafter “instant real estate”) on the ground-based Radra in Gangnam-gu, Seoul, Seoul (number number, lake omitted) (hereinafter “instant real estate”), which was owned by the Nonparty, with the maximum debt amount of KRW 150,000,000, the obligor, the Nonparty, and the Nonparty’s creditor, and the Plaintiff (hereinafter “instant collateral security”).

C. On March 7, 2008, the head of the tax office of the Gu government shall determine the amount of the comprehensive real estate tax to be paid by the Nonparty as KRW 32,322,760 and the amount of the special rural development tax to be paid by the Nonparty as KRW 6,464,50, and then notify the Nonparty of the tax base and calculation details of the comprehensive real estate tax in 2007 as above. Around that time, the payment deadline for the said comprehensive real estate tax and special rural development tax was notified to the Nonparty at KRW 3,490,440.

1) Comprehensive real estate holding tax;

(1) Tax base: 2,611,123,744 won;

(2) Tax rate: 2.0%

(3) Gross real estate tax amount: 34,977,979 won.

(4) Amount of property tax to be deducted: 2,655,214 won.

(5) Calculated tax amount: 32,322,765 won.

(6) Amount of notified tax: 32,322,760 won.

2. Special rural development tax

(1) Tax base: 32,322,765 won.

(2) Tax rate: 20%

(3) Calculated tax amount: 6,464,553 won.

(4) Amount of notified tax: 6,464,550 won.

3) On the premise that the Nonparty was entitled to the deduction of 3/100 of the calculated amount of comprehensive real estate tax, the head of the tax office having jurisdiction over the district tax office made a report of comprehensive real estate tax and special tax for rural development on December 11, 2007, and did not pay it by December 15, 2007, the payment deadline. As such, the head of the tax office determined that comprehensive real estate tax and special tax for rural development was not deducted by 3/100 of the calculated amount of tax.

D. On September 3, 2008, the Seoul Central District Court (Seoul Central District Court 2008tagi25764) commenced the auction procedure (hereinafter “instant enforcement procedure”) on the instant real estate.

E. On September 17, 2008, the Defendant requested the enforcement court to deliver KRW 42,273,730 of the Non-Party’s gross real estate tax amount in 2007 to the non-party.

1. Name of tax item: Gross real estate tax;

2) Legal date: December 17, 2007

3) Payment deadline: March 31, 2008

(d) Comprehensive real estate holding tax: 42,273,730 won in total, including 32,319,410 won in special rural development tax and 6,463,880 won in special rural development tax and additional dues 3,490,440 won in total;

F. On April 29, 2009, a court of execution made a distribution of KRW 42,273,730, the total amount of the claim for delivery to the Defendant as the fourth-class creditor. The court of execution made a distribution schedule that distributes only KRW 99,750,847, out of the amount of the claim for delivery to the Plaintiff, the mortgagee, as the fifth-class creditor. The Plaintiff was present on the date of distribution on the above date of distribution and raised an objection against the total amount of dividends to the Defendant, and then filed the instant lawsuit within the statutory period.

[Ground of recognition] Facts without dispute, Gap evidence 1, Gap evidence 3, Gap evidence 4, Eul evidence 1 to Eul evidence 3-1 and Eul evidence 3-2, the purport of whole pleadings

2. Relevant provisions;

* Article 21 of the Framework Act on National Taxes (Time of Materialization of Tax Liability)

(1) A liability to pay national taxes shall accrue at the following times:

10-4. For a special rural development tax, when a tax liability as prescribed in Article 2 (2) of the Act on the Special Rural Development Tax comes into existence; and

10-5. The tax base date for comprehensive real estate holding tax;

* Article 22 of the Framework Act on National Taxes (Determination of Tax Liability)

(1) The amount of national taxes shall be determined by procedures under relevant tax-related Acts.

* Article 10-2 (Determination of Liability for Tax Payment) of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 19893, Feb. 28, 2007)

The case where the tax amount is fixed in accordance with the procedures under the relevant tax-related Acts as provided in Article 22 (1) of the Act shall be as follows:

1. For income tax, corporate tax, value-added tax, special consumption tax, liquor tax, securities transaction tax, educational tax, traffic tax or comprehensive real estate holding tax, when the tax base and tax amount of the relevant national tax are reported to

Provided, That this shall not apply to cases falling under subparagraph 2.

2. Where the Government determines the tax base and amount of the national taxes under subparagraph 1, the time of determination;

* Article 16 (Report and Payment) of the former Gross Real Estate Tax Act (amended by Act No. 8235 of Jan. 11, 2007)

(1) A taxpayer of comprehensive real estate holding tax shall report the tax base and amount of such comprehensive real estate holding tax payable each year to the head of the competent tax office having jurisdiction over the place of tax payment (hereinafter referred to as "head of the competent tax office") from December 1 to December 15 of the

(2) A taxpayer who has reported pursuant to paragraph (1) shall pay comprehensive real estate holding tax to the head of the competent district tax office, the Bank of Korea or a postal agency within its report deadline.

* Article 17 (Determination and Correction) of the former Gross Real Estate Tax Act (amended by Act No. 8235 of January 11, 2007)

(1) Where a taxpayer fails to report pursuant to Article 16, the head of the competent district tax office or the Commissioner of the competent Regional Tax Office having jurisdiction over the place of tax payment (hereinafter referred to as “head of the competent regional tax office”) shall

(2) Where any omission or error is found in the details of reports filed pursuant to Article 16, the head of the competent district tax office or the Commissioner of the competent Regional Tax Office shall correct the tax base and

* Article 3 of the Addenda of the former Gross Real Estate Tax Act (amended by Act No. 7328 of Jan. 5, 2005) (Special Cases concerning Additional Tax)

The additional tax under the provisions of Article 18 shall be exempted from the date of entry into force for three years, but if the duty of report and payment is performed within the time limit as prescribed in Article 16 during the exemption period, an amount equivalent to 3/100 of the calculated tax amount under the provisions of Article 18 shall be deducted from the calculated tax amount.

* Article 2 (Definitions) of the Act on Special Rural Development Tax.

(2) The term "principal tax" in this Act means the following:

8. Comprehensive real estate holding tax in the case of special rural development tax under the provisions of Article 5 (1) 8.

* Article 3 of the Act on Special Rural Development Tax (Taxpayer)

Those who fall under one of the following subparagraphs shall be liable to pay the special rural development tax under the provisions of this Act:

6. Taxpayers of comprehensive real estate holding tax under the Comprehensive Real Estate Holding Tax Act.

* Article 5 of the Act on Special Rural Development Tax (Tax Base and Tax Rate)

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

8. 20/100 of the amount of comprehensive real estate holding tax to be paid under the Comprehensive Real Estate Holding Tax Act.

* Article 7 of the Act on Special Rural Development Tax (Report, Payment, etc.)

(4) The special rural development tax under the provisions of Article 5 (1) 3 through 8 shall also be reported and paid at the same time when the relevant principal tax is reported and paid (in cases of subparagraph 3 of the same paragraph, interim prepayment shall be excluded) or is paid after transaction collecting (referring to transaction collecting under the provisions of Article 9 of the Securities Transaction Tax Act; hereinafter the same shall apply).

* Article 8 of the Act on Special Rural Development Tax (Imposition and Collection)

(2) Where those who are obliged to report, pay and withhold special rural development tax under the provisions of Article 7 fail to report, or make an error or omission in the reported matters, or do not pay or underpay the tax amount, the following subparagraphs shall apply:

1. With respect to a taxpayer under subparagraph 1 of Article 3 for whom income tax or corporate tax is reduced or exempted or a taxpayer under subparagraphs 2 through 4 and 6 of Article 3 (excluding an importer of goods among taxpayers under subparagraph 3 of the same Article), the head of a tax office shall determine, revise, and collect the relevant principal tax in the same manner as the principal tax is determined, revised, and collected;

* Article 21 of the National Tax Collection Act (Additional Dues)

If the national taxes are not paid in full by the payment deadline, the additional dues equivalent to 3/100 of the national taxes in arrears shall be collected from the date on which the payment deadline expires: Provided, That this shall not apply to the State and local governments (including associations

* Article 35 of the Framework Act on National Taxes

(1) National taxes, surcharges, or expenses for disposition on default shall be collected in preference to other public imposts and other claims: Provided, That this shall not apply to any of the following public charges and other claims:

3. With respect to the sale of an asset for which the fact that the establishment of the right of lease on deposit basis, the pledge right or the mortgage has been registered prior to the following date (hereinafter referred to as "legal due date") is proved under the conditions as prescribed by the Presidential Decree, if any national tax or additional dues (excluding the national tax and the additional dues imposed on the asset) is collected from the proceeds of sale, the obligation secured by the right

(a) For the returned tax amount, in the case of a national tax for which a duty to pay is determined by the tax base and return of tax amount (including the interim prepayment corporate tax and the value-added tax paid by preliminary return), the

(b) Where the Government determines, revises, or occasional assessment of the tax base and tax amount, the date of sending a tax notice for the notified tax amount;

(c) For the national taxes and stamp taxes collected from the withholding agent or the tax association, the date on which the liability to pay taxes is determined, notwithstanding items (a) and (b);

3. The parties' assertion

A. The plaintiff primarily asserts that since the statutory due date of the above comprehensive real estate tax and special rural development tax claimed by the defendant on March 7, 2008 is prior to the date of establishment of the right to collateral security of this case, the defendant cannot be paid dividends preferentially to the plaintiff on the above comprehensive real estate tax, special rural development tax and additional dues based on such tax, and even if the defendant can be paid dividends preferentially to the plaintiff, even if he can be paid dividends preferentially to the plaintiff, the above comprehensive real estate tax and special rural development tax, which constitute the tax base of the real estate of this case among the tax base of the 117 comprehensive real estate tax and special

B. As to this, the defendant asserts that since the statutory due date of the above comprehensive real estate tax and special rural development tax was on December 11, 2007 reported by the non-party, prior to the establishment date of the right to collateral security of this case, the defendant can receive the above 42,273,730 won in preference to the plaintiff.

4. Determination

A. According to the provisions of Article 21(1)10-4, Article 10-5, and Article 22(1) of the Framework Act on National Taxes and Article 10-2 of the former Enforcement Decree of the Framework Act on National Taxes, the liability to pay comprehensive real estate tax and special rural development tax is finalized at the time of filing a return on the tax base and tax amount with the competent tax office. As such, the reported tax amount shall be deemed the statutory due date for determining the priority of secured claims, such as mortgage, etc. pursuant to Article 35(1)3(a) of the Framework Act on National Taxes. However, if the government determines the tax base and tax amount due to failure to file a return on the tax base and tax amount, or errors or omissions in the reported amount, etc., the duty to pay taxes is finalized at the time of determining the tax base and tax amount, and such notified tax amount shall be deemed the date of sending a tax payment notice (see Supreme Court Decision 2005Da10845, Feb. 22, 2007).

In addition, Article 35 (2) 3 of the Framework Act on National Taxes does not provide for the statutory due date of additional dues, but Article 21 of the National Tax Collection Act provides that additional dues shall be collected for delinquent national taxes if national taxes are not paid in full by the due date. Thus, if the tax amount in arrears is not paid by the due date notified in the notice of the principal tax payment, the additional dues shall be collected as a matter of course without a separate confirmation procedure for the additional dues of the tax authority. Therefore, the statutory due date of additional dues shall be deemed to be when the liability to pay additional dues is determined by analogy by applying the provisions of Article 35 (2) 3 (c) of the Framework Act on National Taxes, i.e., when the liability to pay the additional dues itself is determined by analogy (see Supreme Court Decision 201Da74018, Feb. 8, 2002)

B. In the instant case, according to the above facts, the non-party reported the amount of comprehensive real estate tax in 2007 to 31,353,083 won and the amount of special rural development tax to 6,270,616 won with respect to comprehensive real estate tax in December 11, 2007. However, on March 7, 2008, the government chief of the tax office determined the amount of comprehensive real estate tax in 32,32,760 won and special rural development tax at 6,464,50 won with respect to the above comprehensive real estate tax in 207 to the non-party. The above amount of comprehensive real estate tax at 32,322,760 won and special rural development tax at 30,000,000 won and special rural development tax at 30,000,000 won and special rural development tax at 30,000,000 won and 30,000.

Therefore, in the execution procedure of this case, the execution court deleted the dividend amount of 42,273,730 won against the defendant from among the dividend table prepared by the execution court on April 29, 2009, and added it to the dividend amount against the plaintiff, thereby revising the dividend amount of the plaintiff to 142,024,577 won (9,750,847 won + 42,73,730 won).

5. Conclusion

Therefore, the plaintiff's claim of this case is accepted on the grounds of its reasoning, and the judgment of the court of first instance is unfair on the grounds of its conclusion, so it is revoked by the plaintiff's appeal and it is so decided as per Disposition by the court below to correct the distribution schedule of this case as above.

Judges Lee Jong-hee (Presiding Judge)