Where a corporation which purchased land for a factory in an industrial complex fails to use the land for its proper purpose due to the refusal to conclude an occupancy contract of the Industrial Complex Management Corporation, and the land for non-business use

The purpose of heavy taxation on non-business land of a juristic person is to punish cases where a juristic person neglects the land for other interests even though it can be used for its own purpose, so if a juristic person who purchased a factory site in an industrial complex fails to use the land for its own purpose due to a refusal to conclude an occupancy contract of the Industrial Complex Management Corporation, it shall be deemed that there is a justifiable reason for non-business use of the juristic person. Thus, the above land

Article 188 (1) 1 and 3 of the Local Tax Act, Article 188 (2) of the Local Tax Act, Article 142 (1) 1 and 7 of the Enforcement Decree of the Local Tax Act

Supreme Court Decision 84Nu408 Delivered on May 28, 1985

Attorney Cho Dong-jin et al., Counsel for the defendant-appellant of the Korea Package Construction Corporation

Sung-nam City Law Firm Lee Jae-ho, Counsel for defendant-appellant

Seoul High Court Decision 85Gu59 delivered on August 26, 1985

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal Nos. 1 and 2 of the Plaintiff’s agent are examined together (the supplementary grounds of appeal to the extent of supplement to each of the above points).

According to the reasoning of the judgment below, since the plaintiff company established for the operation of ready-mixed manufacturing and sale business, road packing construction business, etc., purchased the above land from the non-party 1 in Sungnam-si ( Address omitted) located in Sungnam-si (hereinafter referred to as this case) and completed the registration of ownership transfer under 6.4 of the same year, the court below determined that the plaintiff's application for the occupancy contract was not legitimate by the plaintiff's failure to use the above land for the above purpose of the occupancy contract after the non-party 1 purchased the above land for the above purpose of the relocation of factory by the non-party 3 and the non-party 1's request for the removal of the above industrial complex to the non-party 1 after the non-party 1 purchased the above land for the above purpose of the occupancy contract to the non-party 3's efficient and proper reasons for the removal of the above new industrial complex after the plaintiff's request for the occupancy contract to the non-party 1's removal of the above land to the non-party 1's new industrial complex construction project.

However, Article 18 (1) 1 Item 3 of the Local Tax Act and Article 188 (3) of the same Act apply property tax rate to non-business land of a corporation. The classification and limit of non-business land shall be prescribed by the Presidential Decree. The main sentence of Article 142 (1) 1 Item 7 of the Enforcement Decree of the Local Tax Act provides that "non-business land of a corporation" means land of a corporation as of the starting date of the payment of property tax without justifiable reasons, which is not directly used for its own purpose (the purpose of the law or the articles of incorporation of a corporation). The purpose of such provision is to punish a corporation's neglecting its own land for other purposes even though it can be used for its own purpose. Thus, if the corporation fails to use it directly for its own purpose, it shall not be subject to heavy taxation unless there is a justifiable reason for it to be used directly by its own company (see Supreme Court Decision 84Nu408 delivered on May 28, 1985).

Therefore, the lower court erred by misapprehending the legal doctrine as to the corporation’s non-business land, which found the instant land to be non-business land of the Plaintiff company to be lawful. Therefore, it is reasonable to argue that the lower court erred by misapprehending the legal doctrine.

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating judges.

Justices Kim Jong-sik (Presiding Justice)