[1] The meaning and method of determining the possibility of prediction, one of the criteria for determining whether the enforcement decree exceeds the delegation scope of the parent law

[2] The case holding that Article 2 (2) (main sentence) of the former Enforcement Decree of the Corporate Tax Act provides for the requirements, etc. for fixed assets subject to non-taxation where a non-profit domestic corporation disposes of its fixed assets, and it cannot be deemed as invalid beyond the scope and limit of delegation under Article 3 (2) 5 of the former Corporate Tax Act

[3] Requirements for imposing additional tax, and whether a taxpayer's mistake in the land or the statute constitutes a justifiable ground for not imposing additional tax (negative)

[1] One of the important criteria for determining whether a provision of the Enforcement Decree goes beyond the scope of delegation by the mother law is predictability. This means that the contents of the Enforcement Decree are already specifically delegated by the mother law and should belong to the scope within which anyone can predict the delegated contents from the mother law itself. The existence of such predictability does not require only one of the specific provisions, but should be determined by systematically and systematically considering the legislative purport of the Act.

[2] The case holding that the main sentence of Article 2 (2) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 21302 of Feb. 4, 2009) stipulates the requirements, etc. for fixed assets that can be subject to non-taxable income in the event that a non-profit domestic corporation disposes of fixed assets, and it cannot be deemed as a invalid provision beyond the scope and limit of delegation under Article 3 (2) 5 of the former Corporate Tax Act (amended by Act No. 9267 of Dec. 26, 2008) as the parent corporation

[3] Penalty taxes under tax law are administrative sanctions imposed pursuant to the law in order to facilitate the exercise of the right to impose taxes and the realization of tax claims, where a taxpayer violates a return, tax liability, etc. under the law without justifiable grounds, and the taxpayer’s intention or negligence is not considered, and the land or mistake of the law does not constitute justifiable grounds.

[1] Article 3 (2) 5 of the former Corporate Tax Act (amended by Act No. 9267 of Dec. 26, 2008) (see current Article 3 (3) 5), Article 2 (2) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 21302 of Feb. 4, 2009) / [2] Article 3 (2) 5 (see current Article 3 (3) 5) of the former Corporate Tax Act (amended by Act No. 9267 of Dec. 26, 2008), Article 2 (2) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 21302 of Feb. 4, 2009) / [3] Article 2 subparagraph 4 and Article 47 of the Framework Act on National Taxes, Article 2 (2) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 21302 of Feb. 24, 2009)

[1] Supreme Court Decision 2006Du19570 Decided November 27, 2008 (Gong2008Ha, 1812) / [3] Supreme Court Decision 2005Du3714 Decided October 26, 2006

Korea Spool (Law Firm LLC, Attorneys So-young et al., Counsel for the defendant-appellant)

Head of Yongsan Tax Office

Seoul High Court Decision 2012Nu17997 decided December 20, 2012

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

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

Article 3(2)5 of the former Corporate Tax Act (amended by Act No. 9267 of Dec. 26, 2008; hereinafter “Corporate Tax Act”) provides that “income from the disposal of fixed assets as one of the income for each business year of a non-profit domestic corporation,” and stipulates that “The fixed assets directly used for the proper purpose business and prescribed by the Presidential Decree, shall be excluded.” Article 2(2)5 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 21302 of Feb. 4, 2009) (hereinafter “Enforcement Decree of the Corporate Tax Act”) stipulates that “The term “the revenues from the disposal of fixed assets” shall be prescribed by the Presidential Decree” and “the fixed assets shall be directly used for the proper purpose business (excluding the profit-making business falling under the provisions of paragraph (1))” as of the date of the disposal of the fixed assets.”

One of the important criteria for determining whether a provision of the Enforcement Decree exceeds the scope of delegation by the mother law is predictability. This means that the contents of the Enforcement Decree in question are already specifically delegated by the mother law, and it must be within the scope of predicting the delegated contents by the mother law itself. The existence of such predictability is not determined by only one of the pertinent specific provisions, but should be determined by systematically and systematically considering the legislative intent of the law (see, e.g., Supreme Court Decision 2006Du19570, Nov. 27, 2008).

Article 3 (2) 5 of the Corporate Tax Act, which is a delegation provision of the Enforcement Decree of the instant case, provides that "fixed assets used directly for the proper purpose business" and its language limits the scope of non-taxation to a certain extent. The purpose of the provision is to induce non-profit domestic corporations to directly use fixed assets such as real estate for the proper purpose business for a considerable period, and the provisions of the Enforcement Decree of the instant case provide for non-taxation on the assets of non-profit domestic corporations such as the Income Tax Act, the Local Tax Act, the Restriction of Special Taxation Act, etc. requires that they be directly used for the proper purpose business for a certain period. In full view of the fact that the delegation provision of Article 3 (2) 5 of the Corporate Tax Act, which is a delegation provision of the instant Enforcement Decree, requires that the contents to be prescribed by the Presidential Decree, such as the period used directly for the proper purpose business, at the time of the disposal of fixed assets, can sufficiently be predicted to be the same as the period used directly for the proper purpose business, and the provisions of the instant Enforcement Decree also stipulate the requirements for non-taxable assets within such delegation scope and limits.

Based on the premise that the provision of the Enforcement Decree of this case is valid, the court below is just in holding that the disposition of this case is legitimate on the ground that the plaintiff, a non-profit domestic corporation, has not used the land of this case directly for the proper purpose business for more than three consecutive years at the time of disposing of the land of this case, which is fixed assets, and the income generated from such disposal cannot be deemed as non-taxable income, and there is no error of law

2. Regarding ground of appeal No. 2

Under the tax law, penalty taxes are administrative sanctions imposed in accordance with the law in cases where a taxpayer violates a duty to report and pay taxes without justifiable grounds in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, and the taxpayer’s intention and negligence is not considered, and the land or mistake of the law does not constitute justifiable grounds (see Supreme Court Decision 2005Du3714, Oct. 26, 2006, etc.).

In the same purport, the court below is just in holding that the Plaintiff’s failure to report and pay corporate tax on the transfer of the instant land even though the Plaintiff realized income, is merely a legal site or misunderstanding as to Article 2(2) of the Enforcement Decree of the Corporate Tax Act, and thus, the failure to perform his/her duty does not constitute a justifiable ground for exempting additional tax. In so doing, there is no error of law by misapprehending the legal principles as to

3. Conclusion

The appeal is dismissed, and the 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 Sang-hoon (Presiding Justice)