Whether a person with a provisional registration is liable for physical tax if he/she exercises a security right by way of settling accounts attributable to him/her prior to the notice of payment of delinquent national taxes (negative)

According to the provisions of Article 42 of the Framework Act on National Taxes, a mortgagee’s physical liability to pay taxes provided for in the provisions of Article 42 of the Framework Act on National Taxes is liable to pay national taxes, etc. delinquent in payment of property transferred for security if a mortgagee’s property is subject to a right to transfer for security. Therefore, in cases where a security right is extinguished by acquiring ownership by executing a provisional registration security right by way of settling accounts for attribution at the time of receiving a notice of payment of national taxes, etc. delinquent as a person liable to pay taxes under Articles 13(1) and 12 of the National Tax Collection Act, barring special circumstances, such real estate is not a property transferred for security

Article 42 of the Framework Act on National Taxes and Article 4 of the Provisional Registration Security Act

Supreme Court Decision 83Nu734 delivered on March 13, 1984, 83Nu661 delivered on December 26, 1984

50

The director of the tax office

Seoul High Court Decision 88Gu12365 delivered on March 30, 1989

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal by the defendant litigant are examined.

Article 42 of the Framework Act on National Taxes provides that a mortgagee shall be liable to pay national taxes, etc. delinquent in the payment of property transferred for security if a mortgagee’s physical duty to pay taxes is established. Thus, in the event that ownership is extinguished by acquiring ownership by executing provisional registration security rights by way of settling accounts for attribution of national taxes, etc. in arrears as a material taxpayer under Articles 13(1) and 12 of the National Tax Collection Act at the time of receiving a notice of payment of national taxes, etc. delinquent as a material taxpayer under Articles 13(1) and 12 of the National Tax Collection Act, barring any special circumstance, such real estate is not a property transferred for security under Article 42 of the Framework Act on National Taxes after the settlement procedure has already been completed. Thus, there is no reason to impose physical duty on the mortgagee (see, e.g., Supreme Court Decision 83Nu61, Dec. 26, 1984; 83Nu734, Mar. 13, 1984). The court below duly established that the Plaintiff had paid the above provisional security deposit under the title of the Plaintiff’s claim for ownership transfer.

Therefore, the court below's decision that the real estate of this case at the time when the plaintiff received a payment notice as a material taxpayer is clear that it is not a property transferred for security under Article 42 of the Framework Act on National Taxes since the settlement procedure has already been completed, is just and there is no error of misconception of facts or misapprehension

Therefore, 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 Jong-soo (Presiding Justice) Lee Chang-soo Kim Jong-won