[1] The meaning of "special circumstances" and the method of determining whether the provisions of the Addenda to the Act before the amendment are invalidated (affirmative in principle) and the requirement to consider that the Act is not exceptionally invalidated

[2] The case holding that Article 23 of the Addenda to the Act on the Regulation of Tax Reduction and Exemption (amended by Act No. 4666 of December 31, 1993) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4666 of December 31, 1990) is not effective despite the enforcement of the Act on the Regulation of Tax Reduction and Exemption

[1] In the case of a specialized amendment of the Act, the same applies to the repeal of the existing Act and the enactment of a new Act, and the provisions of the Addenda are deemed to be null and void. Therefore, the transitional provisions of the previous Act shall be deemed null and void. However, in special circumstances, the term “special circumstances” in this context shall not be deemed null and void. The term “special circumstances” in this context include not only cases where a separate provision exists that the former Act shall continue to apply the transitional provisions of the previous Act, but also exceptional circumstances where the former transitional provisions shall be deemed null and void, even if there are no such provision. In determining whether there is “special circumstances” in this case, the legislative process and purport of the previous transitional provisions, the legislative intent and overall structure of the amended Act, whether there is a legal gap, and all other circumstances, shall be determined individually and specifically by comprehensively taking into account the following factors.

[2] The case holding that Article 23 of the Addenda of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4285 of Dec. 31, 1990) is not effective despite the enforcement of the Special Regulation of Tax Reduction and Exemption Act (amended by Act No. 4666 of Dec. 31, 1993)

[1] Article 56-2 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4021 of Dec. 26, 198), Article 23 of the Addenda of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 6136 of Jan. 12, 200), Article 2 of the Addenda of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4743 of Mar. 24, 1994), Article 6 (Elimination of current Act) of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act (amended by Presidential Decree No. 14084 of Dec. 31, 1993) / [2] Article 56-2(2) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4021 of Dec. 26, 198), Article 36(4) of the former Addenda of the Regulation of Tax Reduction and Exemption Act (amended by Presidential Decree No. 214364 of the current Regulation of Tax Reduction and Exemption Act)

[1] Supreme Court Decision 2001Du11168 decided Jul. 26, 2002 (Gong2002Ha, 2091)

Human resource distribution (Law Firm No. 1,000 others, Counsel for defendant-appellant)

The director of the tax office of Geumcheon-cheon (Attorney Lee Jae-soo, Counsel for defendant)

Seoul High Court Decision 2005Nu30213 delivered on November 15, 2006

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

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Regarding ground of appeal No. 1

A. Article 56-2 (hereinafter “former Article 56-2”) of the former Corporate Tax Act (amended by Act No. 3939, Nov. 28, 1987; hereinafter “former Article 56-2 of the Securities and Exchange Act”) newly established a new company in order to list stocks at the Korea Stock Exchange under the provisions of Articles 88(1) of the Assets Revaluation Act in order to support the sound development of the capital market through the expansion of supply of superior stocks, the former Regulation of Tax Reduction and Exemption Act provides that “If a corporation which conducts revaluation fails to list stocks at the Korea Stock Exchange within 2 years from the date of revaluation, it shall not be deemed revaluation of its income under the Assets Revaluation Act on the first day of each month, notwithstanding the provisions of Articles 4 and 38 of the Assets Revaluation Act: Provided, That when a corporation which conducts revaluation fails to list stocks at the Korea Stock Exchange within 2 years from the date of revaluation, it shall not be deemed revaluation of its income under the Assets Revaluation Act on the basis of its income amount before revaluation of its income amount.

Article 56-2 of the former Regulation on Tax Reduction and Exemption (amended by Act No. 4285 of Dec. 31, 1990) of the Act on the Regulation of Tax Reduction and Exemption (amended by Act No. 4285 of Dec. 31, 1990) was deleted, and Article 23 of the Addenda (amended by Presidential Decree No. 14084 of Dec. 31, 1993) of the former Enforcement Decree of the Regulation on Tax Reduction and Exemption (amended by Presidential Decree No. 14084 of Dec. 31, 1993) was established. Paragraph (1) of the same Article provides that "If a corporation which conducted revaluation under the former Article 56-2 does not list its stocks within the period prescribed by Presidential Decree, it shall not be deemed revaluation under the Assets Revaluation Act." Paragraph (2) of the same Article provides that "where a corporation which conducted revaluation is revoked within the period prescribed in paragraph (1), it shall be returned and paid along with a report on tax base for the business year in which the revaluation is revoked."

After that, Article 2 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4666 of Dec. 31, 1993) which was amended and enforced on Jan. 1, 1994 (hereinafter referred to as the "Special Regulation of Tax Reduction and Exemption Act") of the Addenda to the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4666 of Dec. 31, 1993), "the amended provision concerning income tax and corporate tax in this Act applies from the taxable year beginning after the enforcement of this Act to the taxable year beginning after the enforcement of this Act" was "general

Meanwhile, even after the enforcement of the Special Act on the Regulation of Tax Reduction and Exemption, etc., the former Enforcement Decree of the Special Act on the Regulation of Tax Reduction and Exemption still provides for “8 years” (Article 109 of the Enforcement Decree of the Regulation of Tax Reduction and Exemption Act amended by Presidential Decree No. 14084, Dec. 31, 1993); “10 years” (Article 109 of the Enforcement Decree of the Regulation of Tax Reduction and Exemption Act amended by Presidential Decree No. 15197, Dec. 31, 1996), “1 year” (Article 138 of the Enforcement Decree of the Restriction of Tax Reduction and Exemption Act amended by Presidential Decree No. 15976, Dec. 31, 198), “13 years” (the Enforcement Decree of the Restriction of Special Taxation Act amended by Presidential Decree No. 1693, Oct. 10, 200); and “13 years” (the Enforcement Decree of the Restriction of Special Taxation Act amended by Presidential Decree No. 1381, Dec. 31, 20138, 1300.

B. If there is no express measure to amend or delete the transitional provision of the Addenda to the previous Act at the time of the amendment, the transitional provision of the Addenda does not become null and void as a matter of course, even though there is no express provision to amend or delete the transitional provision of the previous Act, but the transitional provision of the previous Act is the same as the abolition of the previous Act and the enactment of a new Act in the case of a specialized amendment. Thus, the transitional provision of the previous Act shall be deemed null and void. However, if there are special circumstances, its validity shall not be lost (see, e.g., Supreme Court Decision 2001Du1168, Jul. 26, 2002). The term "special circumstance" referred to in this context includes not only a separate provision that applies to the transitional provision of the previous Act, but also an exceptional circumstance that can be deemed null and void without the previous transitional provision. In this case, the determination of whether there is an exceptional provision in the previous Act should be a comprehensive consideration of the legislative intent and the overall legislative structure and circumstances of the previous Act.

However, with the removal of the former provisions of Article 56-2, which are the special provisions for asset revaluation, the provisions for the special provisions for asset revaluation, the effect of asset revaluation (paragraph (1)) at the time of listing and the effect of cancellation of asset revaluation (paragraph (2)) in order to ex post regulate only the corporation which has already conducted asset revaluation under the above provisions, and the special provisions for the special provisions for asset revaluation are specifically delegated to the Presidential Decree only for the time limit for listing. Thus, even if the special provisions for asset revaluation are not applicable under the Special Provisions for the Regulation of Tax Reduction and Exemption Act, the Special provisions for the Regulation of Tax Reduction and Exemption seems to be not to have a separate transitional provisions for this, and if the new provisions for the supplementary provisions for the Special Provisions for the Regulation of Tax Reduction and Exemption were not applied to the corporation which has already implemented asset revaluation under the previous provisions for the purpose of the Regulation of Tax Reduction and Exemption Act, the new provisions for the Regulation of Tax Reduction and Exemption were not applied to the corporation whose asset revaluation had already been implemented within the time limit for stock revaluation (the previous provisions for asset revaluation are not applied within 2).

C. On January 1, 1990, the court below held that even if the Special Act on the Regulation of Tax Reduction and Exemption does not contain any transitional provision on the supplementary provision of this case, the supplementary provision of this case does not apply to the corporate tax for the portion of the previous taxable year until December 31, 2003, and the Special Act on the Regulation of Tax Reduction and Exemption provides that "the amended provision on corporate tax shall apply to the portion of the previous taxable year starting first after this Act enters into force ( January 1, 1994)" as an exception of Article 2 of the Addenda of the Special Act on the Regulation of Tax Reduction and Exemption, the Special Act on the Regulation of Tax Reduction and Exemption shall be subject to the Specialized Act on the Regulation of Tax Reduction and Exemption, so even if there is no transitional provision on the supplementary provision of this case in the Special Act on the Regulation of Tax Reduction and Exemption, it is reasonable to determine that the supplementary provision of this case still applies to the portion of the plaintiff company for the taxable year prior to the enforcement of the Special Act on the Regulation of Tax Reduction and Exemption and Exemption and Exemption, and Exemption, and it is legitimate.

In light of the above legal principles, although the reasoning of the court below is somewhat inappropriate, it is just in its conclusion that the disposition of this case based on the supplementary provision of this case is lawful, and it is not erroneous in the misapprehension of legal principles as to the validity of the previous law when a specialized amendment of the law is made, which affected the conclusion of the judgment.

2. Regarding ground of appeal No. 2

Article 26-2 of the Framework Act on National Taxes provides, in principle, the exclusion period of imposition of national taxes, excluding inheritance tax and gift tax, as the title "period for exclusion from imposition of national taxes", for five years from the date on which national taxes can be imposed.

According to Article 9(2) of the former Corporate Tax Act and Article 12(1)5 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14468 of Dec. 31, 1994), any profit from voluntary evaluation of assets not under the Assets Revaluation Act shall be included in gross income in calculating the income of the relevant corporation. However, any profit from voluntary evaluation of assets under the Assets Revaluation Act shall not be included in gross income under Article 15(1)5 of the former Corporate Tax Act. However, if a corporation which has conducted asset revaluation under Article 56-2 fails to list its stocks by December 31, 2003, which is the “period determined by the Presidential Decree” under Article 1 of the Addenda of the former Corporate Tax Act, the date of revaluation should be included in gross income only because the assets revaluation is not deemed revaluation under the Assets Revaluation Act. Therefore, even if the relevant corporation did not list its stocks before the arrival of the aforementioned period, it shall be included in gross income in calculating the income amount of the pertinent business year (including 10.4).

The court below held that since the company of the plaintiff did not list shares until December 31, 2003, which is the listed date, even though it conducted the asset revaluation on January 1, 1990 under the former provisions of Article 56-2, since the company did not list shares until December 31, 2003, the initial date of the exclusion period of the corporate tax of this case and the value added tax should be January 1, 2004. In light of the above legal principles, the judgment of the court below is just, and there is no error of law by misunderstanding the legal principles as to the exclusion period of imposition, as otherwise

3. Conclusion

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.

Justices Park Si-hwan (Presiding Justice)