Cho High Court Decision 201Do1506 (No. 29, 2011)

The excessive portion of the property tax on the building borne by the lessee constitutes the tax base for the rental service.

Where the tenant is exempted from the liability for payment due to the payment of the amount of taxes on the acquisition tax and heavy property tax imposed by the head of a local government on the lessor of a building, the amount equivalent to the relevant local tax is related to the lease of a building in return for the lease of

Article 13 (Tax Base of Value-Added Tax Act)

Article 48 (Calculation of Tax Base of Value-Added Tax Act)

2011Revocation of the disposition of revocation of value-added tax

Jeonn et al.

Head of the tax office;

October 14, 2011

November 18, 2011

1. All of the plaintiffs' claims are dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

The part of the value-added tax for the second period of December 10, 2010, which exceeds 3,421,013 won for the second period of value-added tax for the second period of 2006 for the Plaintiffs on December 10, 201, exceeds 4,125,691 won for the first period of 207, and the part exceeding 4,125,691 won for the value-added tax for the first period of 2007 for the second period of 15,923,870 won, and the part of the value-added tax for the second period of 207 for the second period of value-added tax for the second period

1. Details of the disposition;

The following facts are either disputed between the parties, or acknowledged in full view of the purport of the whole pleadings in Gap evidence Nos. 5, 11, 13, Eul evidence No. 1-1 through 3, Eul evidence No. 2-1, 2, Eul evidence No. 4-1 through 3:

A. On January 29, 2002, the plaintiffs purchased each of the buildings listed in paragraphs 1 and 2 of the attached list No. 1 and 2 of the real estate list (hereinafter referred to as "each of the buildings in this case" in sequence), and on March 22, 2002, with respect to the 34/60 shares of each of the buildings in this case among the buildings in this case, the plaintiffs completed the registration of ownership transfer for the remaining 26/60 shares in the YY future.

B. On May 1, 2004, the Plaintiffs entered into a lease agreement between thisCC and each of the instant buildings with a lease deposit of KRW 150,000,000, monthly rent of KRW 2,000, and usage of KRW 2,000,00, respectively, as a singing practice room. On June 1, 200, the Plaintiffs delivered each of the instant buildings to thisCC.

C. However, the head of Jongno-gu Seoul Metropolitan Government imposed acquisition tax and property tax (hereinafter collectively referred to as "each of the local taxes of this case") on each of the buildings of this case from July 2006 to October 2007 on the grounds that each of the buildings of this case constitutes a high-class recreation center subject to taxation of acquisition tax and property tax under the former Local Tax Act (amended by Act No. 8835, Dec. 31, 2007; hereinafter referred to as the "former Local Tax Act").

D. On December 28, 2006, DoD, the husband of the lessee CC, who is not the plaintiffs, paid each property tax, 1, 2, 3, and 4, 3 and 4, 5, and 6, 207, 7, and 8, 3 and 8, respectively, respectively, on April 30, 207, respectively.

E. Meanwhile, while the Plaintiffs reported and paid the value-added tax for each of the second and second taxable periods of 2006 to 2007 to the Defendant, they did not report the amount equivalent to the value-added tax amount of KRW 124,76,60 ( = 137,243,260, 260/1. hereinafter referred to as “the key amount in this case”) out of the total amount of each of the local taxes in this case paid as above to the Defendant as the value-added tax base for each of the pertinent taxable periods.

F. From September 8, 2010 to September 27, 2010 of the same year, the Defendant investigated the Plaintiffs by item of value-added tax. As a result, the Defendant deemed that the Plaintiffs omitted the return of the supply value related to the omitted sales amount including the instant key amount and the supply value related to the sales amount of fixed assets, and thus, on December 10, 2010, notified the Plaintiffs of the correction and notification of the value-added tax of KRW 8,173,889, value-added tax for the second period of 2006, value-added tax of KRW 15,923,870, value-added tax for the first period of 207, value-added tax of KRW 10,753,035 for the second period of 207 (hereinafter “each disposition of this case”).

2. Whether each of the dispositions of this case is legitimate

A. The plaintiffs' assertion

Each of the instant buildings does not constitute a high-class recreation center as prescribed by the Local Tax Act, and even if it can be seen as a household high-class recreation center, as long as thisCC established a high-class recreation center at its discretion in each of the instant buildings without the consent of the Plaintiffs, the Defendant cannot impose acquisition tax and property tax on the Plaintiffs by applying a heavy taxation rate. Ultimately, the imposition disposition of each of the instant local taxes is null and void inasmuch as the defect is so serious and clear as the disposition of imposition of each of the instant local taxes is null and void, and thus, the Defendant’

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

If there is a defect that misleads the facts or legal relations in an administrative disposition, even if such defect is serious, if it is objectively unclear, the disposition cannot be deemed null and void. In order to find the defect clear, it should be deemed that the material, which served as the basis for misconception of the facts or legal relations, lacks external appearance, or is objectively impossible to recognize its establishment or authenticity. If it is evident that there is a defect only when investigating the facts or legal relations accurately, such defect is apparent (see Supreme Court Decision 91Nu6863, Apr. 28, 1992).

As to the instant case, comprehensively taking account of the purport of the entire pleadings and arguments as to health zone, Gap evidence Nos. 3, Eul evidence Nos. 5 through 9, Eul evidence No. 2-1, and Eul evidence No. 2, this case’s building’s building of this case’s building from the plaintiffs was used for singing practice room, and the building No. 2 was used for entertainment zone’s purpose. The building No. 1 of this case’s building of this case’s building of this case’s building of this case’s building and the building No. 2 of this case’s building of this case’s building of this case’s building and the building No. 1 of this case’s building of this case’s building of this case’s building of this case’s building of this case’s building of this case’s building of this case’s building of this case’s building of this case’s non-permanent recreation center of this case’s local tax imposition disposition of this case’s building of this case’s case’s building of this case’s building of this case’s building of this case’s building of this case’s construction.

Ultimately, the disposition imposing each local tax of this case against the plaintiffs by the head of Jongro-gu Seoul Special Metropolitan City cannot be deemed null and void. As seen earlier, so long as thisCC and its husband, who are the lessee of each building of this case, paid each local tax of this case to the head of Jongro-gu Seoul Special Metropolitan City, and thereby the plaintiffs became exempted from the obligation of payment, it is reasonable to view the key amount of this case as being in a quid pro quo relationship with the lease of each building of this case

Therefore, each disposition of this case, which was included in the tax base of value-added tax, is legitimate, considering the key amount of this case as the consideration for the lease of each building of this case.

3. Conclusion

Therefore, the plaintiffs' claims of this case are dismissed as it is without merit, and it is so decided as per Disposition.