[1] Whether a corporation's construction work, such as construction, to use the land acquired by it directly for its unique business, can be deemed to have used the land directly for its unique business (negative)

[2] Criteria for determining "justifiable reasons" under Article 84-4 (1) of the former Enforcement Decree of the Local Tax Act

[3] The case holding that in case where a corporation completed the business plan for a golf course business with the scale of 27 holes and completed the construction of a golf course, but, in order to examine whether 9 holes out of 27 holes should be diverted to a public golf course, due to the aggravation of finance and the burden of additional funds related to additional public golf course facilities to be attached to the public golf course, the registration and opening of only 18 holes facilities and registered and opened the whole 27 holes after about 2 years, there is a "justifiable reason" under Article 84-4 (1) of the former Enforcement Decree of the Local Tax Act that did not directly use the land of the above

[1] Article 84-4 (1) 1 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 15211 of Dec. 31, 1996) provides that "When construction work starts, it shall be used directly for its unique duties, but the total period of suspension of construction without justifiable grounds shall not exceed one year." According to Article 84-4 (1) 3 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 15211 of Dec. 31, 1996), "the land used directly for its unique duties within the grace period and not used directly for its unique duties for more than one year without justifiable grounds before five years elapse from the date of its acquisition, it shall be deemed that the land used directly for its unique duties is non-business land: Provided, That the same shall not apply to the land used directly for its unique duties for more than two years in total. However, even if construction work directly for its unique duties was done under the former Enforcement Decree of the Local Tax Act as amended by Presidential Decree No. 1481 of Dec. 31, 1994>

[2] In determining the existence of "justifiable cause" which serves as the basis for non-business land of a corporation subject to heavy acquisition tax, it shall be determined individually according to a specific case by taking into account the following factors: (a) whether the corporation is a profit-making corporation; (b) whether it is a non-profit corporation; (c) the length of the preparation period required for the use of land for its proper purpose in light of the purpose of acquisition of land; (d) the statutory and de facto disability and degree of disability that cannot be used for its proper purpose; (e) whether the pertinent corporation has made a serious effort to use the relevant land

[3] The case holding that in the case where a corporation completed the business plan for a golf course business with the scale of 27 holes, but actually completed the golf course facilities, the "justifiable cause" under Article 84-4 (1) of the former Enforcement Decree of the Local Tax Act exists to examine whether nine holes among 27 holess should be converted into a public golf course due to the aggravation of finance due to excessive loans, the lack of the performance of membership recruitment, and the burden of additional funds related to the public golf course facilities to be attached to the public golf course facilities, where the corporation first registered and opened only 18 holes facilities, and registered and opened the whole 27 holess after about two years, and registered and opened the whole 27 holes

[1] Article 112(1) and (2), and Article 112-3 of the former Local Tax Act (amended by Act No. 4794 of Dec. 22, 1994); Article 84-4(1) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 1481 of Dec. 31, 1994); Article 84-4(1)1 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 1521 of Dec. 31, 1996); Article 112(1) and (2), and Article 112-3 of the former Local Tax Act (amended by Act No. 4794 of Dec. 22, 1994); Article 14-4(1)1 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14814 of Dec. 14, 1994); Article 194-13(1) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14(14)

[1] Supreme Court Decision 92Nu19279 delivered on March 25, 1994 (Gong1994Sang, 1363), Supreme Court Decision 95Nu6120 delivered on September 26, 1995 (Gong1995Ha, 3553), Supreme Court Decision 96Nu3906 delivered on April 24, 1998 (Gong1998Sang, 1534), Supreme Court Decision 95Nu5257 delivered on December 8, 1995 (Gong196Sang, 431) (Gong196Sang, 1301), Supreme Court Decision 95Nu18314 delivered on March 12, 196 (Gong196Sang, 1301), Supreme Court Decision 9Nu19739 delivered on November 29, 197 (Gong297Sang, 199)

Leecheon Tourism Development Co., Ltd. (Attorneys Kim Jong-sung et al., Counsel for the defendant-appellant)

Gyeonggi-do Leecheon-si (Attorney Yoon Sang-hoon, Counsel for defendant-appellant)

Seoul High Court Decision 97Gu17744 delivered on February 13, 1998

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

We examine the grounds of appeal.

1. According to the reasoning of the lower judgment, the lower court: (a) obtained the approval of the business plan of a registered sports facility business (member golf club business) with 27 square meters on December 23, 1989; (b) acquired land of 1,56,831 square meters in total until August 28, 1990; (c) on April 10, 1990, the construction of a golf club was commenced on the construction of a golf club and completed its unique business on June 27, 1994; (d) on the ground that the Plaintiff did not directly use the land of this case for the purpose of constructing a golf club business within 18 meters on the 19-year grace period; and (e) determined that the Plaintiff did not directly construct the land of this case on the 19-year grace period on the 19-year ground that it did not directly construct the land of this case on the 19-year grace period on the 19-year ground that it did not directly construct the land of this case on the 16-year period.

2. Regarding ground of appeal No. 1

According to Article 84-4 (1) 1 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14481 of Dec. 31, 1994, which was amended by Presidential Decree No. 15211 of Dec. 31, 1996), "When construction work commences, it shall be deemed directly used for its unique duties, but the total period of suspension of construction is more than one year without justifiable grounds." According to Article 84-4 (1) 3 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 15211 of Dec. 31, 1996), "the land used directly for its unique duties within a grace period of not less than one year before five years elapse from the date of its acquisition shall be deemed land for its unique duties: Provided, That this shall not apply to the land used directly for its unique duties for more than two years, but it shall not be deemed that it was directly used for its unique duties under the former Enforcement Decree No. 1481 of the Local Tax Act, Dec. 31, 1997>

In the same purport, the court below is just in holding that the plaintiff's construction work of golf course on the land of this case is merely a preparatory stage for use in the golf course business, which is its unique duties, and it cannot be deemed that it is directly used for its unique duties. There is no error in the misapprehension of legal principles as to land not directly used for its unique duties, as otherwise alleged in the ground of appeal.

3. Regarding ground of appeal No. 2

In determining the existence of "justifiable cause" which serves as the basis for non-business land of a juristic person subject to heavy acquisition tax, it shall be determined individually according to specific cases by taking into account the following factors: (a) the relevant juristic person is a profit-making juristic person; (b) whether it is a non-profit juristic person; (c) the length of preparation period required for using it for its proper purpose in light of the purpose of acquiring land; (d) the statutory and de facto disability and degree of disability required for its proper purpose; (e) whether the relevant juristic person has made a serious effort to use the relevant land for its unique purpose; and (e) whether the relevant administrative agency's cause was attributable (see, e.g., Supreme Court Decision 95Nu52

Even according to the facts established by the court below, if the Plaintiff acquired 1,56,831 square meters of land including the instant land by August 28, 1990, while the Plaintiff started construction of a golf course on April 10, 1990 and completed construction of a golf course on or around June 10, 194, most of 80 billion won invested for the purchase of the instant golf course site and construction cost were financed with loans, and the public finance has deteriorated due to low membership recruitment performance. The heavy burden of additional funds related to the expansion of the area of the public golf course facilities to be annexed, which should be imposed upon the Plaintiff’s construction of the instant land directly on or after the completion of construction of the instant golf course on or after the completion of construction of the entire golf course on or after the completion of construction of the instant land on or after the completion of construction of the entire golf course, it should be deemed that the Plaintiff directly completed construction of the instant land on or after the completion of construction of the new golf course on or after the completion of construction of the new golf course.

Nevertheless, the court below judged that the construction of a golf course on the land of this case was not used directly for its unique duties because it did not immediately complete the registration or opening of a golf course business, and it cannot be said that there is a justifiable reason for the delay of its registration or opening, and therefore, it constitutes a case where the land of this case becomes a non-business land within five years after acquisition under Article 112-3 of the Local Tax Act. The court below erred by misapprehending the legal principles on non-business land and legitimate reasons, which affected the conclusion of the judgment. The ground of appeal pointing this out is

4. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee In-hee (Presiding Justice)