The purpose of Article 112(3) and Article 138(1)4 of the Local Tax Act and the meaning of the establishment or extension as provided for in the same Article.

The purpose of Article 112 (3) and Article 138 (1) 4 of the Local Tax Act, which imposes heavy taxation on the acquisition of taxable objects for business and the registration of real estate of a factory, is to restrain the concentration of population in large cities and prevent the proliferation of pollution. Thus, the establishment or extension of a factory which is a heavy taxation requirement provided for in the same Act means newly installing a factory or expanding the size of facilities of an existing factory. Therefore, it is the case that comprehensively succeeds to land, building production facilities of an existing factory or comprehensively succeeds to land, building production facilities of an existing factory or to comprehensively reduce the size of facilities while succeeding to the existing factory while comprehensively succeeding to the land, building, manufacturing facilities, and production facilities of an existing factory constitutes the acquisition of a factory, and it does not constitute the establishment or extension of

Articles 112(3) and 138(1)4 of the Local Tax Act, Article 84-2(2) and 102(3) of the Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 1399, Apr. 6, 1984); Article 47 subparag. 7 of the Enforcement Rule of the Local Tax Act

Attorney Ham, Lee Chang-soo, Counsel for the first instance court-appellant

Attorney Kim In-hwan, Counsel for the defendant-appellant in Gyeonggi-do

Seoul High Court Decision 84Gu214,254 decided April 1, 1987

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

As to the Defendant’s Attorney’s ground of appeal:

1. On September 18, 1983, the judgment of the court below that recognized the fact that the plaintiff was notified by the defendant of the extension of the re-examination period by telephone, and that the pre-examination of the judgment of the court below was lawful, the defendant did not notify the extension of the re-examination period by September 22, 1983, which is the period of re-examination decision, and even if examining the records, the fact-finding by the court below is just and there is no error in the rules of evidence such as the theory of the lawsuit. The arguments are groundless.

2. (1) According to the reasoning of the judgment below, the court below recognized that the plaintiff was transferred all production facilities except the goods already disposed of or scheduled to be disposed of from other companies among the production facilities in addition to the building, land, structure, power facilities, vehicles, tools, fixtures, and telephone subscription rights of the factory of this case from the overseas Textiles Co., Ltd., and determined that the plaintiff was comprehensively acquired all production facilities such as land, buildings, machinery and equipment, power equipment, etc. of the above company's existing factory of this case, and the plaintiff comprehensively acquired all production facilities such as land, building, machinery and equipment, power equipment, etc. of the above

(2) On the other hand, the judgment of the court below ruled that the defendant's assertion that the type of business of an overseas textile stock company and the type of business of the plaintiff who acquired the ownership factory is different from that of the former company in the form of factory site, factory, warehouse, machinery and equipment, and electric power distribution facilities, etc., after comprehensive acquisition of factory site, factory site, warehouse, and electrical equipment and electric power distribution facilities, etc., which are different from the previous one, even if the acquisitor sells or removes part of the changed type of business in the previous type of machinery and equipment, it does not interfere with the succession of the existing factory as it does not interfere with the acquisition by succession of the existing factory. Thus, the above judgment of the court below cited the above decision of the court below in light of the purport that it is not a heavy taxation provided in Article 138 of the Local Tax Act even if partial sale of the changed type of business among the machinery and equipment after acquiring it in the form of existing factory and then disposing of it without any use in the changed type of business.

However, the above precedents do not hold that it is not subject to heavy taxation under Article 138 of the Local Tax Act because it constitutes succession acquisition and change of business type, and it is recognized as succession acquisition, and that all of the machinery and equipment of existing factory should be taken over in full. Therefore, there is no error of law like the theory of lawsuit in the judgment below.

3. Article 112 (3) of the Local Tax Act provides that acquisition tax shall be imposed heavy on the acquisition of a factory to newly build or extend a factory in a large city. Article 138 (1) 4 of the same Act provides that registration tax on real estate following the new construction or extension of a factory in a large city shall be imposed heavy, and Article 84-2 (2) and Article 102 (3) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 11399 of Apr. 6, 1984) provides that "the new construction or extension of a factory" under the same Act means the succession of a factory, the new construction or extension of a factory except for the acquisition of a factory in the large city, the relocation of a factory in the large city, and the change of the business type of a factory means the comprehensive acquisition of an existing factory, which does not fall under the requirements for factory establishment or the comprehensive acquisition of a new factory, such as land, buildings, manufacturing facilities (including machinery, equipment and power equipment). Therefore, it means that an existing factory establishment or the comprehensive acquisition of a new construction of a factory.

The Enforcement Rule of the Local Tax Act provides that the succession acquisition of a factory except for the heavy taxation of the Enforcement Decree of the same Act shall mean that all of the land, buildings, production facilities, etc. of an existing factory shall be comprehensively taken over, and it shall not be construed that the acquisition by succession of a factory shall not be excluded until the scale of facilities of the factory is reduced

According to the reasoning of the judgment below, the court below acknowledged the fact that the plaintiff was transferred the production facilities other than the building, land, structure, power facilities, vehicles, tools and fixtures of the factory of this case from the foreign Textiles Co., Ltd. and the production facilities that the plaintiff acquired by the plaintiff were comprehensively taken over all production facilities such as the land, building, machinery and equipment and power equipment of the above company's existing factory of this case, and it did not err in the misapprehension of the legal principles of Article 47 subparagraph 7 of the Enforcement Rule of the Local Tax Act, such as the theory of lawsuit, in light of the legal principles of heavy taxation on the construction and extension of factories in large cities as seen above.

Since the plaintiff's main business is the manufacture and sales business of magnetic tapes which are electronic equipment, there is no reason to comprehensively acquire the above company's factory that carries on textile products manufacturing business, such as room and dyping business, and the above company's production facilities that the plaintiff acquired by the plaintiff cannot perform the plaintiff's business. Thus, the plaintiff's acquisition of the above production facilities cannot be viewed as the acquisition by succession of the factory. However, in light of the legislative intent of the local tax law, which imposes heavy taxation on the newly established and expanded factory in large cities, the change of the business type of the factory is excluded from the new construction and extension of the factory, acquisition by succession of the factory can only be the requirement of comprehensively taking over the objective factory facilities such as land, buildings, and production facilities of the paper factory, and it is not necessary to maintain the identity of the business regardless of the intention to continue the same type of business

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 Kim Jong-chul (Presiding Justice)