Busan District Court Decision 2011Guhap1093 (2011.08)

Cho High Court Decision 2010Du2598 ( December 02, 2010)

Since it cannot be deemed that any defect in a return made previously by the public is apparent, a return of unjust enrichment of value-added tax cannot be sought.

Since the company's funds are useful for service transaction and the value-added tax is paid separately from the transaction price, the defect in the reporting act cannot be deemed to be significant and obvious, so the return of the value-added tax cannot be claimed as unjust enrichment.

2011Nu2910 Revocation of Disposition of Imposing income tax

GangnamA et al., the joint management of the XX stock company and one other

Head of Eastern Tax Office

Korea

Busan District Court Decision 2011Guhap1093 Decided July 8, 2011

March 21, 2012

April 25, 2012

1.The judgment of the first instance shall be modified as follows:

A. The part of the plaintiffs' primary claims to revoke the disposition imposing value-added tax is dismissed.

B. The plaintiffs' remaining main claims are dismissed.

C. The plaintiffs' preliminary claims that were changed in exchange at the trial are dismissed.

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

The judgment of the first instance shall be revoked.

In the first place, the imposition of the value-added tax on December 7, 2009 and the earned income tax (A) on April 7, 2010 shall be revoked by the head of the defendant Eastern Tax Office.

Preliminaryly, Defendant Republic of Korea shall pay to the Plaintiffs the amount of KRW 200,000,000 as well as 5% per annum from January 1, 2007 to the pronouncement date of the instant judgment, and 20% per annum from the next day to the day of full payment (the Plaintiff sought direct payment of the said amount at the first instance trial, and the Plaintiff changed its conjunctive claim to seek payment of the said amount by subrogation of Oconstruction Co., Ltd. at the first instance trial).

1. Quotation of judgment of the first instance;

The court's reasoning concerning this case is the same as the part concerning the reasoning of the judgment of the court of the first instance except for the modification of the part concerning the reasoning of the judgment of the court of the first instance under paragraphs (3) and (4) of the same Article. Thus, this Court's reasoning is cited in accordance with Article 8 (2) of the Administrative Litigation Act

2. Judgment on the conjunctive claim

A. The plaintiffs' assertion

If the service transaction in this case is a processing transaction, there is no supply of the service subject to value-added tax, so the defendant Republic of Korea shall return value-added tax 200 million won paid to Oconstruction and damages for delay thereof as unjust gains, and Oconstruction shall return the amount equivalent to two billion won paid as the service price to the plaintiffs as unjust gains.

However, since the OO Construction is closed down and is insolvent, and the defendant Republic of Korea does not exercise the right to claim the return of unjust enrichment, the defendant Republic of Korea is obligated to pay the above value-added tax amounting to KRW 200 million and damages for delay to the plaintiffs subrogated to O Construction.

B. Determination

According to the above facts, it is recognized that OConstruction received KRW 2 billion from the rehabilitation company without the supply of service as service price without any legal ground and thereby inflicted losses on the rehabilitation company. Thus, O Construction is obligated to return the above amount to the plaintiffs as unfair benefit. In addition, according to the above facts recognized and the purport of the whole pleading, OO Construction is recognized as having no ability to return the above unjust enrichment to the plaintiffs.

However, in the case of taxes for which a taxpayer voluntarily determines their tax base and amount of tax and for which a tax return specifically becomes final and conclusive by filing a tax return, the State and local governments shall hold the tax amount paid based on such finalized tax claim. As such, insofar as a taxpayer’s filing of a tax return is null and void due to a significant and apparent defect, it cannot be said that it constitutes unjust enrichment. Here, whether such filing of a return constitutes void as a matter of course due to a significant and apparent defect shall be determined reasonably by considering the purpose, meaning, function, and legal remedy for defective filing of a return, etc., of the laws and regulations on the basis of which the filing of a return is based, and at the same time, by individually identifying and determining the specific circumstances leading to filing a return (see, e.g., Supreme Court Decision 94Da

However, in this case, it cannot be deemed that the defect in the report of O Construction is significant and apparent, as it pretends to the O Construction and the payment of value-added tax of KRW 200,000,000, in addition to the transaction price to O Construction by means of appropriating the company's funds.

Therefore, the Oconstruction cannot seek the return of the value-added tax returned to Defendant Republic of Korea as unjust enrichment. Therefore, the Plaintiffs’ assertion premised on the establishment of such unjust enrichment claim is without merit.

3. Conclusion

Therefore, the part of the plaintiffs' claim for revocation of the disposition of value-added tax among the main claims against the defendant Lee Dong-dong Tax Office is unlawful, and the remaining main claims are dismissed as it is without merit. The plaintiff's conjunctive claims against the defendant in exchange for a change in the trial are dismissed as it is without merit, and the judgment of the court of first instance is modified as above. It is so decided as per Disposition.