Alternative Steel Co., Ltd. (Law Firm Dongin, Attorneys Lee Han-tae et al., Counsel for the defendant-appellant)

The head of Dong-gu Incheon Metropolitan City

January 23, 2018

Incheon District Court Decision 2017Guhap50151 Decided September 28, 2017

1. The plaintiff's appeal is dismissed.

2. The costs of appeal shall be borne by the Plaintiff.

The judgment of the first instance is revoked. On March 23, 2016, the Defendant’s rejection disposition against the Plaintiff for correction of KRW 447,250,00 for acquisition tax, KRW 44,725,00 for local education tax, and KRW 22,362,50 for special rural development tax is revoked.

1. Quotation of the first instance judgment

The reasoning of this court’s reasoning is as follows: (a) the former Enforcement Decree of the Local Tax Act No. 10 No. 7 of the judgment of the court of first instance (amended by the former Local Tax Act); and (b) the Plaintiff’s assertion is stated in the reasoning of the judgment of the court of first instance, except where the following determination is added; and (c) thus, it is accepted in accordance with Article 8(2) of the Administrative Litigation Act

2. Additional determination

The Plaintiff asserts that the taxation principle, the principle of substantial taxation, and the principle of tax equality are contrary to the intrinsic elements of taxation in interpreting that the exercise of the existing taxation claim cannot be affected by the cancellation of a sales contract with the focus only on the “acquisition itself” as to the imposition of acquisition tax.

Article 7(2) of the Local Tax Act provides that the acquisition of real estate subject to acquisition tax shall be deemed to have been acquired at the time of actual acquisition even though the acquisition is not registered or recorded under the Civil Act or other relevant Acts and subordinate statutes. Article 20(2)2 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 25545, Aug. 12, 2014; hereinafter the same shall apply) provides that the acquisition of real estate by onerous succession with a private person shall be deemed to have been acquired on the balance payment date under the contract (referring to the date on which 60 days have elapsed from the contract date if the balance payment date is not stipulated in the contract) (this refers to the date on which the contract date is stipulated in the contract). However, Article 20(11)2 of the former Enforcement Decree of the Local Tax Act provides that the acquisition of real estate subject to acquisition by a private person shall not be deemed to have been acquired if the contract is proved by a specific document within a specified period of time prescribed by the Enforcement Decree without registering or registering the relevant acquired object.

As such, not only the ownership of income or property, consumption of goods or services, but also the use of certain acts related to transactions as the index of the tax-bearing force, it is permitted within the scope of reasonable legislative discretion to limit the extent of the tax items with the nature of the tax item, which is characterized by the tax-bearing force. Since the acquisition act itself does not coincide with the actual profit that a taxpayer can be diminished by its acquisition, it cannot be deemed that it goes against the principle of able taxation, the principle of substantial taxation, and the principle of tax equality.

Therefore, unlike the case of invalidation, etc. where it is impossible to deem that there is an original defect in a contract that actually satisfies the requirements for acquisition due to the original defect, a taxation claim for acquisition tax shall be established if the acquisition was actually made, and even if a sales contract was terminated retroactively by the exercise of right to rescission, it is reasonable to view that the claim for taxation of acquisition tax already established cannot be affected by the claim for taxation of acquisition

3. Conclusion

Therefore, the judgment of the court of first instance is just, and the plaintiff's appeal is dismissed as it is without merit.

Judges Doing and decorations (Presiding Judge)