The re-disposition of this case constitutes a disposition after the expiration of extinctive prescription.

Since extinctive prescription takes place due to the original disposition which is void as a matter of course, the re-disposition of this case is illegal disposition after the extinctive prescription is completed.

2016Gudan8184 Revocation of Disposition of Imposing capital gains tax

○○○○○○○○○○○○ ○○○○ school.

○ Head of tax office

January 25, 2017

March 8, 2017

1. The Defendant’s imposition of KRW 000 (including additional taxes) of the transfer income tax corresponding to the year 2008 against the Plaintiff on November 2, 2015 shall be revoked.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. The order on August 29, 2008 owned by the Plaintiff

1. The Defendant’s disposition of imposition of capital gains tax of KRW 49,628,170 (including additional tax) for the year 2008 against the Plaintiff on November 2, 2015 shall be revoked.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. On August 29, 2008, the Plaintiff transferred 00 won of the building owned by ○○○○-dong and its ground (hereinafter referred to as “instant real estate”) to ○○○-si, ○○○-dong and its ground (hereinafter referred to as “instant real estate”). The Plaintiff’s representative did not report and pay capital gains tax.

B. On December 1, 2009, the Defendant decided and notified the Plaintiff of KRW 00 (including additional taxes) of the transfer income tax on the instant real estate (hereinafter “original disposition”). Accordingly, the Korea Asset Management Corporation had the Plaintiff carry out the attachment and public auction of other buildings owned by the Plaintiff on January 14, 2014.

C. On July 23, 2015, the Plaintiff, who became aware of this, filed an objection against the original disposition on the ground that he/she had failed to serve a tax notice on the Defendant. On July 27, 2015, the Defendant revoked the original disposition ex officio after recognizing that the procedure for serving a tax notice was not lawful, and subsequently re-determined and notified the Plaintiff of KRW 29,628,170 on November 2, 2015 (hereinafter “instant disposition”).

D. On March 2, 2016, the Plaintiff appealed and filed a request for examination with the Commissioner of the National Tax Service, but was dismissed on May 4, 2016.

[Reasons for Recognition] Each entry in Gap 1, 2, 5, and Eul 1 through 5 (including the branch numbers), and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Both claims

The Plaintiff asserts that the extinctive prescription of the Plaintiff’s right to collect capital gains tax on the transfer of real estate has expired at the lapse of five years from the date following the due date of the original disposition pursuant to Article 27(1) of the National Tax Collection Act and Article 12-4(1)2 of the Enforcement Decree of the National Tax Collection Act. The Defendant exercised the right to collect national taxes by making the original disposition on December 1, 2009, which was based on the original disposition on the real estate of this case, and the lapse of five years from January 1, 2010 and December 31, 2014, which was the day following the due date of payment, became extinct, and thus, the right to collect national taxes thereafter became invalid

As to this, the Defendant did not report the transfer income tax on the instant real estate, and thus, the Defendant’s taxation claim becomes final and conclusive at the time of imposition. The original disposition made on December 1, 2009 by the Defendant constitutes invalid by serving it to an illegal place. Since the Defendant cancelled it ex officio, the Defendant’s taxation claim cannot be determined as the original disposition, and there is no problem in calculating the extinctive prescription period of the right to collect national taxes. Accordingly, in the case of the instant disposition, the exclusion period for imposition of transfer income tax was seven years from the day following the due date of payment of the income tax return, and the period for imposition of transfer income tax was completed within seven years from June 1, 20

B. Relevant statutes

Attached Form is as shown in the attached Form.

C. Determination

1) Relevant statutes and legal principles

Article 27 of the former Framework Act on National Taxes (Amended by Act No. 11604, Jan. 1, 2013; hereinafter the same shall apply) 27

Article 12-4 (1) of the Enforcement Decree of the Framework Act on National Taxes provides that "the time when the State can exercise its right to collect national taxes under paragraph (1) for the purpose of collecting national taxes shall be determined by Presidential Decree", and Article 12-4 (1) of the Enforcement Decree of the Framework Act on National Taxes provides that "the time when the State can exercise its right to collect national taxes" means any of the following dates: "the time when the State can exercise its right to collect national taxes" under Article 27 (3) of the Act; "the day following the due date of statutory due date of due of due of due of due of return for tax return, in the case of a national tax for which the duty payment is finalized by a return of tax base and amount of tax," and "the day following the due date of due date of tax payment due due of notice" under subparagraph 1 and subparagraph 2 of the same Article shall apply to the

Meanwhile, in general, extinctive prescription takes place from the time when a right arises objectively and the exercise of such right is possible (see, e.g., Supreme Court en banc Decision 84Nu572, Dec. 26, 1984); if a de facto situation where a right to exercise objectively arrives, the extinctive prescription shall run from that time; and whether the right to exercise is legally effective does not affect the running of extinctive prescription. Therefore, “tax notice” under Article 12-4(1)2 of the Enforcement Decree of the Framework Act on National Taxes includes all cases where a tax authority exercises its right irrespective of its validity, and the effect of the extinctive prescription that has already occurred by such tax notice does not change because the relevant tax disposition (tax notice) was revoked by final judgment or the tax authority revoked ex officio.

2) In the instant case:

The facts that the Defendant determined and notified the original disposition after determining the tax base and amount of tax on December 1, 2009 due to the Plaintiff’s failure to report the tax base and amount of tax related to the transfer income tax of this case are as seen earlier. However, even if the Defendant voluntarily revoked the original disposition, it is reasonable to view that the time at which the original disposition was determined and notified can be seen as the time when the State can exercise its right to collect national taxes under Article 27(1) of the former Framework Act on National Taxes for the following reasons in light of the relevant

○ As in the instant case, where a taxpayer fails to report capital gains tax and imposes capital gains tax by the tax authority based on the method of imposition, the tax liability is specifically determined when the tax authority decides to impose the tax base and tax amount confirmed by the investigation (see, e.g., Supreme Court Decision 94Nu5052, Feb. 28, 1995; however, the effect of such determination is the same when the relevant decision is notified to the taxpayer). If the tax authority decides to impose capital gains tax, it can be deemed that it objectively could have been able

○ Article 12-4(1)2 of the Enforcement Decree of the Framework Act on National Taxes provides that “if the government determines, revises, or occasionally determines the tax base and amount of tax, the following day of the due date for payment according to the notice shall be the same as the amount of tax to be paid by the government.” Thus, if the tax notice is not explicitly stated in the law regarding the amount of tax to be paid by the tax authority, and if the tax notice was actually effective by the tax authority, the fact that the notice of tax payment was cancelled after the final and conclusive judgment, etc. or the tax authority revoked it ex officio on the grounds of the defect of service, etc., it does not lose the fact that the tax notice was issued after the final and conclusive judgment, etc.

○ Effect of interrupting extinctive prescription which has already occurred by a notice of tax payment shall be the same as that of such disposition.

The position of the Supreme Court is that it is not a dead one after cancellation by this final judgment (see, e.g., Supreme Court Decision 85Nu688, Feb. 23, 1988). Such a legal principle is the same in cases where the disposition (tax notice) is cancelled for the reason that it is null and void or the tax authority voluntarily revokes it, and it is also the same in cases where the tax authority voluntarily revokes it, and it should be interpreted equally in cases where the validity of extinctive prescription period already occurred by the tax payment notice is determined (in the above 85Nu688, the tax authority imposed and collected global income tax and defense tax for the period from November 23, 1977 to 1977, but the above imposition and collection notice was made by the taxpayer without specifying the basis for calculating the amount of tax, and as a result, the above disposition was revoked as a final and conclusive judgment, and the defendant made a second imposition notice as of June 30, 1984, by specifying the basis for calculating the amount of tax.

○ Meanwhile, “when a person can exercise his/her right”, which is the starting point of the statute of limitations, refers to cases where there is no legal disability (e.g., the period during which the right is due or the condition of suspension is not met) in exercising his/her right, and the statute of limitations does not run because he/she was unable to exercise his/her right due to de facto disability, such as a lack of personal circumstances or knowledge of the right holder, the site of the existence of the right, or the absence of the debtor (see, e.g., Supreme Court Decision 80Da2626, Jan. 19, 1982). The circumstances that the tax authority did not know the exact domicile of the person liable for tax payment or did not make a lawful service by ascertaining the domicile of the person liable for tax payment by mistake,

○ From the perspective of additional charges (Report and payment of capital gains tax on the instant real estate)

The Plaintiff’s negligence was found to have been aware of the fact that: (a) around June 18, 2015, seven years after the date of the transfer of the instant real estate, and seven years after the date of the transfer of the instant real estate, the Korea Asset Management Corporation was proceeding to sell other real estate by the Plaintiff; and (b) if the Plaintiff received a notice of payment based on the original disposition, the Plaintiff would have only paid approximately KRW 30 million if the Plaintiff would have received the notice of payment based on the original disposition; and (c) as such, the Plaintiff was placed at the situation where the Plaintiff would have to pay taxes of KRW 50,000,000,000,000 to a considerable amount of additional taxes after the lapse of several years due to the mistake in delivery

According to the logic of the defendant, if the tax authority intentionally delivers a notice of payment to a place which is not a taxpayer's domicile, and then cancels the previous notice of tax payment on the ground of service defect after a considerable period of time has elapsed, and it is possible to make a disposition to impose again, including two times or more of the principal tax if the period of imposition expires within the exclusion period of imposition, which is difficult to obtain.

3) Sub-decisions

Therefore, in this case, the extinctive prescription of the right to collect a national tax from January 1, 2010, which is the day following the due date of the original disposition corresponding to the notice of tax payment pursuant to Article 12-4(1)2 of the Enforcement Decree of the Framework Act on National Taxes, shall be deemed to have expired due to the lapse of December 31, 2014, which is five years from that date, and the right to collect a capital gains tax on the instant real estate becomes extinct. Thus, the instant disposition that was issued thereafter constitutes an invalidation (see, e.g., Supreme Court Decision 92Nu8194, Sept. 14, 199

3. Conclusion

The plaintiff's claim shall be accepted, and it is decided as per the Disposition.