The defect of taxation disposition can not be considered as unjust enrichment because it is not clear.

Although a capital gains tax disposition is illegal, it cannot be deemed null and void because it cannot be deemed that there is no legal basis in substantive or procedural law or that there is an obvious defect.

Seoul Central District Court 2016da5018718 Undue gains

United StatesA

Large 000 et al.

April 26, 2016

May 17, 2016

1. The plaintiff's claims against the defendants are all dismissed.

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

Cheong-gu Office

The Plaintiff shall pay the amount of KRW 0,00,000 to the Plaintiff, and the amount of KRW 15% per annum from October 0, 2012 to the delivery date of the complaint to the △△,00,000, and each of the above amounts to the Defendant 00 to the △△,000,000, and the 15% per annum from the following day to the day of full payment.

1. Facts of recognition;

A. In around 199, the Plaintiff acquired 00 ○ apartment 000, △△△dong, Seoul △△△△△, 000 (hereinafter “the previous house”), but acquired △△△○ apartment 00,000, △△△△△△, 000 (hereinafter “the newly-built house of this case”) on October 0, 2002 following the progress of the reconstruction project.

B. On October 00, 2006, the Plaintiff transferred the newly-built house of this case. On the ground that the newly-built house of this case was transferred within five years from the date of its acquisition, the Plaintiff reported the transfer income tax reverted to the year 2006 under the main text of Article 99-3(1) of the former Restriction of Special Taxation Act (amended by Act No. 9272, Dec. 26, 2008) (hereinafter “Special Provision”).

C. On October 00, 2012, the head of △△△ Tax Office (former head of ○○ Tax Office) deemed that the transfer income accrued from the acquisition date of the previous house of this case until the date prior to the acquisition date of the newly-built house of this case is not the amount deducted from the acquisition amount of the taxable object of transfer income tax, and rendered a disposition of imposition of the transfer income tax of KRW 0,000,000 (including additional tax) to the Plaintiff (hereinafter “instant disposition”).

D. Accordingly, on October 0, 2012, the Plaintiff reported and paid KRW 1,00,000 to the head of △△△△△△, a local income tax on capital gains, and paid the said capital gains tax to the head of △△△ on October 2012.

E. The Plaintiff, who is dissatisfied with the instant disposition, filed an objection with the head of △△ Tax Office on October 0, 2012, but was dismissed on October 0, 2012, and again filed a tax appeal with the Tax Tribunal on October 0, 2012, and subsequently filed a request for a tax appeal on October 0, 2012, but was dismissed on October 00, 2013. The said decision became final and conclusive because the Plaintiff did not institute an administrative litigation against the decision to dismiss the said request for a trial.

F. In the related litigation at issue of the interpretation of the Special Provision (Supreme Court Decision 2013Du12690), the Supreme Court held on December 11, 2014 that “in the case of “transfer within five years from the date of acquisition of a newly-built house eligible for reduction or exemption under the former part of the Special Provision, transfer income from the acquisition date of an existing house to the date of acquisition of a newly-built house” and “transfer income from the date of acquisition of a newly-built house to the date of transfer of a newly-built house, the entire transfer income tax

[Reasons for Recognition] Unsatisfy, each entry in Gap evidence 1-12 (including virtual numbers), the whole pleadings

Purport

2. The assertion and judgment

A. The assertion

According to the Special Provision, even if “transfer within five years from the date of acquisition of Newly-built houses” is reduced in full, the disposition of this case in violation of the no taxation without any legal basis is null and void. Therefore, the Defendants shall return the full amount of the tax payable pursuant to the disposition of this case to the Plaintiff as unjust enrichment.”

(1) In order for a tax to be unjustly paid or overpaid to constitute unjust enrichment, the tax payment or tax collection should be null and void as it has no legal basis in substantive or procedural aspects or due to the significant and apparent defect of the tax assessment. In a case where the defect of the tax assessment is limited to the extent that the tax assessment can be revoked, unless the tax authority voluntarily cancels it or cancels it by the appeal procedure (see, e.g., Supreme Court Decision 94Da2800, Nov. 11, 1994).

In order for a taxation disposition to be null and void as a matter of course, the mere fact that there exists an illegal ground is insufficient, and the defect must be objectively obvious as it seriously violates an essential part of the relevant laws and regulations. In determining whether a serious and apparent defect exists, the purpose, meaning, function, etc. of the laws and regulations, which serve as the basis for the said taxation disposition, shall be considered teleologically as well as reasonable consideration on the specificity of the specific case itself, in addition, in a case where a taxation disposition is conducted by applying a provision of a certain Act and subordinate statute to a certain legal relationship or factual relationship, clearly stated that the legal doctrine that the relevant provision cannot be applied to such legal relationship or factual relationship, and even if there is no room for dispute over the interpretation thereof, if the relevant tax authority imposed a taxation disposition by applying the provision of the relevant Act and subordinate statutes, it is significant and obvious that the defect is serious and obvious. However, in a case where there is an objective reason to believe that a certain legal relation or factual relationship that is not subject to an administrative disposition is subject to the disposition, and it can only be clarified even if it is erroneous (see, etc.).

(2) The main text of the Special Provision provides that “where a resident acquires a newly-built house (c) and transfers it within five years from the date of acquisition, the tax amount equivalent to 100/100 of the transfer income tax shall be reduced or exempted (hereinafter “former”), and where the relevant newly-built house is transferred after five years from the date of acquisition, the transfer income accrued for five years from the date of acquisition of the relevant newly-built house shall be subtracted from the income amount subject to the transfer income tax (hereinafter “afterward group”).

With respect to the "transfer within five years from the date of acquisition of a newly-built house" under the former part of the Special Provision at the time of the disposition of this case, there is room for dispute over the interpretation of ① the transfer income of the previous house from the acquisition date of the newly-built house to the date of acquisition of the newly-built house; ② the transfer income from the date of acquisition of the newly-built house is not subject to reduction or exemption stipulated in the same provision; ② the date of commencement of the transfer income subject to reduction or exemption in the former part is not expressly stated; and ② the method of calculating the transfer income subject to reduction or exemption in the former part, unlike the latter part, is not separately prepared; and the legislative intent of this case is divided into the opinions that the total amount of income accruing from the previous house during the period from the acquisition date of the newly-built house to the date of transfer of the newly-built house is to be reduced or exempted. In other words, there is no room for dispute over the interpretation of the previous house's income generated from the acquisition date of the newly-built house to the date of transfer thereof.

The plaintiff's assertion on the premise that the disposition of this case is void as a matter of course is without merit.

4. Conclusion

The plaintiff's claim against the defendants is dismissed on the ground that it is without merit.