[1] The meaning of "transfer of business" which is not considered as the supply of goods under the Value-Added Tax Act and the burden of proof for it

[2] Where a taxpayer voluntarily pays the transfer income tax on the transfer of real estate and the tax authority denies it and imposes a comprehensive income tax on the real estate sales businessman, whether the amount of such voluntary payment should be added to the interest equivalent to additional dues when deducting the amount of such voluntary payment from the amount of legitimate total final tax (negative

[3] In determining whether an income from the transfer of real estate constitutes a business income, taking into account the ex post facto factors and allowing the method of estimation into account whether it violates the constitutional provisions on the no taxation without law (negative)

[4] Whether Article 67 of the former Enforcement Rule of the Income Tax Act is invalid by delegation of blank power under Article 134 (2) of the former Enforcement Decree of the Income Tax Act (negative)

[1] Article 6 (6) of the Value-Added Tax Act provides that the transfer of business shall not be deemed the supply of goods subject to value-added tax, and Article 17 (2) of the Enforcement Decree of the Act provides that the transfer of business under Article 6 (6) of the Act shall comprehensively succeed to all rights (excluding rights related to amounts receivable) and obligations (excluding rights related to amounts payable) for each place of business. The term "transfer of business" refers to the transfer of physical, human and human facilities and rights and obligations, including business property, to replace only a business owner while maintaining the identity of the business by comprehensively transferring the physical, human and human facilities and rights and obligations. Thus, the business shall be separated from the business owner as an organic combination of human and material facilities so that the social independence can be recognized. The fact that the transfer is not a simple physical facility but a organic combination of these facilities is not a taxable obstacle in value-added tax, and the burden of proving

[2] Where a taxpayer reported and paid a transfer income tax on the transfer of real estate, but the tax authority imposed a comprehensive income tax on the income accrued from such transfer on the ground that such transfer took place as a part of the real estate sale business, the transfer income tax amount is within the scope of the legitimate tax amount. However, even if there were errors in the payment form, the State does not have any legal basis to hold it. Thus, the legal principles on the national tax refund under Article 51 of the Framework Act on National Taxes do not apply as it does not itself, and the tax authority does not impose any additional tax on the global income tax amount under Article 51 (1) 3 of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994) without any additional interest equivalent to the additional tax on the refund of the global income tax amount when deducting the amount from the total determined tax amount under Article 131 (1) 3 of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994).

[3] Article 20 (1) 8 of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994) provides for the income generated from the real estate business as one of the business income subject to income tax, and distinguish it from the transfer income under Article 23 of the same Act. Article 36 (3) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14467 of Dec. 31, 1994) provides that the real estate business is real estate sales business. Article 82 of the former Income Tax Act provides for the calculation method of global income tax on such real estate sales businessman. This is a different characteristic from the temporary and temporary transfer income, so it is reasonable to treat the income generated from the continuous act aimed at profit-making from the transfer of real estate, and the criteria for distinction between the two are ultimately based on whether the transfer is planned for profit-making and continuous activity, and thus, it goes against the principle of no taxation without the law.

[4] Article 67 of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Prime Minister No. 505 of May 3, 1995) provides for the method of calculating the calculated global income tax under Article 82 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 14467 of Dec. 31, 1994) based on the re-delegation of Article 134 (2) of the same Act. However, although the content is merely a natural provision derived from the interpretation of the provisions of Article 82 (1) and (2) of the same Act, it does not stipulate any other matters concerning taxation requirements or procedures. Thus, even if it appears to be re-entrusted entirely, it does not go beyond the limits of delegation under the Act or it does not constitute a delegation of blank power, such provision cannot be deemed a violation of the principle of no taxation without the law.

[1] Article 6 (6) of the Value-Added Tax Act, Article 17 (2) of the Enforcement Decree of the Value-Added Tax Act / [2] Articles 51 and 52 of the Framework Act on National Taxes, Article 121 (see current Article 81), and Article 131 (1) 3 (see current Article 116 (1) 1) of the former Income Tax Act / [3] Article 59 of the Constitution of the Republic of Korea, Article 20 (1) 8 (see current Article 19 (1) 11 and 12 of the Enforcement Decree of the Income Tax Act, Article 82 of the former Enforcement Decree of the Income Tax Act (amended by Act No. 4803, Dec. 22, 1994); Article 19 of the former Income Tax Act (amended by Presidential Decree No. 4804, Dec. 16, 194); Article 20 (2) 9 of the former Enforcement Decree of the Income Tax Act (amended by the former Enforcement Decree No. 194, Dec. 14, 7, 194 of the Value-Added Tax Act)

[1] Supreme Court Decision 92Nu15420 delivered on January 19, 1993 (Gong1993Sang, 767), Supreme Court Decision 93Nu524 delivered on April 27, 1993 (Gong1993Ha, 1614), Supreme Court Decision 95Nu290 delivered on November 10, 1995 (Gong1995Ha, 3949), Supreme Court Decision 97Nu324 delivered on March 27, 1998 (Gong1998Sang, 1242 delivered on April 10, 1998), Supreme Court Decision 98Du908 delivered on April 196 (Gong1998Sang, 1299) (Gong19695 delivered on April 196, 195) / [2] Supreme Court Decision 97Nu196979 delivered on May 196, 1995

Plaintiff (Law Firm Gwangju, Attorneys Kim Tae-ho et al., Counsel for the plaintiff-appellant)

Head of Sungbuk Tax Office

Seoul High Court Decision 94Gu17651 delivered on July 2, 1997

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

The First Ground for Appeal

Article 6 (6) of the Value-Added Tax Act provides that the transfer of business shall not be deemed the supply of goods subject to value-added tax, and Article 17 (2) of the Enforcement Decree thereof provides that the transfer of business under Article 6 (6) of the Act shall be comprehensively succeeded to all rights (excluding rights related to amounts receivable) and obligations (excluding rights related to amounts payable) with respect to the business at each place of business. The term "transfer of business" in this context refers to the transfer of physical and human facilities and rights and obligations, including business property, and the replacement of management body while maintaining the identity of the business. Thus, the business shall be divided into an organic combination of human and physical facilities so that the social independence can be recognized by being separated from the management body. The fact that the transfer is not a simple physical facility but a systematic combination of these facilities is not a value-added tax, and the taxpayer bears the burden of proving the transfer of the business (see, e.g., Supreme Court Decisions 93Nu524, Apr. 27, 1993; 95Nu29590, Nov.

According to the records, the court below is justified in holding that the public bath business itself is not subject to transfer on the grounds that the plaintiff did not assert or prove any assertion or evidence as to whether the transfer proceeds of the public bath business was included in the evaluation of the business rights of the public bath, and whether the employee, who is the human facilities for the operation of the public bath, succeeded to the transferee of the public bath, although the property was a physical facility for the public bath business of this case, and there is no error of law as to the reasoning for comprehensive transfer, such as the theory of lawsuit, or the legal scenario as to the burden of proof. The argument is without merit.

The Second Ground of Appeal

According to the reasoning of the judgment below, when the plaintiff entered into an exchange contract between Jincheon-dong and the land owned by the plaintiff and the land owned by the non-party 1 on June 15, 1989 to mutually relocate the above land 13.7 square meters and the land site owned by the non-party 1 in Jung-gu, Seoul, Jung-gu, Seoul, and the above ground buildings, the court below held that although the contract did not specify the price of Jincheon-dong land subject to exchange and the price of the above ○○-dong real estate, the above ○○-dong real estate was assessed as 30 million won, and the above 200 million won in difference was assessed as 10 million won, and the above ○-dong real estate was transferred to the non-party 1 designated by the plaintiff and paid the plaintiff the above 200 million won in advance pursuant to the above contract, the court below's determination that the transfer price of the real land in this case was reasonable in view of the facts and the records.

The Supreme Court Decision 96Nu860 Decided February 11, 1997 cited by the theory of the lawsuit is not appropriate to invoke this case as it differs from this case.

As to the third ground for appeal

In a case where a taxpayer reported and paid a transfer income tax on the transfer of real estate, but the tax authority imposed a comprehensive income tax on the income accrued from such transfer on the ground that the transfer was made as a part of the real estate sale business, so long as the transfer income tax is within the legitimate tax amount, even if there were errors in the payment form, it does not lack the legal basis for the State to hold it. Therefore, there is no room to apply the legal principles on national tax refund under Article 51 of the Framework Act on National Taxes as it does not in itself, and the tax authority may collect the remainder after deducting the total determined tax amount from the total determined tax amount under Article 131 (1) 3 of the former Income Tax Act (amended by Act No. 4803, Dec. 22, 1994; hereinafter the same shall apply). In this case, there is no error in the misapprehension of the legal principles as to the total tax amount paid for an additional tax on global income in order to secure the obligation to report or performance of obligation, and there is no reasonable ground to impose an additional tax on the remaining amount.

As to the fourth ground for appeal

Article 20 (1) 8 of the former Income Tax Act defines income generated from real estate business as one of the business income subject to income tax, and distinguish it from transfer income under Article 23 of the same Act. Article 36 (3) of the former Enforcement Decree provides that real estate business shall be real estate sales business. Article 82 of the former Income Tax Act provides that the income generated from continuing activities for the purpose of profit-making among the income generated from the transfer of assets, including real estate, shall be based on the fact that it is reasonable to treat the income generated from continuing activities for the purpose of real estate sales business, because it differs from temporary and temporary transfer income, and it shall be based on whether it is ultimately planned for profit-making and continuous activities. Thus, the criteria for distinction between the two are based on whether the income from the transfer of certain real estate is a business income, and whether it can be seen as a business income in light of the size, frequency, form, etc. of sale, and so on, it shall be considered that there is no violation of the principle of no taxation without law, and thus, it shall not be considered that there is no violation of no taxation without law.

In addition, Article 67 of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Prime Minister No. 505 of May 3, 1995) provides for the method of calculating the calculated global income tax under Article 82 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 14467 of December 31, 1994) by re-delegationing the provisions of Article 134 (2) of the same Act. However, the content is merely a natural provision derived from the interpretation of the provisions of Article 82 (1) and (2) of the same Act, and it does not stipulate any other matters concerning the tax requirements or procedures for imposition and collection. Thus, even if it appears to be completely re-entrusted, it does not exceed the limit of delegation prescribed by the Act or it does not constitute a delegation of blank power. Thus, these provisions do not violate the principle of no taxation without the law.

Therefore, the appeal is dismissed and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Yong-hun (Presiding Justice)