Plaintiff (Attorney Go Young-woo, Counsel for the plaintiff-appellant)

The head of Dobong-gu Seoul Metropolitan Government (Attorney Lee Jae-in, Counsel for defendant)

July 15, 2005

Seoul Administrative Court Decision 2004Guhap24929 delivered on November 2, 2004

1. The part against the defendant in the judgment of the first instance shall be revoked;

2. The plaintiff's claim corresponding to the above revoked part is dismissed.

3. The costs of lawsuit shall be borne by the Plaintiff in both the first and second instances.

1. Purport of claim

The defendant's imposition disposition of acquisition tax of KRW 27,146,840 against the plaintiff on July 12, 2004, of KRW 5,347,60 among the imposition disposition of KRW 27,60, and of KRW 490 among the imposition disposition of KRW 2,670,140, and KRW 490 among the imposition disposition of KRW 490,220 among the imposition disposition of KRW 43,90,150, and the imposition disposition of KRW 52,327,490, respectively, shall be revoked.

2. Purport of appeal

The purport of the disposition is the same.

1. Details of the imposition;

The same shall apply to the corresponding parts of the judgment of the first instance.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

In this case, where the Plaintiff reported the current base value of the acquisition tax and registration tax with respect to the instant real estate, and the amount does not reach the current base value, the remaining portion excluding the portion adjusted by 30/100 of the registration tax rate among the disposition imposing the instant tax, inasmuch as there is no basis to regard the total amount of debts that the Plaintiff, not the current base value reported by the Plaintiff, donated and succeeded to the instant real estate

B. Relevant statutes

The entries in the attached statutes are as follows.

C. Determination

(1) The key issue of this case is whether the Plaintiff’s actual acquisition value revealed by the contract, etc. is the tax base of acquisition tax and registration tax due to onerous donation, even though the reported value does not reach the statutory standard value.

Article 11(1) of the Local Tax Act prior to the amendment by Act No. 4995 of December 6, 1995 (hereinafter referred to as the "former Local Tax Act") provides that "the tax base of acquisition tax shall be the value at the time of acquisition: Provided, That in case of acquisition in annual installments, it shall be the annual installments: Provided, That the tax base as provided for in paragraph (1) shall be the amount reported by the acquisitor as prescribed by the Municipal Ordinance in accordance with the provisions of the Municipal Ordinance: Provided, That if there is no declaration or declaration price or such declaration price falls short of the standard market price as prescribed by the Presidential Decree, it shall be based on the current market price." Paragraph (5) of the same Article provides that "acquisition (excluding donation, donation, or other gratuitous acquisition) listed in the following subparagraphs shall be based on the actual acquisition price or annual installments, notwithstanding the provisions of the proviso of paragraphs (2) and (3) of the same Article."

Article 111(1) of the Local Tax Act means, in principle, the actual acquisition value required for the acquisition of an object of taxation, such as real estate, at the time of acquisition under Article 111(1) of the Local Tax Act. Paragraph (2) of the same Article means that the purchaser reports the value at the time of acquisition, which is the tax base under Paragraph (1). If there is no report or the reported value falls short of the standard market value, it is reasonable to interpret that the standard market value should be the tax base (see Supreme Court Decision 2002Du240, Sept. 26, 2003). In other words, Article 111(1) of the Local Tax Act provides that "the value at the time of acquisition" in Article 111(1) of the Local Tax Act means "the de facto acquisition price" unless there is a special provision in the principle of substantial taxation. Under such premise, if the reported value of an acquisitor is not yet short of the standard market value, the tax authority should not consider it as the tax base even if it is found de facto acquisition price.

In this interpretation, Article 111(6) of the former Local Tax Act provides that "if the de facto acquisition price has been verified by a notarial deed, etc., it shall become the tax base thereof as the lowest standard price." Ultimately, even if the Local Tax Act amended by Act No. 4995 of Dec. 6, 1995 becomes invalid after deletion, it shall not be deemed that "if the purchaser of real estate acquired the real estate after the amendment of the former Local Tax Act, files a report on the value at the time of acquisition pursuant to Article 111(2) of the Local Tax Act, and if the reported value does not meet the standard market price, it shall not be deemed that the actual acquisition price shall not be taxed on the basis of the contract, etc. stipulated in Article 111(6) of the former Local Tax Act, even if it is proved that the de facto acquisition price is higher than the standard market price."

Therefore, it is difficult to deem that the instant disposition was unlawful, based on the sum of obligations to be borne by the Plaintiff, instead of having reported the tax base of the instant real estate based on the current base value.

3. Conclusion

Therefore, the plaintiff's claim based on the premise that the disposition of this case is unlawful is dismissed as it is without merit. Since the judgment of the court of first instance is unfair with a different conclusion, the defendant's appeal is accepted, and the part against the defendant in the judgment of first instance is revoked, and the plaintiff's claim corresponding to

[Attachment List omitted]

Judges Song Jin-jin (Presiding Judge)