Cho High Court Decision 2014Do3289 ( November 25, 2014)

It is reasonable to deem that the Plaintiff delegated the authority to receive tax notice to the attorney of the preceding case.

It is reasonable to deem that the Plaintiff, who is the legal representative of the preceding case, delegated the right to receive the instant tax payment notice to the Kim J-Law clearly or implicitly, and furthermore, since the Plaintiff received the instant tax payment notice through the Kim J-Law, it shall be deemed that the instant tax payment notice was lawful.

Articles 8 and 12 of the National Flag Act, Articles 9 and 12 of the National Flag Act

2015Guhap5489 Revocation of Disposition of Imposition of Value-Added Tax

AAAA

BB Director of the Tax Office

June 21, 2016

July 14, 2016

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The primary purport of the claim is to confirm on March 7, 2014 that the imposition of the value-added tax of KRW 0,000,000 for the second period of 203 by the Defendant against the Plaintiff on March 7, 2014 is invalid.

Preliminary claim: On March 7, 2014, the Defendant revoked the imposition of the value-added tax of KRW 0,000,000 for the second period of CCC 2003 against the Plaintiff on March 7, 201.

1. Details of the disposition;

A. DD industry Co., Ltd. (hereinafter referred to as "D industry") owned 21 units and 22 units (hereinafter referred to as "D stores") of the EE EE 16-1 and 12 units of the land, EE EE 16-1 and 4 units and 4 units (hereinafter referred to as "D stores"). A lessee of D Industries established by the lessee of D stores (hereinafter referred to as "Lessee") was permitted to sell the purchase price of 00 billion won in the course of voluntary auction against D stores on July 1, 2001.

B. On July 16, 2002, CCC entered into a sales contract with D industry to purchase Diplomatic Price 00 billion won from D industry, and completed the registration of ownership transfer on the same day, and subsequently, filed a claim for cancellation of the right to request a lessee association to suspend the procedures for voluntary auction against Diplomatic Price and file a claim for cancellation of the right to request a lessee association. After that, CCC entered into an agreement with D industry on September 27, 2003 on December 9, 2003 with the lessee association to receive the agreed amount, etc.

C. Meanwhile, on January 22, 2002, the Plaintiff was a corporation established under the State Law of the United States of Netherlands, which was established on June 29, 2002, and entered into a consulting agreement with the CCC that DDA wishes to take over, and the FF (hereinafter referred to as the “FF”) and GG CoCo Ltd (hereinafter referred to as the “GGGG”) acquired shares of the CCC 21,250 shares (42.5%) on September 16, 2003, respectively, as a corporation established under the Malaysia Act.

D. On January 13, 2006, the Y director of the tax office imposed the second-year value-added tax amount of KRW 0,000,000 (including additional tax) on the following day on the ground that CCC acquired D status from D industry in the purchase price of KRW 00,00,000, and subsequently transferred D status to the lessee and subsequently obtained profits from D status D, CCC’s transfer of D status D statusd building portion to CCC’s lessee constitutes the supply of goods under Article 6(1) of the Value-Added Tax Act. On the same day, CF and GG were designated as the secondary taxpayer under Article 39 of the Framework Act on National Taxes, and notified the secondary taxpayer under Article 39 of the Framework Act on National Taxes of KRW 0,000,000 (including additional tax).

E. However, on March 10, 2008, FF and GGG were merely nominal shareholders of CCC, and the Plaintiff actually exercised shareholder rights as the oligopolistic shareholder of CCC, the head of the Y Tax Office cancelled the secondary taxpayer designation and notice of payment of value-added tax for FF and GGG, and on March 17, 2008, issued the notice of tax payment of KRW 0,000,000 (including additional tax 0,000,000,000,000) calculated by adding additional and aggravated additional taxes to the value-added tax amount equivalent to the Plaintiff’s share ratio (85%) on March 17, 2008.

F. On December 30, 2008, the Tax Tribunal decided to reduce the CCC’s value-added tax amount to KRW 4,033,017,336 on the appeal filed by CCC. Accordingly, the YY chief of the tax office reduced the Plaintiff’s value-added tax amount to KRW 0,000,000 (including the additional tax amount of KRW 0,00,000,000) (the imposition disposition of value-added tax as of March 17, 2008).

G. The Plaintiff is dissatisfied with the initial disposition of this case. The Plaintiff did not constitute a secondary taxpayer because it was not an oligopolistic shareholder of the CCC, and the director of the YY Tax Office did not stipulate the type of additional tax or the grounds for calculation, and thus, the initial disposition of this case should be revoked illegally. The Seoul High Court (201Nu1574) in the lawsuit above. The Seoul High Court (201Nu1574) deemed the Plaintiff as an oligopolistic shareholder of the CCC and designated the Plaintiff as the secondary taxpayer, but the portion of the tax notice was illegal because CCC did not state the grounds for calculation of additional tax and additional tax, additional dues, increased additional dues, 00,000,000 among the initial disposition of this case, and the final judgment of both the Plaintiff and the head of the tax office became final and conclusive on August 16, 2013 (hereinafter referred to as “the above final judgment became final and conclusive, but both of the above final and conclusive.”

H. The Defendant, which had been the competent tax office due to the relocation of the CCC’s place of business, revoked the portion of additional tax (including additional dues) out of the initial disposition of the instant case in accordance with the final judgment of the instant case, and notified the Plaintiff of the refund of KRW 0,000,000 corresponding to the Plaintiff’s share out of the CCC’s additional tax (including additional dues). On March 21, 2014, the instant tax payment notice was issued on March 21, 2014 (hereinafter “instant tax payment notice”). The instant tax payment notice stated “the date of the disposition” as “ March 7, 2014.” (hereinafter “instant disposition”).

(i) The Plaintiff filed an appeal with the Director of the Tax Tribunal on June 2, 2014, against the instant disposition, but the appeal was dismissed on November 25, 2014.

2. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

The instant disposition is unlawful in the following respect.

1) The Defendant merely served the instant tax payment notice on the Plaintiff, the Plaintiff’s legal representative for the preceding case, and did not serve the notice to the Plaintiff. This is invalid as it is unlawful for the Defendant to serve the notice to a person who has no right to receive the tax payment notice on the part of the Plaintiff.

2) In order for the Defendant to make a lawful tax payment notice to the Plaintiff, the secondary taxpayer, the first taxpayer, the duty payment notice should be served with the CCC, which is the primary taxpayer, and there is no error in the foregoing procedure. The CCC’s additional tax notice amount is KRW 0,00,000,00, and the instant tax payment notice should also pay the same amount to the Plaintiff that the Plaintiff actually owns 85% of the CCC’s shares. As such, there is an error in the foregoing disposition, the content and procedural defect.

3) The Defendant reconvened the two acts of acquiring DD values through the rescission of agreement between DD industry and CCC on December 9, 2013 and the tenant association’s voluntary auction procedure on December 10, 2003 as a single act of transfer by CCC’s tenant association. As such, the Plaintiff exceeded the bounds of the substance over form principle, and the Plaintiff was not expected to impose the duty of payment of value-added tax on CCC, the principal taxpayer as such, as the transfer transaction is deemed to exist. Furthermore, since accelerator and GG were actually engaged in a large number of transactions in Korea, the Plaintiff was assessed as an oligopolistic shareholder by FF and GGG as a second taxpayer of CCC. Accordingly, there is also a justifiable reason that additional tax should be exempted for the Plaintiff.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether it is a lawful service on the plaintiff

(4) On July 26, 2013, the Plaintiff’s notice of tax refund No. 4 through 11 of the Plaintiff’s certificate (including each number) was sent to the Plaintiff’s agent, and the Plaintiff’s notice of tax refund No. 2 of the instant case was sent to the Plaintiff by 30 of the Plaintiff’s legal office to the effect that the Plaintiff’s notice of tax refund No. 3 of the instant case was not sent to the Plaintiff, and that the Plaintiff’s legal office’s receipt of the instant notice of tax refund No. 2 of the instant case was valid until December 31, 2015. The Plaintiff’s notice of tax refund No. 2 of the instant case was sent to the Plaintiff by 30 of the Plaintiff’s legal office and the Plaintiff’s legal office’s receipt of the instant notice of tax refund No. 3 of the Plaintiff’s legal office to the Plaintiff. The Plaintiff’s receipt of the instant notice of tax refund No. 3 of the Plaintiff’s legal office to the Plaintiff’s legal office No. 2 of the Plaintiff’s receipt of the refund money No. 3 of the Plaintiff’s legal office.

2) Whether there is any defect in the duty payment notice on the principal taxpayer

A notice of payment to a secondary taxpayer is formally independent tax assessment, but actually has the nature of a disposition under the collection procedure of the principal tax liability determined by a tax assessment, etc. Therefore, in order to issue a notice of payment to a secondary taxpayer, the procedures for determining his/her specific tax liability by granting a tax assessment to the principal taxpayer as a prior requirement should be followed (see, e.g., Supreme Court Decision 82Nu123, May 10, 1983).

However, according to the evidence evidence Nos. 3 through 5, CCC filed a lawsuit against the director of the YY Tax Office seeking revocation of the imposition of value-added tax for the second period of 2003 with respect to the initial disposition of this case, but the judgment of losing the lawsuit becomes final and conclusive. Therefore, the specific tax liability of CCC, which is the principal taxpayer, has already become final and conclusive, and it cannot be deemed that the Defendant has to again issue a tax notice to CCC prior to the instant disposition against the Plaintiff. Furthermore, the Plaintiff’s notice of tax payment stated in the notice of this case’s payment is insufficient to deem that CCC’s additional tax amount of 0,000,000,000,000, the principal taxpayer of this case’s initial disposition of this case’s revocation of the additional tax (including additional dues) and re-disposition under the final and conclusive judgment of this case’s final judgment, and therefore, the Plaintiff’s error in this part of CCC’s additional tax amount of 0,000,000 won is also difficult.

3) Whether there exists a justifiable reason, which is the reason for exemption of additional tax

As seen earlier, the penalty tax imposed on the Plaintiff according to the instant tax notice is not a penalty tax for the Plaintiff’s failure to report and pay in good faith, but a penalty tax for the principal taxpayer’s failure to report and pay in good faith. Thus, the Plaintiff’s failure to expect the principal tax to be imposed on the principal taxpayer or for itself to be designated as the secondary taxpayer is merely the Plaintiff’s unique circumstance, and the Plaintiff’s failure to do so cannot be a ground for exemption from the penalty tax. The Plaintiff’s assertion on this part is without merit.

D. Sub-committee

The instant disposition to the same purport is lawful.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.