Western Doro L Co., Ltd. (Law Firm LLC, Attorneys Lee Dog-min, Counsel for the defendant-appellant)

The head of Seongbuk-gu Seoul Metropolitan Government (Law Firm Barun, Attorneys Lee Woo-hoon et al., Counsel for the plaintiff-appellant)

June 27, 2012

Suwon District Court Decision 201Guhap5491 Decided February 22, 2012

1. All appeals filed by the Defendant are dismissed.

2. The costs of appeal shall be borne by the Defendant.

1. Purport of claim

The Defendant’s disposition of imposition of registration tax of KRW 952,536,240, local education tax, KRW 177,130,260, and KRW 189,30,30, and KRW 39,60,990, and KRW 7,364,340, and KRW 7,870,170, and KRW 64,107,870, and KRW 19,232,250, and KRW 86,725,70, and KRW 520, among the dispositions imposed by the Plaintiff on February 10, 2011, is revoked.

2. Purport of appeal

The judgment of the first instance is revoked. All of the claims filed by the plaintiff are dismissed.

1. Quotation of judgment of the first instance;

The reasoning of the judgment of this court is as follows, except for the addition of the judgment on the defendant's assertion by the court of first instance, and thus, it is cited in accordance with Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the

2. Additional determination

A. Additional determination as to No. 1 of this case

The Defendant asserted that the heavy registration tax rate should apply to the real estate registration regarding the entire community facilities and sanatoriums of this case as well as the office of this case. Thus, the first disposition of this case is lawful. However, the part of the first disposition of this case which does not directly use the office of this case for its original purpose is unlawful. The reasons are as follows.

① Article 102(2) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 21498, May 21, 2009; hereinafter “former Enforcement Decree of the Local Tax Act”) provides that “Real Estate registration following the establishment of a corporation and the establishment of a branch or sub-office in a large city and the relocation of a branch or sub-office in a large city” under Article 138(1)3 of the former Local Tax Act means all the real estate acquired before the establishment, establishment, and transfer of a corporation’s head office, branch or sub-office in a large city.” Accordingly, Article 102(2) of the former Enforcement Decree of the Local Tax Act provides that “No real estate is used directly for the establishment, establishment, and transfer of a corporation’s head office, branch or sub-office in a large city and its relocation into a main office, branch or sub-office in a large city without the provision of Article 138(1)3 of the former Enforcement Decree of the Local Tax Act shall be subject to criticism for the purpose of the new provision or sub-office.”

On May 21, 2009, the Defendant asserts that the amendment of Article 102(2) of the former Enforcement Decree of the Local Tax Act to the “real estate registration following the establishment of the headquarters, branch, etc. within a large city” subject to the heavy registration tax under the former Local Tax Act is to stipulate “related sex requirements” as stated in the previous Supreme Court precedents (see Supreme Court Decision 2005Du6546, Dec. 22, 2006, etc.) that require the relevance between the acquisition of real estate and the establishment of the headquarters, etc., but it is difficult to deem that the amendment was made in order to clarify the fact already recognized in the previous Supreme Court precedents. Moreover, it is unreasonable that the language of Article 102(2) of the former Enforcement Decree of the Local Tax Act, “acquisition for direct use,” which is “acquisition for the purpose of the head office, etc., constitutes an excessively reduced interpretation differently from the meaning of the language.

② The imposition of registration tax on a specific real estate registration of a juristic person located in a large city constitutes a policy taxation introduced for the purpose of suppressing population and economic concentration in the large city, preventing pollution facilities, and facilitating the regional economy. Article 138(1)3 of the former Local Tax Act does not violate the principle of prohibition of excessive restriction (see, e.g., Supreme Court Decision 97Nu3132, Feb. 24, 1999). However, it is reasonable to strictly interpret the applicable scope in terms of the degree of excessive registration tax and the system established for policy reasons of excessive registration tax. Such interpretation also accords with the legislative intent of the former Enforcement Decree of the Local Tax Act.

③ As alleged by the Defendant, where only the instant office is used for the actual purpose of the headquarters, and the part of the instant community facilities and the instant sanatoriums, excluding the instant office, is subject to registration tax even if they are not used for the main office, the Plaintiff, a juristic person, such as the Plaintiff, has an office used as the main office, to attract the office used as the instant community facilities, the building with the instant sanatoriums, and other neighboring buildings, thereby violating the principle of tax neutrality that tax decision-making should not be distorted.

④ In interpreting as alleged by the Defendant, the scope and scope of acquisition tax under Article 112 of the former Local Tax Act and registration tax under Article 138 of the former Local Tax Act are different.

⑤ According to Article 67 of the Registration of Real Estate Act, registration of transfer of part of ownership can be made, and according to Article 1 of the Act on the Ownership and Management of Aggregate Buildings, ownership of part of one building can be divided (see Article 13 of the Act on the Ownership and Management of Aggregate Buildings). As to acquisition tax, the Defendant is limited to only the real estate registration of the instant office. Therefore, the registration tax may be imposed on the real estate registration of the instant office acquired to use directly for the purpose of the Plaintiff’s principal office. Nevertheless, there is no need to focus on the real estate registration of the part other than the instant office.

B. Additional determination as to the disposition No. 3 of this case

The Defendant asserts that the Plaintiff should pay acquisition tax on the land outside of the instant project even in the court. However, on the grounds indicated in the first instance trial, the Plaintiff is not obligated to pay acquisition tax on the land outside of the instant project, as it is impossible to substitute the Plaintiff for obtaining land transaction permission granted by the Nonparty, and thus, the Plaintiff cannot be deemed to have acquired the land outside the instant project, even in that it cannot be seen as having acquired the land outside the instant project.

3. Conclusion

The judgment of the first instance is justifiable. All appeals filed by the defendant are dismissed.

Justices Kim Jong-ho (Presiding Justice)