Cho Jae-2017-China-2837 (No. 28, 2017)

In the case of reduction or exemption by substitute land, the exclusion period

If the taxpayer should decide whether he/she satisfies the non-taxation requirement, the starting date of the exclusion period shall be the time when the taxpayer fails to meet the non-taxation requirement after the lapse of the specified period.

The exclusion period for national tax assessment under Article 26-2 of the Framework Act on National Taxes

Incheon District Court 2017Guhap5439 Decided revocation of imposition of capital gains tax, etc.

○ ○

○ Head of tax office

8.06.15

2018.07.20

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

On February 6, 2017, the Defendant confirmed that imposition of capital gains tax of KRW 91,100,360, and special rural development tax of KRW 9,540,120 for the Plaintiff was null and void.

1. Details of the disposition;

A. On May 29, 2006, the Plaintiff acquired ○○○○○○○-dong, 794-9 of an orchard 3,306 square meters (hereinafter “instant farmland”) as a public site on February 24, 2010 and applied for a reduction or exemption of capital gains tax on substitute land by filing a preliminary return on April 30, 2010 with the transfer value of the instant farmland as KRW 1.22,432 million.

B. The details of the change of address of the Plaintiff are as follows.

C. The Defendant: (a) was suspected of having transferred the Plaintiff to ○○○○○○○○○○○○, ○○○○○○○, 180-3 in the vicinity of the land of this case for the reduction of and exemption from large land; and (b) was confirmed as a result of a tax investigation, on the ground that the requirements for reduction of and exemption from capital gains tax on farmland were not satisfied; (c) on February 6, 2017, the Defendant imposed imposition of capital gains tax of KRW 91,100,360 and special rural and fishing villages tax of KRW 9,540,120, and served a tax notice on February 9, 2017 (hereinafter “instant disposition”).

D. The Plaintiff filed an appeal with the Tax Tribunal on May 24, 2017, but the Tax Tribunal dismissed the appeal on September 28, 2017.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 4, Eul evidence Nos. 1 and 5, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The exclusion period of imposition is Do.

From April 30, 201 or June 1, 201, which was the date of the final return of capital gains tax that became final and conclusive on April 30, 201 or on which the Plaintiff submitted an application for tax reduction or exemption of farmland, the Defendant could have known the grounds for the Defendant’s failure to perform his/her duties sufficiently through follow-up management procedures. Thus, the period for exclusion from imposition ought to run from the above date and time. Accordingly, the instant disposition made on February 6, 2017 is null and void after the five-year period for exclusion from imposition expires.

(ii) Illegal service by publication;

Service by public notice may be deemed to be a case where a service by public notice is not made even after a good manager’s duty of care was examined. However, as the Defendant did not serve the instant disposition on February 6, 2017, the Defendant served a service by public notice on February 9, 2017, which was three days later. Accordingly, the instant disposition by public notice is invalid due to its illegality in the procedure of service by public notice.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Determination on the Do and argument for exclusion period of imposition

A) The starting date for the exclusion period

According to Article 26-2(1)3 of the former Framework Act on National Taxes (amended by Act No. 10405, Dec. 27, 2010; hereinafter referred to as the "former Framework Act on National Taxes"), Article 12-3(2)3 of the Enforcement Decree of the same Act, and Article 110(1) of the former Income Tax Act (amended by Act No. 15225, Dec. 19, 2017), the exclusion period of capital gains tax is five years from the date on which it can be imposed, and the date on which it can be imposed is, in principle, the date following the day on which one's two-way one's relocation right is affixed".

Meanwhile, Article 70(1) of the former Restriction of Special Taxation Act (amended by Act No. 0406, Dec. 27, 2010) and Article 67(3)1 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 23590, Feb. 2, 2012) stipulate the full reduction of capital gains tax on farmland substitute land in cases where a person who has cultivated while residing in the former location of farmland for at least three years, acquires another farmland within one year from the date of transfer (two years in cases where land is expropriated by consultation, expropriation pursuant to the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects and by other Acts) and cultivates farmland while residing in a new location of farmland for at least three years. Accordingly, in order to determine whether non-taxation is non-taxation, the tax authority is bound to impose capital gains tax immediately on the taxpayer and it becomes final when the taxpayer fails to meet the requirements for non-taxation. Therefore, the period of exclusion shall be determined after the lapse of the exclusion period.

B) In the instant case:

Inasmuch as the instant land was transferred through consultation under the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects on February 24, 2010, prior to the transfer date of the instant land, it is reasonable to decide whether the Plaintiff satisfies the requirements for non-taxation until February 24, 2012, which was the second anniversary of the transfer date of the instant land. However, on February 24, 2012, the Plaintiff was confirmed to have failed to meet the requirements for non-taxation on farmland as of February 24, 2012, and the Defendant issued the instant disposition on February 6, 2017, which was within five years from the exclusion period of imposition of national taxes, and thus, this part of the Plaintiff’s assertion is without merit.

2) Determination as to the assertion of illegal service by public notice

A) Relevant legal principles

Article 8(1) of the Framework Act on National Taxes provides that "a place to be served with documents under the Framework Act on National Taxes or other tax-related Acts (hereinafter referred to as "place of residence, residence, place of business or business") shall be "where a person under Article 10(4) is unable to serve a document at a place to be served by a person under Article 10(4) as a reason for service by public notice and is prescribed by Presidential Decree, such as where the document is served by registered mail but the document is returned without the recipient's absence," and Article 7-2 of the Enforcement Decree of the Framework Act on National Taxes provides that "where it is deemed difficult to serve a document by the due date because the tax official visited the taxpayer two or more times to deliver the document,

Considering the language and text of the provision, the purport of the service by public notice under Article 11 of the Framework Act on National Taxes, and the fact that the granting of service by public notice may excessively infringe the right to a trial under Article 27(1) of the Constitution to be tried by public notice on the grounds that a tax authority may serve by public notice on a taxpayer for the reason that a tax authority may serve by public notice may excessively infringe on the right to a trial under Article 27(1) of the Constitution, i.e., “place to serve” under Article 11(1)3 of the Framework Act on National Taxes refers to the taxpayer’s address or place of business that the tax authority may know by public notice on the grounds that the tax authority may serve by public notice on a good manager, and the “place to serve” of the taxpayer may be attempted to serve by public notice at each place, even though a tax official visited only some of the places and confirmed that there is no recipient (see Supreme Court Decision 2015Du43599, Oct. 29, 2015).

Article 7-2 of the Enforcement Decree of the Framework Act on National Taxes (Article 7-2 of the Enforcement Decree of the Framework Act on National Taxes) In the case of this case, "the absence of the recipient" in subparagraph 2 shall be interpreted to be limited to the case where a taxpayer deserts for a long time from the place of the existing service and there is an obstacle to the exercise of taxation right (see Supreme Court Decision 98Du18916, Oct. 6

In light of the above legal principles, in light of the following facts and circumstances, it is reasonable to deem that the instant disposition satisfies the requirements for service by public notice under Article 11(1)3 of the Framework Act on National Taxes and Article 7-2 subparag. 1 of the Enforcement Decree of the Framework Act on National Taxes, and accordingly, the instant disposition was lawfully delivered to the Plaintiff on February 23, 2017.

① On February 6, 2017, when the Defendant’s public official notified the Plaintiff of the instant disposition, the Plaintiff promised to leave the Plaintiff on February 7, 2017. The Plaintiff promised to receive the tax payment notice by holding the Plaintiff’s tax agent delivery phone to the Plaintiff on February 7, 2017.

② However, on February 7, 2017, the Plaintiff and its tax agent did not leave the Defendant’s public official in charge, and the Plaintiff’s tax agent call to the Defendant’s public official in charge and sent the Plaintiff directly.

③ On February 8, 2017, a public official in charge of the Defendant visited the Plaintiff at ○○○○○○○-ro, 9 Dong Dong 907 (hereinafter “Plaintiff’s domicile”) (hereinafter “Plaintiff’s domicile”) (hereinafter “the Plaintiff’s domicile”), which is the Plaintiff’s domicile, in order to serve a tax notice on the instant disposition on the Plaintiff at around 15:00 on the same day, even though the Plaintiff did not receive the phone, and around 15:00 on the same day, the Defendant’s public official visited the Plaintiff at ○○○○-dong, ○○○○-dong, 9 Dong 907 (hereinafter “the Plaintiff’s public official in charge”) (hereinafter “the Plaintiff’s domicile”). The Defendant’s public official in charge denied the Plaintiff’s presence of the Plaintiff

④ On February 8, 2017, from around 16:30 to 19:30, the Defendant’s public official visited ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ (hereinafter “Plaintiff’s business office”) located in the first floor (hereinafter “○○○○○○○○○○”). However, there was no reason to place a notice for arrival of the tax payment notice (the first vehicle). On the same day, around 20:00, the Defendant’s public official visited the Plaintiff’s domicile, but did not have any visit to the Plaintiff’s domicile, and thus, attached a notice for arrival of the

⑤ On February 9, 2017, around 10:00, the Defendant’s public official in charge visited ○○○○○○○○○○○○-ro 87-ro 82 (○○○○-dong), where the Plaintiff’s immediate domicile and father, Kim○-dong, was residing, and sought to deliver a tax notice or notice of payment. However, Kim○-○ refused to accept the Plaintiff’s domicile on the ground that the Plaintiff transferred his domicile, and recorded the grounds for refusal in the receipt, and then placed the tax notice on the said house.

④ On February 9, 2017, the Defendant’s public official visited the Plaintiff’s domicile at around 12:00, but the security guards issued a tax notice and received a receipt for the said reason. At around 15:00 on the same day, the Defendant’s public official visited the Plaintiff’s domicile at around 15:00, on the other hand, attached a notice for arrival of the tax notice (three-dimensional) as there was no reason to do so. On the same day, the Defendant’s public official visited the Plaintiff’s business office at around

7) Ultimately, the Defendant attempted to visit the Plaintiff’s domicile and the place of business at least twice to serve the documents. However, even if the Plaintiff was informed of the instant disposition and its contents by contact with the Defendant’s public official, the Defendant intentionally discontinued contact and did not serve the documents by dancing at the address and place of business in order to avoid serving the instant disposition. This ought to be the same as leaving the place of service for a long time as the Plaintiff left the place of service.

3. Conclusion

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

section 3.