In cases where the previous gift contract is rescinded after the amendment of Article 29-2(4) of the former Inheritance Tax Act on December 31, 1993, the liability to pay the gift tax shall be made.

According to Articles 20, 29-2 (4) and (5), and 34-7, etc. of the former Inheritance Tax Act (amended by Act No. 5193, Dec. 30, 1996) amended on December 31, 1993, in cases where even if a donation contract was rescinded prior to the issuance of a tax disposition on such contract, if the subsequent restitution is not made within six months from the time of the donation, gift tax may be levied lawfully: Provided, That in cases where the return was made within one year, gift tax may not be imposed again on such return (this other Supreme Court Decision 96Nu1061, Apr. 26, 1996). In such cases, it is different from the case where a donation contract was rescinded by agreement and completed recovery before the amendment under Article 29-2 (4) of the above Act.

Article 20 (see current Article 67 of the Inheritance Tax and Gift Tax Act), Article 29-2 (4) and (5) (see current Article 31 (4) and (5) of the Inheritance Tax and Gift Tax Act), Article 34-7 (see current Article 68 of the Inheritance Tax and Gift Tax Act), Article 7 of the Addenda (see current Article 31 of the Inheritance Tax and Gift Tax Act) of the former Inheritance Tax Act (amended by Act No. 5193, Dec. 30, 1993)

Supreme Court Decision 96Nu1061 Decided April 26, 1996 (Gong1996Sang, 1766) Supreme Court Decision 96Nu6929 Decided July 11, 1997 (the same purport)

[Judgment of the court below]

The Head of Gangnam District Tax Office (Attorney Yoon Young-young, Counsel for the plaintiff-appellant)

Seoul High Court Decision 96Gu22206 delivered on December 27, 1996

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

We examine the grounds of appeal.

Article 29-2 (4) of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993, and amended by Act No. 5193 of Dec. 30, 1996), where the donated property is returned within the time limit for report under the provisions of Article 20 by agreement between the parties after receiving the donation, the donation shall be deemed not to have existed from the beginning. Paragraph (5) of the same Article shall not apply to cases where the donated property is returned or re-donations the donated property to the donor within one year, except for cases falling under the main sentence of paragraph (4), and Article 20 provides that, where the decedent or the heir has no address in a foreign country, the heir shall submit a report, etc. stating the value of inherited property within six months from the date on which the commencement of inheritance was known, and Article 34-7 of the former Inheritance Tax Act shall apply mutatis mutandis to the gift tax, and Article 29-2 (4) of the Addenda provides that the gift tax shall be returned within six months before the first determination of the gift tax was made.

In the same purport, the decision of the court below that the disposition of this case was lawful on the ground that the registration of transfer of ownership was made on January 30, 1993, and the registration of cancellation of transfer of ownership due to the cancellation of a contract was made on March 6, 1995, which was more than six months later than the time. The decision of the court below that the disposition of this case was lawful. The decision of the court below was made on December 31, 1993 by limiting the effect of rescission of contract with respect to the imposition of gift tax under Article 29-2 (4) of the above amendment as amended on December 31, 1993. Thus, it did not err in the misapprehension of legal principles as to the establishment and confirmation of tax liability, or the interpretation of the above amendment provisions. Moreover, the above amendment provisions do not constitute a violation of the principle of no taxation without law or the principle of guarantee of property rights.

The Supreme Court Decision 96Nu1061 delivered on April 26, 1996 held by the plaintiff is that prior to the amendment of Article 29-2(4) of the above Article, the contract of donation is rescinded and the contract is completed to restore the original state. In such a case, Article 7 of the Addenda to the above provision cannot be applied. Thus, since the contract of donation is rescinded after the amendment of the above provision, the above decision of the court below is different from this case, it cannot be deemed that the above decision of the court below is contrary to the above decision. All arguments are without merit.

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

Justices Kim Jong-sik (Presiding Justice)