[1] Whether Article 82-3 (2) of the former Enforcement Decree of the Local Tax Act is invalid beyond the scope of delegation under Article 111 (7) of the Local Tax Act, a parent corporation (negative)

[2] In a case where acquisition tax is excessive due to a corporation's land for non-business use, whether the interest rate for the construction of fixed assets for business cannot be included in the tax base for acquisition tax and registration tax (negative)

[1] Article 82-3 (2) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14753 of Aug. 21, 1995) specifies the scope of "the de facto acquisition price, which is the price that serves as the tax base for acquisition tax under Article 111 (5) of the former Local Tax Act (amended by Act No. 4995 of Dec. 6, 1995)" as a part of the acquisition price, and it is limited to the acquisition of the pertinent goods prior to the time of acquisition of the goods. Thus, it cannot be said that there is no ground for delegation of the parent law or that there is no provision for invalidation in violation of the delegated purport.

[2] The interest rate for the construction of fixed assets for business under Article 82-3 (2) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14753, Aug. 21, 1995) is indirectly invested for the acquisition, and thus is included in the tax base for acquisition tax and registration tax. On the other hand, land for non-business use of a corporation differs from its purport to prevent non-productive speculation caused by the acquisition and holding of land for non-business purpose and to ensure the efficient use of land. Therefore, even if the acquisition tax is heavy because it falls under land for non-business use of a corporation, the interest rate for the construction of fixed assets for business purpose cannot be included in the tax base.

[1] Article 11 (5) and (7) of the former Local Tax Act (amended by Act No. 4995 of Dec. 6, 1995); Article 82-3 (2) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14753 of Aug. 21, 1995) (see current Article 82-3 (1)) / [2] Articles 111 (5) and (7) and 130 of the former Local Tax Act (amended by Act No. 4995 of Dec. 6, 1995), Article 82-3 (2) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14753 of Aug. 21, 1995); Article 82-3 (1) (see current Article 82-3 (1) of the Enforcement Decree of the Local Tax Act); Article 82-3 (2) of the former Corporate Tax Act (amended by Presidential Decree No. 151301 of Dec. 29, 1995)

Pacific District Co., Ltd.

Head of Geumcheon-gu Daejeon Metropolitan City

Daejeon High Court Decision 99Nu682 delivered on November 26, 1999

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

We examine the grounds of appeal.

1. On the first ground for appeal

A. Article 111 (7) of the former Local Tax Act (amended by Act No. 4995, Dec. 6, 1995; hereinafter the same shall apply) provides that "the scope of the value, price or annual installment amount which serves as the tax base for acquisition tax under the provisions of paragraphs (1) through (6) and the time of acquisition shall be determined by Presidential Decree." Article 82-3 (2) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14753, Aug. 21, 1995; hereinafter referred to as the "former Enforcement Decree of the Local Tax Act") provides that "acquisition price as provided in paragraph (1) means all expenses paid or to be paid to the other party to the transaction or a third party for the acquisition of the pertinent object as of the time of acquisition (including interest, introduction fees, design expenses, etc. of the amount appropriated for construction fund under the provisions of subparagraph 11 of Article 16 of the Corporate Tax Act)", and it is not a reason for delegation to the effect of the former Local Tax Act.

Although the court below erred in finding the invalidity of Article 82-3 (2) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 1389 of May 26, 1993) on the premise that Article 82-3 (2) of the former Enforcement Decree of the Local Tax Act is applicable to this case, it is just in holding that the disposition of this case is legitimate under the premise that Article 82-3 (2) of the former Enforcement Decree of the Local Tax Act is valid, and there is no error of law by misunderstanding

B. According to the reasoning of the judgment below, based on the facts acknowledged as stated in its reasoning, the court below determined that, since the purpose of acquiring the land of this case was to use the land of this case as a site for the new construction of a factory, the purpose of acquiring the land of this case was to use the land of this case as a site for the above construction of a new factory. The plaintiff himself calculated the interest interest rate on the loan interest by the time of acquisition of the land of this case by April 30, 1993, which is the time of acquisition of the land of this case, since it is reasonable to view the land of this case as a fixed asset for business business at the time of April 30, 1993, because the interest rate on the loan used for the acquisition of the land of this case was indirectly invested in order to acquire it, it should be added to the tax base of registration tax, and even if the land for non-business use was acquired after the acquisition of the fixed asset for business.

In light of the relevant laws and records, the judgment of the court below is just, and there is no error in the misapprehension of legal principles as to interest rate on fixed assets for business.

The grounds of appeal disputing this issue are rejected.

2. On the second ground for appeal

The interest rate on fixed assets for business under Article 82-3 (2) of the former Enforcement Decree is indirectly invested for acquisition, and thus is included in the tax base of acquisition tax and registration tax. However, land for non-business use of a corporation is different from acquisition tax to prevent non-productive speculation caused by a corporation's acquisition and holding of land other than its own purpose and to seek the efficient use of land. Therefore, even if acquisition tax is heavy because it falls under non-business land of a corporation and thus, it is not necessary to include construction funds for fixed assets for business in the tax base.

The judgment of the court below to the same purport is just, and there is no violation of law such as incomplete hearing.

The grounds of appeal disputing this issue are also rejected.

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

Justices Lee Jin-hun (Presiding Justice)