(a) the case that the business transferee comprehensively succeeds to all rights and obligations concerning the business is the secondary person liable for tax payment;

B. The need for the procedure of the preceding trial in a lawsuit seeking revocation of a declaration of invalidation of taxation (affirmative)

C. In a case where the grounds for the initial taxation disposition and the illegality of the increased disposition are common, whether the person liable for duty payment, who has gone through the legitimate pre-trial procedure, in filing an administrative litigation against the pre-assessment disposition, should take a pre-trial procedure (negative)

(d) Scope of taxes for which a business transferee becomes liable for secondary tax payment.

A. Article 41 of the Framework Act on National Taxes and Article 22 of the Enforcement Decree of the same Act, which provides that the transferee shall comprehensively succeed to all rights and obligations concerning the business of the non-party company, which provides that the transferee shall be liable to pay secondary tax to the transferee, mean that the transferee succeeds to the legal status of the same kind as the transferor by taking over not only all his/her business facilities but also his/her business rights and obligations, such as credits and obligations, etc. related to such business, and by taking over all personal and physical rights and obligations from the transferor. The judgment of the court below is justifiable in determining that the Plaintiff constitutes the transferee of the non-party company, if the transferee purchased the business from the non-party company whose main purpose is to manufacture, sell, etc. the content products, takes over the rights to physical facilities (lease) and takes over part of his/her business obligations, and then set off the takeover and the purchase price. The non-party company leases the factory buildings, machinery, equipment, telephone subscription rights, and one vehicle leased and used by the non-party company from a third party.

(b)a lawsuit seeking revocation in the sense of seeking the invalidation declaration of taxation should undergo a prior trial procedure.

C. If a reorganization disposition increases after a tax disposition, the original disposition loses its independent existence value by absorbing the reorganization disposition, and thereafter reduces it thereafter, the reorganization disposition takes effect only for the reduced tax amount. Therefore, in principle, the implementation of the reorganization procedure shall be decided as the object of the reorganization disposition. However, in a case where a ground for illegality of the preceding disposition and the increased reorganization disposition is common, as long as a legitimate ground for the preceding disposition is common, the tax authority has already been given the opportunity to review the basic facts and legal issues, as long as it has already been conducted, and it is harsh that a taxpayer would not go through the original procedure again for the same reason for illegality. Therefore, a taxpayer may institute an administrative lawsuit against the increased reorganization without going through the original procedure.

(d) If the secondary tax liability is imposed on the transferee of the business pursuant to the provisions of Article 41 of the Framework Act on National Taxes, it is required to be the tax already imposed at the time of its transfer.

(a)Article 41 of the Framework Act on National Taxes and Article 22(b) of the Enforcement Decree of the Framework Act on National Taxes;

A. Supreme Court Decision 81Nu134 delivered on December 13, 1983 (Gong1984,180) 82Nu311 delivered on April 24, 1984 (Gong1984,906). Supreme Court Decision 88Nu796 delivered on November 10, 1989 (Gong1990,38). Supreme Court Decision 87Nu174 delivered on April 12, 198 (Gong198,857) 89Nu6723 delivered on December 26, 198 (Gong190,420).

Authorized type

Head of Suwon Tax Office

Seoul High Court Decision 88Gu13245 delivered on February 9, 1990

Each appeal shall be dismissed.

The costs of appeal shall be assessed against each appellant.

We examine the Plaintiff’s ground of appeal.

(1) According to Article 41 of the Framework Act on National Taxes and Article 22 of the Enforcement Decree of the same Act, a person who comprehensively succeeds to all rights and obligations (except for obligations related to unpaid amounts) with respect to the business by workplace shall be subject to secondary tax liability as a transferee of the business. Here, a comprehensive succession to all rights and obligations relating to the business refers to a transferee’s succession to the legal status of the same degree as that of the transferor by taking over not only the transferor’s whole business facilities, but also all personal rights and obligations, such as business rights and obligations, and all rights and obligations related to such business from the transferor (see, e.g., Supreme Court Decisions 81Nu134, Dec. 13, 1983; 82Nu311, Apr. 24, 1984).

According to the reasoning of the judgment of the court below, the court below acknowledged that the plaintiff purchased an enterprise from Agman Industrial Co., Ltd. 50,000,000 won for the main purpose of manufacturing, selling, etc. of Agman Industrial Products, and acquired 50,600,000 won for a business debt of 81,60,000 won for a business debt of 81,60,000 won, and offsets the acquisition debt and the purchase-price. The court below held that the plaintiff was the business transferee of the non-party company after employing the non-party company's employees as it is in the form of new employment and completed the registration as the business owner of the non-party company. Accordingly, the court below's fact-finding and judgment of the court below are just and there is no error in the rules of evidence or incomplete hearing or insufficient reasoning, such as litigation, and there is no error in the rules of evidence or insufficient reasoning.

(2) In addition, the lower court did not go through the previous trial procedure in the part of the Defendant’s disposition of imposition of value-added tax of KRW 9,365,430 for the first period of June 16, 198 and the part of the claim for cancellation of the collection disposition of KRW 1,217,470 for the additional dues of November 25, 1988. However, in the sense of seeking cancellation of a tax disposition’s invalidation declaration, the lawsuit seeking cancellation should undergo the previous trial procedure, and thus, dismissed this part of the lawsuit by deeming it unlawful. This judgment is just and without merit, and there is no violation of the rules of evidence, such as the theory of lawsuit, or of incomplete deliberation, or of lack of reasoning.

2. We examine the Defendant’s ground of appeal No. 1.

If a reorganization disposition is taken after a tax authority imposed a tax disposition to increase it, the initial disposition shall lose its independent existence value by absorbing the reorganization disposition, and if a reorganization disposition to reduce it again takes effect only for the reduced tax amount, then the implementation of the reorganization disposition shall be judged as the object of the reorganization disposition. However, in principle, unless the grounds for illegality of the preceding disposition are common, the tax authority has already given an opportunity to review the basic facts and legal issues, and it is so harsh that a taxpayer may institute an administrative litigation against the above reorganization disposition without going through the previous trial procedure (see Supreme Court Decision 88Nu796 delivered on November 10, 1989).

In this regard, the court below's decision that the plaintiff can seek the revocation of the tax disposition notified in April 27, 198, even if it did not follow the procedure of the previous trial on June 16, 198, as long as the plaintiff had gone through the previous trial procedure for the tax disposition notified in April 27, 198, is just and there is no violation of law of incomplete trial such as the theory of lawsuit

3. We examine the defendant's second ground for appeal.

If the secondary tax liability is imposed on the transferee of the business pursuant to the provision of Article 41 of the Framework Act on National Taxes, it is the opinion of party members that it is required to be imposed at the time of transfer of the business (see, e.g., Supreme Court Decision 89Nu6723, Dec. 26, 1989; Supreme Court Decision 87Nu1174, Apr. 12, 1988).

The court below's decision is just in holding that the amount of 16,836,480 won increased by the reorganization disposition of the second half-yearly value-added tax in the year 1987 is imposed on the transferor of the business after the transfer and takeover of the above business, and the second tax liability cannot be imposed on the plaintiff who is the transferee of the business. Thus, there is no error in the misapprehension of legal principles as to the second tax liability of the transferee of the business.

4. Therefore, each appeal shall be dismissed, and all costs of appeal shall be assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Jae-seok (Presiding Justice)