2020Da260902 Payment by substitute

Plaintiff

Attorney Kim Yong-ri, Counsel for the defendant-appellant

Defendant

Law Firm Hayn, Counsel for the defendant-appellant

[Defendant-Appellee] Plaintiff 1 and 3 others

Busan District Court Decision 2019Na54801 Decided August 14, 2020

July 29, 2021

The part of the judgment below against the defendant is reversed, and that part of the case is remanded to Busan District Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1.(a) Transfer income tax shall be levied on the income accruing from "transfer at a price by means of sale, exchange, investment in kind in a corporation, etc., regardless of registration or enrollment of the assets (Article 88 subparagraph 1 of the Income Tax Act)."

B. If a title truster transfers real estate to a third party and income accrued from such transfer was attributed to the title truster, under the substance over form principle under Article 14(1) of the Framework Act on National Taxes, if the title truster is only the subject of transfer, and the title trustee is not the person liable for the payment of the relevant capital gains tax. However, if the tax authority imposed a tax on the title trustee, the legal relationship between the title truster and the tax authority is established. This is a separate legal relationship from the legal relationship between the title truster and the tax authority, and even if the title truster either paid the tax in the name of the title trustee or shared the payment, the legal effect of the payment is merely attributable to the title trustee, who is the other party to the tax, and the legal relationship between the title truster and the tax authority. Accordingly, if the tax amount paid to the title trustee was paid in the name of the title trustee, but the tax amount paid in the name of the title trustee becomes invalid or cancelled, the right to claim the refund of the tax amount paid in the name of the title trustee shall be deemed to belong to the legal relationship between the title trustee and the tax authority (see Supreme Court Decision 2013.

C. Meanwhile, even if the tax authority imposed capital gains tax on a title trustee, who is not a title truster, in accordance with a title trust agreement, and accordingly the title trustee paid capital gains tax accordingly, it cannot be deemed that the title trustee has a right to claim restitution of unjust enrichment against the title truster (see Supreme Court Decisions 2018Da283773, Sept. 3, 2020; 2019Da298222, Nov. 26, 2020; 2019Da298239, Nov. 26, 2020).

2. Review of the reasoning of the lower judgment and the record reveals the following facts.

A. On January 2005, the Defendant purchased the land ( Address 1 omitted) in the name of the Plaintiff in Busan-gun, Busan-gun, (hereinafter referred to as “the land ( Address 1 omitted) and the land ( Address 2 omitted) (hereinafter referred to as “CB”) in the name of the Plaintiff. On February 28, 2005, the ownership transfer registration was completed in the name of the Plaintiff as to the land ( Address 3 omitted), the Plaintiff, Nonparty 1, and Nonparty 2 as to the land ( Address 3 omitted), and the ( Address 4 omitted) among the land under the ( Address 5 omitted). As to the land under the ( Address 5 omitted), the ownership transfer registration was completed in the name of the Plaintiff as to some portion due to exchange of co-owned property and co-owned property partition.

B. On March 12, 2010, the registration of transfer of ownership was completed in the name of the ethyl Bank Co., Ltd. (hereinafter “Selim tin”) with respect to the Plaintiff’s share in ( Address 5 omitted) land (hereinafter “instant transfer”).

C. On June 28, 2012, the Plaintiff was convicted of the crime that “the Plaintiff evaded KRW 781,309,950 of the capital gains tax for the year 2005 due to the resale gains by means of the resale of part of the land under Section B to Nonparty 3 and Nonparty 4 without completing the registration of ownership transfer on the said land, and without completing the registration of ownership transfer on the said land, the Plaintiff was found guilty of having evaded KRW 781,309,950 according to the resale gains.” The judgment became final and conclusive.

D. On November 28, 2006 and December 29, 2006, the Plaintiff paid the capital gains tax, etc. for the year 2005 imposed by designating the Plaintiff as the person obligated to pay the said criminal facts as the grounds for taxation.

E. Around July 2012, the head of the Suwon District Tax Office calculated KRW 226,062,290, out of the capital gains tax for the year 2005 as a refund, and then calculated KRW 43,022,840, out of the sum of the above amount and the additional tax for refund KRW 52,965,530, which is the sum of the said amount and the additional tax for refund, and refunded the remainder to the Plaintiff on July 2012.

F. In the instant case, the Plaintiff demanded that the amount appropriated from the refund be paid in advance on the ground that he/she had the obligation to pay KRW 43,022,840 appropriated to the transfer income tax from an occasional amount in July 2012.

3. Examining these facts in light of the legal principles as seen earlier, the refund amount out of the capital gains tax for year 2005, as a direct party to the legal relations with the tax authority, is reverted to the Plaintiff, who is the title truster having the legal effect of paying the tax amount. Moreover, even if the refund amount reverted to the Plaintiff was appropriated for the capital gains tax imposed on July 2012 under the Plaintiff’s name and such transfer income tax was paid, the Defendant, the title truster, is still liable to pay the said capital gains tax to the tax authority, and thus, it cannot be deemed that the Defendant obtained unjust enrichment that the Defendant was exempted from its considerable liability for payment due to the appropriation of the refund amount. Accordingly, the Plaintiff

Nevertheless, the lower court, on the premise that the refund amount of the capital gains tax for the year 2005, reverted to the Plaintiff was appropriated for the occasional capital gains tax in July 2012, and that the Defendant obtained unjust enrichment that the Defendant was relieved of its considerable liability for payment, determined that the Defendant was obligated to return KRW 43,022,840, which was appropriated to the Plaintiff as the capital gains tax for the occasional capital gains tax in July 2012. In so doing, the lower court erred by misapprehending the legal doctrine on the obligation to pay capital gains tax and the return of unjust enrichment,

4. Therefore, without further proceeding to decide on the remainder of the grounds of appeal, the part against the defendant among the judgment below is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating

Justices Noh Tae-tae

Justices Lee Ki-taik

Justices Park Jung-hwa

Justices Kim Jong-soo