ELB Co., Ltd. (Attorney Kim Young-soo, Counsel for the plaintiff-appellant)

Head of Yeongdeungpo Tax Office

October 9, 2002

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff.

The defendant revoked the disposition of imposition of corporate tax of KRW 3,596,390 for the business year of 1998 against the plaintiff on July 9, 2002 and corporate tax of KRW 242,157,89 for the business year of 199.

1. Details of the disposition;

The following facts do not conflict between the parties, or can be acknowledged by comprehensively taking into account the whole purport of the pleadings as stated in each of Gap evidence 1-1, 2-2, Eul evidence 1-1, 2-2, Eul evidence 2-1, 2-3, Eul evidence 4, Eul evidence 5-1 through 3, and Eul evidence 6-1 through 3.

A. When the Plaintiff Company transferred real estate listed in the separate sheet Nos. 1, 286,289,000 won (land 34,739,162 won + building 541,549,838 won) to its employees in 198, the Plaintiff Company did not deliver account statements equivalent to KRW 359,639,139 among them. Moreover, the Plaintiff Company did not submit account statements for the supply price of KRW 145,630,000, the supply price received from the Parkwon-won Patent Office. The Plaintiff Company did not submit account statements for the individual purchaser’s purchase price of KRW 24,215,768,640 (land 11,277,407,408 won + building 12,38,361,461,498 won) in total to its employees in the same list No. 1999, Mar. 1, 198.

B. As to the failure to issue invoices for 1998 business year and to submit invoices for individual suppliers, the Defendant received provisions of Article 41(14)1 and 2, Article 66(1) and (2) of the former Corporate Tax Act (amended by Act No. 5581, Dec. 28, 1998; hereinafter “198 Corporate Tax Act”) concerning failure to receive invoices for 1998 business year and to submit invoices for 199 business year and aggregate invoices for individual suppliers, the Defendant did not receive invoices for 96(9)1 and 2, Article 66(1) and (3) of the former Corporate Tax Act (amended by Act No. 6558, Dec. 31, 201; hereinafter “199 Corporate Tax Act”) from the head of the regional tax office having jurisdiction over the amount of additional taxes imposed on the Plaintiff for 190 percent of the total amount of supply for goods and for 299 years, and notified the Plaintiff of the amount of additional taxes for 190 percent 196.7.98

(c) Object of adjudication;

원고는 위 각 가산세 중 계산서 미교부에 해당하는 1998사업연도 귀속 법인세 3,596,390원(5,052,690원-145,630,000원/100)과 1999사업연도 귀속 법인세 242,157,890원(≒243,744,080원-158,639,849원/100)에 대하여만 불복하고 있으므로, 이 부분을 이 사건 심판의 대상으로 하면서 이하 ‘이 사건 처분’이라고 한다.

2. Whether the instant disposition is lawful

(a) Related Acts and subordinate statutes;

It is as shown in the attached Table related statutes.

B. The plaintiff's assertion

For the following reasons, the instant disposition is unlawful.

(1) In light of the following, the provisions of the Corporate Tax Act of this case violate the principle of guarantee of property rights under Article 23(1) of the Constitution and the principle of excessive prohibition under Article 37(2) of the Constitution, and even if not, there are justifiable grounds for not imposing additional tax on the Plaintiff.

As part of corporate restructuring, the Plaintiff Company transferred each real estate listed in the separate sheet (hereinafter “instant real estate”) to its existing employees as part of corporate restructuring, and most of the national housing scale is exempt from value-added tax. The Plaintiff Company prepared account books by double entry; thus, since it introduced the account books due to the possibility of omitting sales, no additional tax was imposed on non-delivery since November 29, 196, and only amended the law on December 30, 1996, it was defined that the provision was enforced after public relations for a long time in order to protect the taxpayer’s trust. However, it is unclear whether the land is included in the concept of “goods” under the provisions of the Corporate Tax Act, and the wording itself does not know that the Plaintiff Company is subject to the issuance of account statements and receipts, and the Plaintiff Company did not issue the account books to its employees, and it did not require the Plaintiff Company to submit the account books to transfer real estate, and thus, it did not require the Plaintiff Company to submit the account books to the National Tax Service, and it did not require the issuance of the account sheets to be included in the total of 20.

(2) The Plaintiff Company’s supply of the instant real estate to its employees constitutes grounds for issuing receipts under Article 211(2) of the Enforcement Decree of the Income Tax Act, and thus, cannot impose additional tax pursuant to the issuance of invoices.

C. Determination

(1) Determination on the part of the Plaintiff’s assertion (1)

According to the provisions of the Corporate Tax Act of this case, where a business operator supplies goods or services, the business operator shall deliver an invoice and collect penalty taxes if the business operator violates the provisions of the Corporate Tax Act. The purport of the corporate tax law lies in preventing tax evasion and facilitating tax administration through mutual verification of transaction relations through the organic relation between the total sum table of accounts for sales and individual suppliers and the supplier submitted by the supplier and the supplier.

In addition, where a corporation has gains on transfer from the transfer of land, buildings, rights to real estate, stocks or equity shares, it becomes an income for each business year and becomes a taxable unit of corporate tax under the Corporate Tax Act as well as special surtax under the Corporate Tax Act (Article 59-2, Article 99 of the Corporate Tax Act). Meanwhile, where a tax invoice under the Value-Added Tax Act is issued, it shall not be required to submit an account statement under the Corporate Tax Act (Article 66(3), Article 66(3), Article 121(4) of the Corporate Tax Act, Article 199 of the Value-Added Tax Act), and the Value-Added Tax Act provides that where the corporation supplies goods or services, it shall prepare and deliver a tax calculation or receipt, and require the corporation to submit a sales and aggregate tax invoice (Articles 16 and 20), and in case of land, it also means that the special surtax is subject to tax exemption under the Value-Added Tax Act (Article 12(1)2).

On the other hand, the transfer value of land, etc. included in the income amount of a corporation in the business year shall be the actual transfer amount, and the transfer value of land, etc. which is the tax base of special surtax shall be the amount obtained by deducting the acquisition value, etc. from the transfer value. However, only when the transfer value is unclear, the standard market value at the time of transfer is the transfer value (Article 59-2, Article 99 of the Corporate Tax Act), and the taxation data to be collected through the obligation to deliver account statements under the provisions of the Corporate Tax Act are related to the actual transfer amount or the standard market value. On the other hand, the tax base of local taxes, such as the acquisition tax and registration tax, collected through the real estate registration procedure, shall be reported by the acquisitor, etc., but if there is no indication of the reported or reported value or if the reported value falls short of the standard market value of local tax (Articles 11 and 130 of the Local Tax Act). As a result, the actual transaction price of the so-called taxable data submitted by the person liable to pay special surtax is ordinarily the transfer value.

Furthermore, according to Articles 59-2(6) and 199(6) of the Corporate Tax Act and Article 59-2(6) of the 198 Corporate Tax Act, when calculating gains on transfer of land, etc. which are the tax base of special surtax, the tax authority needs to collect taxation data on the special surtax as long as the balance has already been transferred in relation to the special surtax, even if the ownership transfer registration was not completed yet, since the payment was not yet settled. Even if a corporation bears the obligation to submit the tax base and tax amount of special surtax, it is only intended to investigate and confirm whether the corporation, which is the taxpayer, satisfies the taxation requirements of the special surtax, and to report the tax base and tax amount by applying the relevant tax law. The imposition of the obligation to deliver the special surtax is against the purpose of having the tax base and tax amount itself prepare and deliver the invoice, which is the data that can serve as the basis of the taxation at the time of the transaction, and its purport is different from the purpose of the provision in order to keep the basis for the transaction subject to taxation by preparing and delivering the account statement, its name and registration number.

The plaintiff asserts that the Corporate Tax Act was amended by Act No. 6558 of Dec. 31, 2001 to the effect that it was an outcome of recognizing illegality of the above provision on the ground that the system was abolished. However, according to the above amended Act, there is no change in the fact that where a corporation supplies goods or services, it shall be calculated or received as prescribed by the Presidential Decree (Article 121(1)), but it shall not apply to cases prescribed by the Presidential Decree where it is deemed inappropriate to issue invoices, etc. such as sale of real estate (Article 121(4)). In light of the legislative intent of the above system, it is difficult to conclude that the above amended provisions alone contain unconstitutional elements only with the above amended provisions in light of the legislative intent of the above system, but rather, it seems that the purpose of the amendment is to promote the international competitiveness of a corporation through the reduction of corporate tax rate and to strengthen the need to issue additional taxes to the land through the expansion of economic potential through the removal of buildings, etc. (Article 164(3) of the Enforcement Decree) of the Corporate Tax Act).

Meanwhile, in order to facilitate the exercise of taxation rights and the realization of tax claims, the additional tax system under the tax law is an administrative sanction imposed as prescribed by the Act in cases where a taxpayer violates a return, tax liability, etc. under the tax law, and the taxpayer's intention or negligence is not considered. It does not constitute a justifiable ground for rejecting additional tax (see Supreme Court Decisions 2000Du1652, Feb. 8, 2002; 9Du3324, Sept. 14, 2001; 98Du16750, Sept. 17, 199; 98Du16750, Sept. 17, 199; hereinafter referred to as "goods"). In light of the fact that the provision of the Corporate Tax Act provides for "goods" as the object of tax exemption, the general concept of goods and intangible goods having property value and the method of imposing additional tax can be prepared in accordance with the calculation statement or receipt, etc., and it does not include the requirements and methods of imposing additional tax in its own account statement or receipt.

In light of the above, the provision of the Corporate Tax Act of this case imposing an obligation to issue invoices at the time of trading land, etc. of a corporation is to seek the realization of the underlying taxation, the cultivation of tax bases, the prevention of tax evasion, and the facilitation of tax administration, and the appropriateness of the means to realize this purpose as well as the legitimacy of the purpose. The imposition of an amount equivalent to 1/100 of the value of supply should be imposed as an additional tax for the breach of such obligation, and it cannot be readily concluded that the sanction is particularly heavy compared to the additional tax for the return, entry failure, underreporting, the additional tax for underreporting, and the additional tax for late payment, etc. as provided in the same Act, unlike other goods, there is no reason to set the additional tax rate in the case of real estate for land, etc., and therefore, the provision of the Corporate Tax

Therefore, the provision of the Corporate Tax Act cannot be deemed to violate the provision on property rights guarantee under the Constitution or the principle on excessive prohibition, and further, it cannot be said that there is a justifiable reason for the Plaintiff to be unable to impose penalty tax.

(2) Judgment on the part of the plaintiff's assertion (2)

As stipulated in the above relevant laws, when an entrepreneur supplies goods or services, he/she is entitled to issue a receipt instead of an invoice exceptionally while issuing an invoice in principle. This is mainly limited to a business that supplies goods or services to consumers and its scope of the entrepreneur’s financial and insurance business, business service, educational service business, health and social welfare business, social and private service business, home-related service business, and other similar business, which are either impossible or considerably difficult to issue an invoice. As such, the Plaintiff Company is primarily aimed at manufacturing and selling electronic equipment, such as electronic, telecommunications, electricity, and other machinery and appliances, and thus, it cannot be deemed to be subject to the above issuance of a receipt (see the certified copy of the register). Thus, the above assertion

(3) Sub-decisions

The instant disposition is lawful.

3. Conclusion

The plaintiff's claim seeking the cancellation of the disposition of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Judges Kang Young-ho (Presiding Judge)