Daejeon High Court 2009Nu131 ( November 26, 2009)

early 2006 to 2207 ( October 25, 2007)

A decision on tax investigation (prior notice of tax investigation) shall be a disposition subject to administrative litigation.

When a decision on tax investigation has been made, a taxpayer shall be legally obligated to answer tax officials' questions and to allow inspection, etc., and a decision on tax investigation shall be subject to appeal litigation by administrative action following the exercise of public authority directly affecting the rights and obligations of a taxpayer.

Article 81-4 of the Framework Act on National Taxes (Prohibition of Abuse of Right of Tax Investigation)

Article 81-7 of the Framework Act on National Taxes (Advance Notice of Tax Investigation and Request for Postponement)

209Du23617 Revocation of revocation of a decision on tax investigation.

209du23624(combined) revocation of revocation of the imposition of global income tax, etc.

KimA

Daejeon Head of the District Tax Office

Daejeon High Court Decision 2009Nu124, 131 (merged) Decided November 26, 2009

March 10, 2011

The part of the judgment of the court below against the plaintiff shall be reversed, and that part of the case shall be remanded to the Daejeon High Court.

The grounds of appeal are examined.

1. The issue of whether a certain act of an administrative agency can be a subject of an appeal cannot be determined abstractly and generally. In a specific case, an administrative disposition is an enforcement of law with respect to a specific fact conducted by an administrative agency as a public authority, which directly affects the rights and obligations of the people, in mind, with the content and purport of the relevant Act and subordinate statutes, the subject, content, form and procedure of the act, substantial relation between the act and disadvantage suffered by interested parties, such as the other party, and the principle of administration by the rule of law and the attitude of the administrative agency and interested parties related to the pertinent act, etc. (see, e.g., Supreme Court Decisions 91Nu1714, Jan. 17, 1992; 2008Du167, Nov. 18, 2010).

Article 81-4(1) of the former Framework Act on National Taxes (amended by Act No. 911, Jan. 1, 2010) provides that "tax officials shall conduct a tax investigation to the minimum extent necessary for appropriate and fair taxation, and shall not abuse the right of investigation for any other purpose, etc." while Article 81-7(1) provides that "where a tax official investigates account books, documents, and other articles, etc. for the purpose of the investigation on national tax, he/she shall notify the taxpayer subject to the investigation of the items of taxation to be investigated, period and reason for the investigation and other matters prescribed by Presidential Decree ten days prior to the commencement of the investigation: Provided, That this shall not apply where it is deemed that the purpose of investigation cannot be achieved due to the destruction of evidence, etc.

Meanwhile, individual tax laws, such as the Income Tax Act, recognize the authority to ask tax officials questions when necessary for performing their duties and to investigate or order them to submit the relevant books, documents, and other things (Article 170 of the Income Tax Act, Article 122 of the Corporate Tax Act, Article 35 of the Value-Added Tax Act). According to Article 17 of the Punishment of Tax Evaders Act, any person who makes a false statement or refuses or evades a tax official's questioning and questioning in accordance with the provisions on the right to inquire and

As such, in cases where a tax investigation is made with the authority to inquire and investigate the tax authorities for the imposition of a fine, taxpayers are legally obligated to answer questions to collect tax data of tax officials and to allow them to inspect them. A tax investigation should be conducted to the minimum extent necessary for appropriate and fair taxation. Moreover, re-investigation of the same tax item and taxable period causes serious infringement on taxpayers’ freedom of business and rights and interests, as well as the risk of arbitrary tax investigation by the tax authorities is low (see, e.g., Supreme Court Decision 2008Du10461, Dec. 23, 2010). Thus, it is necessary to prohibit taxpayers except for exceptional cases that are considerably contrary to the principle of fair taxation (see, e.g., Supreme Court Decision 2008Du10461, Dec. 23, 2010). A decision to conduct a tax investigation is more than that it is possible to dispute the decision to impose an administrative fine prior to or after the completion of the investigation to resolve disputes fundamentally through an administrative action that directly affects the public authority.

2. Nevertheless, the court below's decision to conduct a tax investigation of this case is an act that does not directly cause legal change in the legal status of the other party or related persons, and is not subject to an administrative disposition which is subject to an appeal litigation, and dismissed this part of the lawsuit. It is erroneous in the misapprehension of legal principles as to an administrative disposition which is subject to an appeal litigation, thereby affecting the conclusion of the judgment. The

3. Therefore, the part of the judgment of the court below against the plaintiff is reversed, and that part of the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices.