Seoul High Court 2014Nu49233 ( October 16, 2014)

2013west 2166 (No. 18, 2013)

The value of the tax authority's re-appraisals by retroactive appraisal shall be equivalent to the market price as long as it is evaluated by reasonable and objective methods.

The second appraisal value by the tax authority constitutes "market price" under Article 60 of the Inheritance Tax and Gift Tax Act, as long as it has been appraised by a reasonable and objective method, and where the tax authority determines and imposes the value of donated property at the re-appraisal value by the tax authority under Article 49 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, it constitutes grounds for exemption from penalty tax due to justifiable reasons

Article 60 of the Inheritance Tax and Gift Tax Act:

Article 49 of the Enforcement Decree of the Inheritance and Gift Tax Act

2014Du44205 Revocation of Disposition of Imposition of Gift Tax

CHAPTER A

Gangwon-gu Director of the District Office

Seoul High Court Decision 2014Nu49233 Decided October 16, 2014

December 2, 2015

The part on imposition of double-paid additional tax shall be reversed, and this part of the case shall be remanded to the Seoul High Court.

The remaining appeals are dismissed.

The grounds of appeal are examined.

1. As to the grounds of appeal Nos. 1 and 2

(1) Article 49(1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 23591, Feb. 2, 2012; hereinafter “Enforcement Decree of the Inheritance Tax and Gift Tax Act”) on delegation by Article 60(2) of the Inheritance Tax and Gift Tax Act (hereinafter “Inheritance Tax and Gift Tax Act”) provides that in the case of donated property, “where there is an appraisal, etc. during the period of three months before or after the base date of appraisal, the value verified under any of the following subparagraphs shall be recognized as the market price.” In the case where there is an appraisal value assessed by a reliable appraisal institution prescribed by Ordinance of the Ministry of Strategy and Finance with respect to the pertinent property under subparagraph 2, the average value of such appraisal value: Provided, That where the relevant appraisal value falls short of the smaller of the value equivalent to 90/100 of the value of similar cases such as the publicly assessed individual land price of the land by the head of a tax office or the director of a regional tax office having jurisdiction over other appraisal

(2) On June 30, 201, the lower court acknowledged the following facts: (a) on March 23, 201, the Plaintiff reported and paid gift tax to the Defendant on the gift tax on the gift of the instant land by donation of the instant land from the GamB on March 23, 201; (b) on the ground that the assessed value of the Plaintiff was 64.6% of the publicly assessed individual land price of the instant land on the ground that the assessed value was 64.6% of the assessed individual land price of the instant land on the ground that the assessed value of the Plaintiff was donated to another two appraisal institutions, the average assessed value of the assessed value (hereinafter referred to as “Defendant assessed value”) was the donated value of the instant land; and (c) on January 1, 2013, the Defendant issued the instant disposition imposing gift tax (including an erroneous payment for negligence) on the Plaintiff.

Furthermore, the lower court determined that, inasmuch as there is no similar case value on the instant land, and the Plaintiff’s appraisal value falls short of a certain standard pursuant to the proviso of Article 49(1)2 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, the market price should be determined through re-appraisal by the tax authority. In this case, the advisory opinion by the Evaluation Deliberative Committee cannot be deemed necessary to recognize the Defendant’s appraisal value as the market price. Furthermore, even if necessary, the Defendant’s appraisal value is higher than the Plaintiff’s appraisal value as it

(3) In light of the fact that the appraisal price of a reliable appraisal institution concerning donated property may be seen as 'market price' if the value assessed in an objective and reasonable manner even if it was based on retroactive appraisal, and that the proviso of Article 49(1)2 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that the tax authority shall, in principle, request another appraisal institution to conduct appraisal in cases where the assessed value presented by a taxpayer of gift tax falls short of a certain standard. Such determination by the court below is justifiable in light of the relevant provisions and legal principles, and there is no error of law by misapprehending the legal principles concerning the procedure

2. Regarding ground of appeal No. 3

(1) The lower court determined that the part on imposition of additional tax on the disposition of this case was lawful on the ground that, in light of the fact that the additional tax on default was paid due to financial benefits for the unpaid amount due to the due date of payment, and the administrative sanctions imposed on the violation of the duty to pay the said tax, even if the amount was not paid due to the difference in the appraisal of donated property due to the difference in the relevant laws and regulations, it can be sufficiently known that the Plaintiff would be subject to gift tax by re-appraisal if the value of the Plaintiff would have been lower than the officially assessed individual land price if the Plaintiff had verified the relevant laws and regulations, the mere fact that the Plaintiff

(2) However, the lower court’s determination is difficult to accept for the following reasons.

Under the tax law, where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, the taxpayer’s intention and negligence is not considered as administrative sanctions imposed as prescribed by individual tax-related Acts. However, where there is a justifiable reason that it is unreasonable for the taxpayer to be unaware of his/her duty, and there is a circumstance that it is unreasonable for him/her to expect the performance of his/her duty, or that it is unreasonable for him/her to expect the performance of his/her duty, etc., the penalty tax may not be imposed (see Supreme Court Decision 2011Du13842, Feb. 27, 2014).

In this case, if the appraisal value of the Plaintiff falls short of a certain standard under the proviso of Article 49 (1) 2 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, it is naturally planned by the tax authority to conduct a re-appraisal at the request of the tax authority. However, the Plaintiff cannot trust the appraisal value of the Plaintiff according to the appraisal by a reliable appraisal agency. Moreover, not only the tax authority but also the person requesting re-appraisals but also the person requesting re-appraisals may have no additional tax payable if the appraisal value is higher than the re-appraisal value at the request of the tax authority. Therefore, the Plaintiff cannot be deemed to have any justifiable reason to believe that there is no additional tax payable until the tax authority conducts re-appraisals at the request of the tax authority. Therefore, even if the Plaintiff was found to have paid less than the legitimate amount of gift tax at the time of the tax authority’s request, it is unreasonable to expect the Plaintiff to pay the amount of gift tax additionally by the original due date, barring any special circumstance. Therefore, the Plaintiff cannot be deemed to have any justifiable reason for failing to neglect its duty.

(3) Nevertheless, the lower court, solely on the grounds indicated in its reasoning, determined that the part of the disposition of this case imposing an additional tax for unfaithful payment was lawful. In so doing, the lower court erred by misapprehending the legal doctrine on the scope of legitimate grounds for exempting from the additional tax.

3. Conclusion

Therefore, the part of the judgment of the court below regarding the disposition on imposition of additional dues is reversed, and that part of the case is remanded to the court below for a new trial and determination, and the remaining appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices.