KSS Shipping Co., Ltd. (Law Firm Rate, Attorneys So-young et al., Counsel for the plaintiff-appellant)

Sejong director of the tax office (Attorney Lee Jae-soo, Counsel for defendant-appellant)

December 19, 2008

Seoul Administrative Court Decision 2005Guhap18594 decided April 21, 2006

1. The plaintiff's appeal is dismissed.

2. The costs of appeal shall be borne by the Plaintiff.

The judgment of the first instance shall be revoked. The part of the corporate tax attributed to the plaintiff on January 16, 2004 for the business year 5,211,365,618 won which exceeds 352,238,003 won and the defense tax exceeding 88,059,50 won out of 1,302,841,404 won shall be revoked, respectively.

1. Details of the disposition;

A. On July 1, 1989, the Plaintiff: (a) conducted a revaluation of assets on the premise that stocks are listed for the first time pursuant to Article 56-2 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 3939, Nov. 28, 1987); and (b) reported and paid corporate tax for the business year 1989, without including the net spread of 14,724,629,134 won in gross income pursuant to Article 15(1)5 of the Corporate Tax Act.

B. The Act on the Regulation of Tax Reduction and Exemption and the Enforcement Decree thereof, which provide for special cases in the case of corporate disclosure, have been amended several times, and the listing period of stocks has been finally extended until December 31, 2003. The defendant, on the ground that the plaintiff did not list the stocks by December 31, 2003, which is within the listing period, pursuant to Article 23(1) of the Addenda of the former Tax Reduction and Exemption Control Act (amended by Act No. 4285, Dec. 31, 1990; hereinafter the same shall apply), deemed the revaluation margin as a voluntary evaluation difference, not a revaluation difference under the Assets Revaluation Act, not a revaluation difference under the Assets Revaluation Act, and included it in the gross income in the calculation of the corporate tax base and tax amount for the business year 1989, on January 16, 2004, determined that the plaintiff included the corporate tax amount of 14,014,222,100 won for the business year 1989.

C. On March 5, 2004, the Plaintiff filed a national tax adjudication on March 5, 2004. On March 28, 2005, the National Tax Tribunal rendered a decision to rectify the amount of tax by deeming that neither underreporting nor underpayment of corporate tax nor underpayment of corporate tax from the defense tax was imposed on March 28, 2005. Accordingly, on March 30, 2005, the Defendant corrected the amount of the initial decision to KRW 5,211,365,618, and the defense tax to KRW 1,302,841,404, respectively (the Defendant imposed corporate tax on the Plaintiff on January 16, 2004 and the defense tax amount to KRW 5,211,365,618, which were corrected as above, and KRW 1,302,841,404, respectively, to be subject to the imposition of tax in this case).

【Ground of recognition】 The fact that there has been no dispute, Gap evidence 1-2, Eul evidence 1-1-9, Eul evidence 2-1 through 9, Eul evidence 2-1 through 13, and the purport of whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff asserts that the disposition of this case is unlawful for the following reasons.

(1) Article 138 of the Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 17458, Dec. 31, 2001) which is applied by the Defendant in rendering the instant disposition is Article 23(1) of the Addenda of the former Regulation of Tax Reduction and Exemption Act and Article 138 of the Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 17458, Dec. 31, 2001). The former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4666, Dec. 31, 1993) has lost its effect due to the Regulation of Tax Reduction and Exemption Act enforced as of January 1, 1994. Since the former Enforcement Decree of the Restriction of Special Taxation Act, which is a subordinate provision, has no effect, is

Since the former Regulation of Tax Reduction and Exemption Act has no effect from January 1, 1994, the provisions on the basis of the disposition of this case can be the Enforcement Decree of the Regulation of Tax Reduction and Exemption Act amended by Presidential Decree No. 13202, Dec. 31, 1990. However, Article 66 of the Enforcement Decree of the Regulation of Tax Reduction and Exemption Act provides that the period of listing shall be five years from the date of revaluation, and according to this, the defendant did not impose a tax for five years, which is the exclusion period stipulated in Article 26-2 of the Framework Act on National Taxes, from the date when national taxes may be imposed (the date following the five years after the date of revaluation, July 1, 1989). Thus, the exclusion period of the disposition of this case was imposed as of July 1, 199.

Article 23 (1) of the former Addenda to the Regulation of Tax Reduction and Exemption Act provides for special cases of revaluation at the time of disclosure of a company in order to promote the capital market. In light of the legislative intent of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 3939 of Nov. 28, 1987) and the former Addenda to the Regulation of Tax Reduction and Exemption Act (amended by Act No. 3939 of Nov. 28, 1987), it should be limited to cases where stocks are not listed due to reasons attributable to taxpayers. However, each listing attempt in 190, 1991, 192, and 2002 is different from the Securities Supervisory Board on the depreciation calculation method. Each listing attempt in 190, 1991, 192, and 2002, from the perspective of the Securities Supervisory Board on the stock market due to the failure of the listed agenda of the Securities Supervisory Commission, withdrawal of listing due to the price increase, and it does not meet the listing requirements due to lack the listing requirements.

Applicant The reason that the Plaintiff initially assessed its assets is due to the failure to comply with the government authority’s listing promotion policy and trust that the listing requirement can be satisfied without any difficulties. Moreover, the Plaintiff’s extension of the listing period through the extension of the listing period has been trusted that the extension of the listing period would not be subject to taxation even though there was no change in particular circumstances even though it was trusted that the extension of the listing period would not be subject to taxation, and the instant disposition of taxation was unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Determination on the first argument

A) Article 56-2 of the former Act on the Regulation of Tax Reduction and Exemption (amended by Act No. 3939, Nov. 28, 1987; hereinafter “former Article 56-2”) is newly established in Article 56-2 of the Securities and Exchange Act (amended by Act No. 3939, Nov. 28, 1987; hereinafter “former Article 56-2 of the Securities and Exchange Act) in order to list stocks at the Korea Stock Exchange for the first time under the provisions of Articles 88(1) of the Assets Revaluation Act, notwithstanding the provisions of Articles 4 and 38 of the Assets Revaluation Act, the date of revaluation shall be the first day of each month in order to support the sound development of the capital market through the expansion of supply of superior stocks. However, in cases where a corporation which conducted revaluation fails to list stocks at the Korea Stock Exchange within 2 years from the date of revaluation, the revaluation already conducted shall not be deemed revaluated under the Assets Revaluation Act (amended by Act No. 4831, Dec. 2, 1994).

Article 56-2 of the former Regulation on Tax Reduction and Exemption (amended by Act No. 4285 of Dec. 31, 1990) of the Act on the Regulation of Tax Reduction and Exemption (amended by Act No. 4285 of Dec. 31, 1990) was deleted, and Article 23 of the Addenda to the former Regulation on Tax Reduction and Exemption (amended by Presidential Decree No. 13202 of Dec. 31, 1990) of the Enforcement Decree of the Act on the Regulation of Tax Reduction and Exemption (amended by Act No. 13202 of Dec. 31, 1990) of the Act on the Regulation of Tax Reduction and Exemption (amended by Presidential Decree No. 1486 of Dec. 28, 1993) of the Act on the Regulation of Tax Reduction and Exemption (amended by Act No. 13284 of Dec. 16, 193) of the Act on the Regulation of Tax Reduction and Exemption.

After that, Article 2 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4666, Dec. 31, 1993; hereinafter “former Regulation of Tax Reduction and Exemption Act”) which was amended by Act No. 4666, Jan. 1, 1994 (hereinafter “Special Regulation of Tax Reduction and Exemption Act”) provides that “The amended Provisions of this Act concerning income tax and corporate tax shall apply from the taxable year beginning after this Act enters into force, starting from the taxable year starting for the first time after this Act enters into force” while there were no separate transitional provisions regarding the previous Article 56-2

Meanwhile, even after the enforcement of the Special Act on the Regulation of Tax Reduction and Exemption, etc., the former Enforcement Decree of the Special Act on the Regulation of Tax Reduction and Exemption still provides for “8 years” (Article 109 of the Enforcement Decree of the Regulation of Tax Reduction and Exemption Act amended by Presidential Decree No. 14084, Dec. 31, 1993); “10 years” (Article 109 of the Enforcement Decree of the Regulation of Tax Reduction and Exemption Act amended by Presidential Decree No. 15197, Dec. 31, 1996), “1 year” (Article 138 of the Enforcement Decree of the Restriction of Tax Reduction and Exemption Act amended by Presidential Decree No. 15976, Dec. 31, 198), “13 years” (the Enforcement Decree of the Restriction of Special Taxation Act amended by Presidential Decree No. 1693, Oct. 10, 200); and “13 years” (the Enforcement Decree of the Restriction of Special Taxation Act amended by Presidential Decree No. 1381, Dec. 31, 20138, 1300.

B) If there is no express measure to amend or delete the transitional provision of the Addenda to the previous Act at the time of the amendment, the transitional provision of the Addenda does not become null and void as a matter of course, even though there is no express provision to amend or delete the transitional provision of the previous Act, but the transitional provision of the previous Act shall be deemed null and void as well as the provisions of the Addenda to the previous Act, in principle, since the transitional provision of the previous Act shall be deemed null and void as well as the provisions of the previous Act shall be deemed null and void, in special circumstances (see, e.g., Supreme Court Decision 2001Du1168, Jul. 26, 2002). The term "special circumstance" referred to in this context includes not only a case where the previous Act has a separate provision that continues to apply the transitional provision of the previous Act, but also an exceptional circumstance that can be deemed null and void without such provision. In this case, the determination of whether there is an exceptional circumstance in light of the overall legislative intent, progress and existence of the previous Act and its overall legislative structure.

However, with the removal of the former provisions of Article 56-2, which are the special provisions for asset revaluation, the supplementary provisions of the Act on the Regulation of Tax Reduction and Exemption, the effect of asset revaluation (paragraph (1)) at the time of listing and the time of cancellation for the corporation to ex post facto regulate only the corporation which has already conducted asset revaluation under the above provisions, and the effect thereof (Paragraph (2) at the time of cancellation for the corporation’s asset revaluation (see, e.g., Paragraph (1)). Since the special provisions of the supplementary provisions of the Act on the Regulation of Tax Reduction and Exemption for Special Cases are specifically delegated to the Presidential Decree only for the time limit for listing, even if there are no transitional provisions for continuing application of the supplementary provisions of the Act on the Regulation of Tax Reduction and Exemption for Special Cases for Asset Revaluation, the special provisions of the supplementary provisions of the Act on the Regulation of Tax Reduction and Exemption for Special Cases are deemed not to have a separate transitional provisions for this case’s disposal. The new provisions of the supplementary provisions of the Act on the Regulation of Tax Reduction and Exemption for Special Cases, which do not apply the previous provisions of Tax Reduction and Exemption Act on the Assets Revaluation.

C) The disposition of this case based on the supplementary provision of this case is legitimate, and the Plaintiff’s assertion that the supplementary provision of this case is invalid is without merit.

2) Determination on the second argument

A) Article 26-2 of the Framework Act on National Taxes provides, in principle, that the exclusion period for national taxes, other than inheritance tax and gift tax, shall be five years from the date on which national taxes can be imposed.

According to Article 9(2) of the former Corporate Tax Act and Article 12(1)5 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14468 of Dec. 31, 1994), profits from voluntary evaluation of assets not under the Assets Revaluation Act shall be included in the gross income in calculating the income of the relevant corporation. However, profits from voluntary evaluation of assets under the Assets Revaluation Act shall not be included in the gross income under Article 15(1)5 of the former Corporate Tax Act, but if a corporation which conducts asset revaluation under the former provisions of Article 56-2 fails to list its stocks by December 31, 2003, which is the “period determined by the Presidential Decree” under Article 56-2(1) of the former Corporate Tax Act, the date of revaluation should be included in the gross income only when the assets revaluation is not deemed revaluation under the Assets Revaluation Act. Therefore, even if the relevant corporation did not list its stocks before the arrival of the aforementioned period, it shall be deemed that the pertinent business year includes 10 years’ income amount from the pertinent provision of the business year.

B) Therefore, the instant disposition taken on January 16, 2004 is extremely apparent that it was taken within five years from January 1, 2004, the starting date of the exclusion period, and thus, the Plaintiff’s assertion against this is without merit.

3) Judgment on the third argument

A) Article 23(1) of the former Addenda to the Regulation of Tax Reduction and Exemption Act provides that “only where stocks are not listed on the Korea Stock Exchange within the period prescribed by the Presidential Decree from the date of revaluation, revaluation already conducted shall not be deemed revaluation under the Assets Revaluation Act,” and does not stipulate “where stocks are not listed, there shall be a cause attributable to a taxpayer” as a premise for not listing stocks. Thus, the Plaintiff’s assertion against this is without merit

B) Even if the above provision is limited and interpreted to the extent that a taxpayer fails to list due to a cause attributable to him/her, it shall not be deemed an assessment under the Assets Revaluation Act, in full view of the following circumstances, even if the government has strictly demanded the listing requirement of the stock company on the ground of excessive supply of the stock market, such circumstance alone cannot be readily concluded that the failure to meet the listing requirement is not attributable to the Plaintiff’s cause attributable to the Plaintiff. Therefore, the Plaintiff’s assertion

(1) According to the evidence Nos. 8 through 14, the plaintiff filed an application for registration of securities with the Securities Supervisory Board for the listing of shares in 1990, but the result of occasional supervision revealed that there was a window dressing accounting, such as understating the depreciation costs of the plaintiff company's audit report, etc., and eventually failed to list shares at the time. According to the above facts, according to the above facts, it cannot be deemed that the plaintiff was not responsible for the non-listed, and there is insufficient evidence to acknowledge that the testimony of the non-party witness and the non-party witness at the trial did not constitute a cause attributable to the plaintiff in 190, and there is no other evidence to prove otherwise.

(2) As to the fact that the Securities Supervisory Commission failed to list the Plaintiff because it failed to submit the Plaintiff’s listing proposal as the Plaintiff’s agenda due to the decline in the stock price in 191, the Plaintiff’s assertion is not sufficient to recognize only the Nonparty’s testimony of the Nonparty witness as stated in the evidence Nos. 24, 25, 27, 29, and 29, and the Nonparty’s testimony of the Nonparty witness at the trial. Therefore,

(3) As to the fact that the application for listing was withdrawn in 1992 and that it was not listed due to the difference with the main agent of the public offering in 2002, it cannot be said that there was no reason attributable to the Plaintiff for failure to list, even if the Plaintiff’s assertion on domestic affairs is recognized.

4) Judgment on the fourth argument

As seen earlier, the Enforcement Decree of the Regulation of Tax Reduction and Exemption Act and the Enforcement Decree of the Restriction of Special Taxation Act were amended several times to extend the listing period of stocks by taking into account the ripple effect on the stock market through excessive supply of stocks through the disclosure of the company. On the other hand, even if the listing period has been extended for several years under the provisions of the Special Regulation of Tax Reduction and Exemption Act, there is no trust relationship that the listing period will be extended continuously and regularly in the future or would not be deemed to have been formed between the Plaintiff and the Defendant that would not impose corporate tax under the former Regulation of Tax Reduction and Exemption Act on the corporation which has conducted asset revaluation based on the special special rule on revaluation at the time of the disclosure of the company, and therefore, even if the listing period has not been extended after setting the listing period until December 31, 2003 in the Enforcement Decree of the Special Regulation of Tax Reduction and Exemption Act as amended on December 31, 201, the Plaintiff cannot assert the violation of the good faith principle. Therefore, the Plaintiff’s assertion contrary to this is without

3. Conclusion

Therefore, the plaintiff's claim of this case seeking revocation on the premise that the disposition of this case is unlawful shall be dismissed as it is without merit, and the judgment of the court of first instance is just in this conclusion. Thus, the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.

[Attachment]

Judges Choi Byung-su (Presiding Judge)