National High Court Decision 2007 Deputy0797 ( October 21, 2008)

The scope of contesting the illegality of the original report or decision in the disposition of increase or correction;

In the adjustment disposition of increase which absorbs the initial return or decision, if the initial return or decision becomes final and conclusive after the lapse of the objection period, the change of the amount of tax determined by the initial return or decision shall not be allowed, and only the increased amount of tax is subject to cancellation in the adjustment disposition of increase.

The contents of the decision shall be the same as attached.

1. The instant lawsuit shall be dismissed.

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

The Defendant’s disposition of imposition of KRW 2,649,49,491 of corporate tax for the business year 2002 against the Plaintiff on December 5, 2006 and disposition of imposition of KRW 22,138,020,09 of corporate tax for the business year 2004 is revoked.

1. Circumstances of the disposition;

A. The plaintiff is a corporation that is incorporated on December 28, 2001 by dividing the genetic business sector of AA and engages in manufacturing, processing and selling of petroleum and chemical industry products. The corporate tax base for the business year 2002 is 13,792,272,317 won, 2,649,49,491 won, 2003 corporate tax base for the business year 17,625,322,875 won, 3,981,470,934 won, and 131,501,467,049 won, and 34,402,958,929 won, and paid each of the above taxes.

B. After conducting a regular investigation against the plaintiff in the business year of 2002 to 2005, the director of Busan Regional Tax Office confirmed the recognition and calculation of interest related to the provisional payment, non-deductible of paid interest, loss not exceeding the limit of entertainment expenses, illegal deduction of temporary investment tax amount, etc. and notified the defendant as taxation data on December 5, 2006. Accordingly, on December 5, 2006, the defendant issued a correction and notification of the amount of corporate tax of 4,019,324,090, corporate tax of 2002 to the plaintiff, corporate tax of 357,34,570, corporate tax of 203 to 83,562,320, corporate tax of 204 to the plaintiff (hereinafter referred to as the "each correction disposition of increase").

C. On March 2, 2007, the Plaintiff entered the difference between the book value and the recoverable value of the tangible asset as a tangible asset reduction loss and managed it as a tax reservation. While the Plaintiff succeeded to KRW 151,246,262,765 (hereinafter “instant reduced loss”) out of the said tangible asset reduction loss in the process of division as a tax reservation, it did not make any separate tax adjustment after the business year 2002, the Plaintiff again claimed that the amount of the reduced loss in this case should be considered as the disapproved depreciation amount, and that it should be confirmed within the scope of the depreciation approval approved for each business year from 2002 to 204, and that the Plaintiff filed an appeal with the National Tax Tribunal.

D. On January 21, 2008, the National Tax Tribunal rendered a decision that "the amount of reduction loss of this case managed by the plaintiff as a reservation in terms of the capital and reserve statement for the business year from 2002 to 2004 shall be deemed the amount of depreciation amount for each business year, and confirmed the amount within the scope of depreciation approval for each business year within the scope of depreciation approval for each business year, and the amount notified on December 5, 2006 shall be corrected within the scope of the corrected amount of corporate tax for each business year." On February 2, 2008, the defendant made a decision that "the correction of the tax base and tax amount shall be corrected within the scope of the corrected amount of corporate tax for each business year from 202 to 357,34,570, the amount of corporate tax for each business year from 203 to 326,320, and the amount of corporate tax for each business year from 204 to 3206, respectively (hereinafter referred to as "the correction reduction").

E. On the other hand, on April 20, 2006, the plaintiff asserted that "the amount of the reduced loss in this case should be calculated again by considering the depreciation scope as the depreciation depreciation amount, and confirmed it as losses within the scope of the approved depreciation amount for each business year of 2003, 2004." The defendant filed a request for correction against the corporate tax for the business year of 2003, 2004. As to the corporate tax for the business year of 2003, 2004, the defendant issued a notice of correction and correction by reducing each amount indicated in the "additional Tax Refund" column for "the second correction disposition" (hereinafter "the second correction disposition"). The plaintiff filed a request with the defendant for correction that the amount of the reduced loss in this case should be refunded to 12,587,068,186 won among the corporate tax for the business year of 204, which was initially reported to the defendant. However, the defendant confirmed that the reported depreciation approval (10,832,614 won and 2084 won were added to 2086.16

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, 4 (including each number), Gap evidence 3, Eul evidence 3, Eul evidence 7-1, 2, Eul evidence 4 through 6, and the purport of the whole pleadings

2. The plaintiff's master;

It is reasonable to interpret that the initial return by the Plaintiff and the revised disposition of each increase in the amount of this case, regardless of the establishment of Article 22-2(1) of the Framework Act on National Taxes, are incorporated into each disposition of increase in the amount of tax in this case, in that the initial return and the revised disposition of each increase in the amount of tax in this case are a series of taxation procedures to determine a single abstract tax liability. Therefore, it is reasonable to interpret that the initial return are incorporated into each disposition of increase in the amount of tax in this case. Therefore, the amount of the reduced amount of tax in this case, which is deemed as the disapproved depreciation amount, is recalculated within the scope

3. Whether the litigation of this case is legal; and

A. The defendant's main defense of safety

1) In the case of a claim for the revocation of a corporate tax imposition disposition for the business year 2002, the portion of the tax amount initially declared was not subject to the Plaintiff’s request for the correction of the tax base and tax amount within the period for filing a request for correction under Article 45-2(1) of the Framework Act on National Taxes, and thus, there was infinite dispute. Even if it is possible to dispute the defects of the initial return as it constitutes a case of dispute over a disposition for correction of the amount of tax absorption of the initial return, the scope that can be revoked in the appeal litigation is limited to the amount of the increased tax amount.

2) In the case of a claim for revocation of a corporate tax imposition disposition for the business year 2004, the Defendant rendered a decision to dismiss part of the Plaintiff’s claim for correction on or around March 2008, and the Plaintiff did not file a request for examination or adjudgment within the objection period. As such, the portion of the remaining tax amount which was revoked by the second reduction or correction disposition among corporate tax for the business year 2004, which was originally reported and paid, was not in dispute. Even if a person who filed the initial return can contest as it constitutes a case of dispute over a correction disposition absorbing the initial return, the scope that can be revoked in the appeal litigation is limited to the corrected amount of tax, and as long as the increased amount of tax is revoked by the first reduction or correction disposition, there is no subject of revocation.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) Part demanding revocation of disposition imposing corporate tax for the business year 2002

Article 22-2 of the Framework Act on National Taxes (amended by Act No. 6782, Dec. 18, 2002) provides that "an amendment to the original amount of tax determined under tax-related Acts shall not affect the rights and obligations relationship under this Act or other tax-related Acts with respect to the amount of tax initially determined," under the title "an amendment to the original amount of tax determined under tax-related Acts" under Article 22-2 (1) of the same Act provides that "an amendment to the original amount of tax determined under tax-related Acts shall not affect the rights and obligations relationship with respect to the original amount of tax determined." The amendment to the original amount of tax determined under the tax-related Acts does not add only the portion of tax evasion determined under the original return, but also include the increased amount of tax. The subject matter of a lawsuit to revoke the revocation of the revocation of the disposition of imposition is specified solely by the tax-related authority's decision or by the objective existence or defense of the amount of tax stated in the tax-related return on the tax base, and thus, the original amount of tax-related return or determination can be deemed unlawful after the lapse of the final decision.

On the other hand, the portion of the tax amount originally declared (2,649,49,491 won) is that the Plaintiff did not file a request for correction of the tax base and tax amount within the period for correction stipulated in Article 45-2(1) of the former Framework Act on National Taxes (amended by Act No. 7329, Jan. 5, 2005) and the change of the tax amount determined as the lapse of the period for objection is not allowed. The change of the tax amount can not be allowed. The amount increased or corrected in the disposition for correction of the corporate tax for the business year 2002 can only be subject to revocation. However, the fact that the Defendant issued the first correction disposition on the total amount of the tax amount increased due to the Plaintiff’s increase in corporate tax for the business year 202, and therefore, the correction disposition on the corporate tax for the business year 2002 was revoked by the first correction disposition.

Therefore, even though there is no increased or decreased correction disposition of corporate tax for the business year 2002, the above cancellation claim is unlawful because it is based on the premise that the increased tax amount exists.

2) The part demanding revocation of disposition imposing corporate tax for the business year 2004

On April 20, 2006, the Plaintiff filed a request for reduction or correction to the effect that corporate tax of 34,402,958,929 won, which was originally reported to the Defendant for the business year 2004, was to be reduced by 12,587,068,186 won. The Defendant issued a request for correction on December 5, 2006, but issued a first correction disposition on February 2008, upon the decision of the National Tax Tribunal, on the total amount of the increased corporate tax during the business year 2004, the first correction disposition was made. On March 2008, the Plaintiff accepted both the Plaintiff’s request for reduction or correction except for the portion arising from the excessive return, and the second correction disposition was made.

Therefore, an increase or decrease in corporate tax for the business year 2004 was revoked by the first adjustment. Although a increase or decrease in corporate tax for the business year 2004 does not exist, the above revocation claim is unlawful by determining its eligible status (In addition, even if a claim for this portion is sought to be revoked by the second adjustment of corporate tax for the business year 2004, which was originally reported and paid, the second adjustment of corporate tax for the business year 2004, which was not accepted by the second adjustment request for correction as of April 20, 206, the above third2,129,356 of the remaining tax amount can be claimed to revoke the correction request, and it cannot be claimed to revoke the remaining tax amount after the second adjustment order was revoked by the second adjustment order as requested by the plaintiff, and as a matter of principle, the tax payment obligation by the taxpayer in the return method for the remaining tax amount becomes final and conclusive, it cannot be seen that there is no error in the details of the tax return by the tax authority and the plaintiff's claim for revocation of the tax amount.

4. Conclusion

Therefore, since the lawsuit of this case is unlawful, it is decided to dismiss it. It is so decided as per Disposition.