Medical Corporation Eul District Hospital (Law Firm Squa, Attorneys Soh-kick et al., Counsel for the defendant-appellant)

The director of the tax office

February 15, 2013

1. The Defendant’s imposition disposition of KRW 400,262,724 of corporate tax for the business year 2005, March 29, 201 against the Plaintiff, the imposition disposition of KRW 276,133,590 of corporate tax for the business year 2006, May 12, 2011, the imposition disposition of KRW 252,812,058 of corporate tax for the business year 2007, and the imposition disposition of KRW 227,475,159 of corporate tax for the business year 208, each of which exceeds KRW 118,645,144 of corporate tax for the business year 208.

2. The plaintiff's remaining claims are dismissed.

3. The costs of lawsuit shall be borne by the defendant.

The Defendant’s imposition of KRW 145,895,766 of corporate tax for the business year 2005, March 29, 201, which was imposed by the Plaintiff on the Plaintiff, exceeds KRW 104,295,60 of the imposition of KRW 380,429,250 of the imposition of KRW 380,429,250 of the imposition of KRW 836,058,850 of the imposition of KRW 836,246,792 of the corporate tax for the business year 2005, and KRW 252,680,190 of the imposition of KRW 143,850 of the imposition of KRW 380,250 of the imposition of corporate tax for the business year 2006, respectively, shall be revoked.

1. Details of the disposition;

A. On March 28, 1967, the Plaintiff is a medical corporation established in Jung-gu, Seoul ( Address 2 omitted) as its principal office. On January 3, 1995, the Plaintiff established the Nowon-gu, Seoul ( Address 1 omitted) Hospital, a branch office, in Nowon-gu, Seoul ( Address 1 omitted).

B. The Plaintiff did not apply the temporary tax credit for investment, and reported and paid corporate tax for the business year 2005 or 2007. The Plaintiff filed a request for rectification on or around March 2007, and received a refund equivalent to the temporary investment tax amount on or around November 2007. The Plaintiff reported and paid corporate tax for the business year 2008 by applying the temporary tax credit for investment.

C. On March 29, 2011, the Defendant corrected and notified the Plaintiff of the corporate tax of KRW 546,158,490 (including additional tax), corporate tax of KRW 380,429,250 (including additional tax), corporate tax of May 12, 201, corporate tax of KRW 336,058,850 (including additional tax) for the business year of 2007, and corporate tax of KRW 252,680,190 (including additional tax) for the business year of 2007, respectively, on the ground that “investment in the Labor-Management Hospital is not subject to temporary tax credit for investment.”

D. The Plaintiff filed a request for adjudication on June 20, 201. On April 20, 2012, the Tax Tribunal rendered a decision that “The part of the erroneous payment for arrears among the correction and notification as of March 29, 201 and May 12, 201, has been revoked, and the remainder of the claim has been dismissed.” Accordingly, the Defendant revoked and refunded the part of the erroneous payment for arrears among the correction and notification as of March 29, 201 and May 12, 201 to the Plaintiff (hereinafter “instant disposition”).

(e) The calculation details of the tax amount for the business year 205 through 2008 shall be as shown in the attached Table.

[Ground of recognition] Evidence Nos. 1 through 7, Evidence Nos. 1 and 2 (including paper numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) The establishment of a Nowon-gu Hospital constitutes a case where a national under Article 130(1) of the Restriction of Special Taxation Act (amended by Act No. 6359, Dec. 29, 2001; hereinafter “the Restriction of Special Taxation Act”) newly opens a place of business in the Seoul Metropolitan area after January 1, 1990, and Article 22 of the Addenda (hereinafter “the Addenda of this case”) provides that “the part concerning a place of business in the amended provisions of Article 130(1) shall be applied from the first commencement of business by establishing a new place of business in the Seoul Metropolitan area after January 1, 2002.” Thus, it shall be determined that the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Act No. 6359, Dec. 29, 2001; hereinafter “the amended by the Restriction of Special Taxation Act”) newly opens a new place of business in violation of Article 130(1)1 of the Enforcement Decree of the same Act (hereinafter “the amended by the Restriction of Special Taxation Act”).

Therefore, the establishment of the Nowon-gu Hospital is not subject to the case of a national starting a business in the Seoul Metropolitan area after January 1, 1990, and it is not subject to the case of a temporary investment credit. Therefore, the disposition of this case, which is contrary to the premise, is unlawful.

(2) Even if the Defendant is excluded from the eligibility for temporary tax credit, the instant disposition was unlawful as it was against the independency of the administrative disposition, which was taken on the ground that the Plaintiff’s claim for correction of corporate tax for the business year 2005 to 2007 was accepted and refunded, but was excluded from the eligibility for temporary tax credit again.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

(1) As to the underlying law

(A) Location of the issue

Article 130(1) of the Addenda of the instant case provides that “The part concerning the place of business among the amended provisions of Article 130(1) shall apply from the first place of business in the Seoul Metropolitan area after January 1, 2002.” Therefore, whether the Addenda of the instant case becomes effective following the amendment of the Restriction of Special Taxation Act, and whether the amendment of Article 130(1) of the Restriction of Special Taxation Act (amended in 2001) provides that “the case where a new place of business commences the business after establishing a new place of business” is revised. In other words, if the Addenda of the instant case becomes null and void or “the case where a new place of business commences the business after establishing a new place of business,” the amendment of Article 130(2) of the Addenda of the Restriction of Special Taxation Act (amended by Act No. 8827, Dec. 31, 2007) was excluded from the tax credit for the temporary investment under Article 130(1) of the Addenda of the Special Taxation Act (amended by Act No. 20131, Dec. 27, 201, 20087.

(B) Whether the invalidation is invalidated

1) There is a partial amendment and a partial amendment, and the partial amendment is divided into absorption method (when an amendment of the existing Act and subordinate statutes which add, amend, or delete part of the existing Act and subordinate statutes has been established and implemented, the contents of the amendment are absorptiond into the contents of the existing Act and subordinate statutes) and identification method (after an amendment of the existing Act and subordinate statutes which add, modify, or delete part of the existing Act and subordinate statutes has been established and implemented, it is not absorption into the existing Act and subordinate statutes are independent of the existing Act and subordinate statutes, and the existing Act and subordinate statutes exist independently). Since Korea takes the partial amendment method, barring any special circumstance such as where a transitional provision of the Addenda itself explicitly amends, deletes, or it becomes invalid or contradictory, or where there is a new supplementary provision in lieu of the previous Act and subordinate statutes (see Supreme Court Decision 95Nu2746, Dec. 22, 1995). As such, Korea takes the partial amendment method, in principle, it still remains effective as independent regulations (see Supreme Court Decision 95Nu2746, etc.

2) Since the enactment of the Addenda to the instant case, the Restriction of Special Taxation Act has been partially amended. Since the Addenda to the instant case was explicitly amended, deleted, or later inconsistent, and the Addenda to the instant case was not newly effective or to substitute the previous provision, it is reasonable to deem that the Addenda to the instant case remains effective.

(C) Whether the amendment was made

The Regulation of Tax Reduction and Exemption Act amended by Act No. 4165 of December 30, 1989 provides that "if a national starts up a business in the Seoul Metropolitan Area after January 1, 1990 (including a case where an enterprise located in an area other than the Seoul Metropolitan Area installs a new place of business within the Seoul Metropolitan Area), he shall exclude temporary tax credit for fixed assets for business located in the Seoul Metropolitan Area" (Article 43-6 (1)). The amended Enforcement Decree of the Restriction of Special Taxation Act provides that "if a national opens a business within 10 years prior to the new place of business and starts a business, he shall newly establish a new business (including Article 37-5 (1) of the Restriction of Special Taxation Act)" and the amended Enforcement Decree of the Restriction of Special Taxation Act provides that "if a national opens a business within 10 years prior to the new place of business, he shall newly establish a new business (excluding the newly established business under Article 43-6 (1) of the Enforcement Decree of the Restriction of Special Taxation Act) and 130 years prior to the amended Enforcement Decree of the Restriction of Special Taxation Act."

(D) Sub-determination

Therefore, it is necessary to determine whether the Nowon-gu Hospital established before December 29, 2001 is exempt from the temporary tax credit under Article 130 (1) of the Restriction of Special Taxation Act prior to the amendment in 2001 in accordance with the Addenda of this case.

(2) As to the establishment of a new business

(A) The meaning of “business start-up” under Article 130(1) of the Restriction of Special Taxation Act prior to the amendment in 2001

In light of the legislative intent and the history of the amendment, the above provision is a provision to exclude the tax credit for investment of newly established enterprises in the Seoul Metropolitan Area. If the establishment includes the "where an enterprise located in the Seoul Metropolitan Area establishes a new place of business in the Seoul Metropolitan Area," it is not necessary to establish the same provision as the overall title of the above provision (including the case where an enterprise located in an area other than the Seoul Metropolitan Area establishes a new place of business in the Seoul Metropolitan Area) or Article 124 (1) of the Enforcement Decree of the same Act (the "establishment of a new place of business" refers to the commencement of a new place of business in the Seoul Metropolitan Area). The amendment of Article 130 (1) of the Restriction of Special Taxation Act of 200, published by the National Tax Service in the 2002 revised tax bill, stating that "the first amendment of Article 130 (1) of the Restriction of Special Taxation Act of 201, newly established a place of business in the Seoul Metropolitan Area."

(B) unconstitutionality of Article 124(1) of the Enforcement Decree

1) Article 38 of the Constitution provides that "All citizens shall have the duty to pay taxes under the conditions as prescribed by Act," and Article 59 provides that "types and rates of taxes shall be determined by Act," thereby adopting the principle of no taxation without the law. Such principle of no taxation without the law means that taxation requirements, etc. shall be prescribed by the law enacted by the National Assembly, which is the representative body of the people, and strict interpretation and application shall be made in the enforcement of the law, and the expansion or analogical application of the administrative convenience shall not be permitted. Thus, it is against the principle of no taxation without the law to stipulate matters concerning taxation requirements, etc. by administrative legislation such as orders or rules without the delegation of the law, or to provide an interpretation provision that makes it possible and expanded without the permission of the law (see Supreme Court en banc Decision 98Du1731, Mar. 16, 200)

2) Since Article 124(1) of the Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 2001) expands the scope of exclusion from tax reduction and exemption by including the meaning of “business start-up” without statutory delegation, which includes “a business located in the Seoul Metropolitan area and newly establishes a place of business in the Seoul Metropolitan area,” the meaning of business start-up includes “a business located in the Seoul Metropolitan area and newly establishes a place of business in the Seoul Metropolitan area.” Thus, the meaning of

(C) Sub-determination

Therefore, since the Nowon-gu Hospital established before December 29, 2001 does not fall under Article 130 (1) of the Restriction of Special Taxation Act prior to the amendment in 2001, it shall not be excluded from the object of temporary investment credit. Thus, the disposition of this case, which is contrary to the premise, is unlawful.

(3) Scope of revocation

The Plaintiff sought revocation on the basis of the tax amount imposed before reduction (including additional tax for arrears), but the tax amount subject to revocation is reduced when the tax authority cancels the tax amount by tax authority. Accordingly, the tax amount subject to revocation is the tax amount subject to reduction. Since the tax amount subject to imposition is the remaining tax amount after deducting the additional tax for arrears from the notified tax amount, the remaining portion of the stated amount is the tax amount subject to the disposition of this case as indicated below. Therefore, in the corporate tax for a business year 2005 through 2007, the remaining tax amount should be revoked in whole as the remaining amount is less than the tax amount for which the Plaintiff seeks revocation, and in the case of corporate tax for a business year 2008, the remaining tax amount should be revoked within the scope of the interim investment tax amount (a fraction less than KRW 100,000, as the Plaintiff seeks).

In the attached business year included in the main sentence, 2005 - 2006 2007 2008 notified tax amount of 546,158,490 won 380,429,250 won 336,058,850 won - 252,680,680,190 won - 145,895,7660 won - 83,246,792 won - 400,262,724 won - 276,133,590 won 252,812,058 won 227,475,159 temporary investment tax amount of 40,2633 won,273 won, 2763,795, 2781, 368, 259, 2065, 2608 won, 2605

3. Conclusion

Therefore, the plaintiff's claim is justified within the above recognized scope, and the remaining claims are dismissed as they are without merit (the plaintiff sought revocation of the tax amount for unfaithful payment out of the tax amount for imposition before reduction, i.e., the part that exceeds the remaining tax amount, and as such, the provisional investment tax amount is sought to be excessively revoked, and this part of the claim is dismissed) and it is so decided as per Disposition.

[Attachment of Related Acts and Subordinate Statutes]

Judges Lee Jin-hun (Presiding Judge)

It is impossible to sign and affix seals due to transfer;