[1] In a case where a corporation which has listed stocks for the first time under Article 56-2 (1) of the former Regulation of Tax Reduction and Exemption Act paid a revaluation tax on its assets, but did not list stocks within the statutory period, whether a taxpayer’s refund of the amount of revaluation tax already paid by the taxpayer due to revocation of the disposition of revaluation tax under the Addenda to the former Regulation of Tax Reduction and Exemption Act constitutes Article 52 subparag. 5 of the former Framework Act

[2] Where Gap corporation, which first listed stocks under Article 56-2 (1) of the former Regulation of Tax Reduction and Exemption Act, paid revaluation tax based on asset revaluation, but did not list stocks by December 31, 2003, the case held that the court below erred in the misapprehension of legal principles as to the amount of revaluation tax refunded to Gap corporation, on January 27, 2004, when the tax authority refunded revaluation tax on January 27, 2004, and imposed additional dues on refund by January 27, 2004 on the ground that additional dues were erroneously paid, but the additional dues were collected by October 23, 2008 on the ground that additional dues were erroneously paid, and the additional dues on refund to be disposed of as of January 1, 204 were corrected by reduction of the amount corresponding to the period from the day following the above payment date to December 31, 2003, the above additional dues should be made on the ground that Article 52 subparagraph 1 of the former Framework Act on National Taxes was lawful.

[1] Articles 51, 52 subparags. 1 and 5 of the former Framework Act on National Taxes (amended by Act No. 8139 of Dec. 30, 2006), Article 56-2(1) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4285 of Dec. 31, 1990), Article 23(1) of the Addenda (amended by Act No. 4285 of Dec. 31, 1990), Article 138 of the Enforcement Decree of the Restriction of Special Taxation Act (amended by Act No. 5531 of Apr. 10, 1998), Article 9, Article 33(1) of the former Assets Revaluation Act (amended by Act No. 4803 of Dec. 22, 1994), Article 15 subparag. 15(1) of the former Corporate Tax Act (amended by Act No. 1509 of Dec. 13, 1994) (see current Article 201)

Co., Ltd. (Law Firm Rate, Attorneys Cho Young-sik et al., Counsel for the plaintiff-appellant)

[Defendant-Appellee] Head of the tax office of North Daegu District Tax Office (Law Firm Gyeong & Yang, Attorneys Kim Yong-kak et al.

Daegu High Court Decision 2008Nu656 Decided December 19, 2008

The judgment below is reversed, and the case is remanded to the Daegu High Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. A. Article 51 of the former Framework Act on National Taxes (amended by Act No. 8139 of Dec. 30, 2006; hereinafter the same applies) provides that the amount of erroneous payment under Article 51, the amount of tax to be refunded under the tax-related Acts, etc. shall be determined as the national tax refund and appropriated for other national taxes, or the taxpayer shall be paid. The main sentence of Article 52 provides that "in the event a refund of national tax is appropriated or paid under Article 51, the head of a tax office shall add to the national tax refund the amount calculated at the rate prescribed by the Presidential Decree (hereinafter referred to as "additional payment on national refund") in consideration of the period from the day following the day specified in the following subparagraphs to the day on which the refund of national tax is appropriated or determined, and the deposit interest rate at financial institutions shall be applied to the national tax refund (hereinafter referred to as "additional payment on national refund")." The main sentence of subparagraph 1 provides that "in case of a refund of national tax due to an erroneous payment, double payment or cancellation or cancellation of the imposition."

Therefore, Article 52 Subparag. 1 of the former Framework Act on National Taxes applies to cases where a return or assessment, which forms the basis of the payment, is corrected or canceled after erroneous payment, double payment, or payment, is made. Article 52 Subparag. 1 of the former Framework Act on National Taxes, and Article 52 Subparag. 5 of the same Act applies to cases where the payment of national taxes is lawfully made and there is no room to revise

B. However, Article 56-2(1) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4285, Dec. 31, 1990; hereinafter the same) provides, “A corporation which intends to list its stocks for the first time at the Korea Stock Exchange under the provisions of Article 8(1) of the Securities and Exchange Act may, notwithstanding the provisions of Articles 4 and 38 of the Assets Revaluation Act, conduct revaluation under the Assets Revaluation Act by treating the first day of each month as the revaluation date: Provided, That where a corporation which conducted revaluation fails to list its stocks at the Korea Stock Exchange within 2 years from the revaluation date, it shall not be deemed revaluation under the Assets Revaluation Act.” Article 23(1) of the Addenda of the Restriction of Tax Reduction and Exemption Act of December 31, 1990 (amended by Act No. 4285, Dec. 31, 199; hereinafter the same shall apply) provides, “A corporation which conducted revaluation under the provisions of the proviso of the same Article prior to its enforcement date of the same Article 56-2(131).

Meanwhile, Article 9 of the former Assets Revaluation Act (amended by Act No. 5531 of Apr. 10, 1998; hereinafter the same) provides that "a person who conducts a revaluation shall pay a revaluation tax as prescribed by this Act", and Article 33 (1) provides that "no revaluation spread shall be included in the gross income or income for income calculation under the Corporate Tax Act or the Income Tax Act," and Article 15 (1) 5 of the former Corporate Tax Act (amended by Act No. 4803 of Dec. 22, 1994) provides that "a revaluation spread under the Assets Revaluation Act shall not be included in the gross income of a domestic corporation for the pertinent business year in calculating the income amount of the domestic corporation for each business year."

According to these regulations, a revaluation of assets under the former Assets Revaluation Act was imposed and paid with respect to the revaluation difference under the premise that stocks are listed for the first time pursuant to the main sentence of Article 56-2(1) of the former Regulation of Tax Reduction and Exemption Act, but where stocks are not listed within the statutory period, a revaluation already conducted pursuant to Article 23(1) of the Addenda to the Regulation of Tax Reduction and Exemption Act (amended by Act No. 4285, Dec. 31, 1990) shall not be deemed revaluation under the former Assets Revaluation Act. As a result, the disposition imposing revaluation tax shall be revoked since it has lost its ground from the beginning, and the asset revaluation difference shall be again included in the gross income of the corresponding year in the calculation of income under the provisions of the Corporate Tax Act, and the corporate tax, etc. shall be corrected and disposed. As such, it is clear that a taxpayer refund of the amount of revaluation tax already paid by the taxpayer following the cancellation of the disposition imposing revaluation tax shall fall under Article 52 subparag. 1 of the former Framework Act on National Taxes. 2.

2. On October 1, 1990, the lower court: (a) conducted revaluation of assets on the premise that the Plaintiff first listed stocks pursuant to the main sentence of Article 56-2(1) of the former Regulation of Tax Reduction and Exemption Act (hereinafter “instant revaluation”); (b) on December 8, 1990, the Defendant issued a disposition of revaluation tax of KRW 91,308,996 (hereinafter “instant revaluation tax”); (c) on November 24, 1990, the Plaintiff paid KRW 46,308,90 among revaluation tax of this case to the Plaintiff on November 24, 1990; and (d) on the grounds that the amount of KRW 45,00,000,000 for the remaining 10,000 from the date following the date of redemption to December 31, 200, which is the final date of listing under the relevant Acts and subordinate statutes, and (d) on the ground that the Plaintiff did not list stocks within 10,0004,000 each of the instant revaluation tax.

Examining these facts in light of the legal principles as seen earlier, Article 52 subparagraph 1 of the former Framework Act on National Taxes is applied to the amount of revaluation tax of the assets of this case refunded to the Plaintiff, and the additional payment on the refund of national taxes should be added from the day following the payment date, and accordingly, the Defendant’

Nevertheless, the court below determined that the disposition of revaluation tax of this case was legitimate since January 1, 2004, as the plaintiff did not list the stocks until December 31, 2003, since the disposition of revaluation tax of this case was illegal only on January 1, 2004. Accordingly, the defendant's disposition of restitution of this case was lawful. Thus, the court below erred by misapprehending the legal principles on the initial date of calculation of additional dues under Article 52 of the former Framework Act on National Taxes, which affected the conclusion of the judgment. The ground of appeal pointing this out is with merit.

3. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Min Il-young (Presiding Justice)