In a case where Gap bank, a education tax obligor Gap et al. merged with credit card companies without education tax liability and reported and paid education tax by adding income related to credit card business to the tax base, and claimed reduction or correction of the above income not included in the tax base, but the tax authority rejected such request, the case affirming the judgment below which held that the credit card business revenue of Gap bank et al.

In a case where Gap bank, etc. liable to pay education tax, as a financial institution under Article 3 of the Banking Act, was merged with credit card companies operating credit card business under Article 2 subparagraph 2 of the Specialized Credit Financial Business Act without any obligation to pay education tax, and reported and paid education tax by including profits related to credit card business in the tax base, and requested for correction of education tax reduction not including the above profits in the tax base, but refused by the tax authorities, the case affirming the judgment below that the amount of revenue generated from credit card business under Article 3 of the Specialized Credit Financial Business Act was not included in the tax base of education tax, and Article 5 (3) of the former Education Tax Act (amended by Act No. 10407 of Dec. 27, 2010), Article 4 (1) and (2) of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 19898 of Feb. 28, 207) is not included in the amount of revenue generated from the credit card company's corporate tax base of education tax.

Article 3 of the Banking Act; Article 2 subparag. 2 of the Specialized Credit Finance Business Act; Article 5(3) of the former Education Tax Act (Amended by Act No. 10407, Dec. 27, 2010); Article 4(1) and (2) of the former Enforcement Decree of the Education Tax Act (Amended by Presidential Decree No. 19898, Feb. 28, 2007);

Korea Exchange Bank and two others (Law Firm Rate, Attorneys So-young et al., Counsel for the plaintiff-appellant)

The director of the tax office and one other (Law Firm KCEL, Attorneys Dog-dam et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2009Nu21095 decided April 16, 2010

All appeals are dismissed. The costs of appeal are assessed against the Defendants.

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

Based on the reasoning of the judgment of the court of first instance, the court below acknowledged the merger of credit card companies that are liable to pay education tax under Article 2 subparagraph 2 of the Specialized Credit Financial Business Act with no education tax liability as financial institutions under Article 3 of the Banking Act, and determined that ① Article 5 (3) of the former Education Tax Act (amended by Act No. 10407 of Dec. 27, 2010), Article 4 (1) and (2) of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 19898 of Feb. 28, 2007) do not regard all the revenue of financial and insurance companies as the education tax base, and it appears that the scope of revenue amount included in the education tax base is defined in the education tax base, ② Article 3 of the Banking Act is reasonable to deem that the plaintiffs' credit card company's credit card company's credit card business and the credit card company's credit card company's status are not subject to education tax in order to concurrently operate credit card business.

In light of relevant laws and records, the court below did not err in the misapprehension of legal principles as to the principle of no taxation without representation or the principle of substantial taxation as otherwise alleged in the ground of appeal.

Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Shin Young-chul (Presiding Justice)