Seoul Administrative Court 2010Guhap15599 (2010.08)

Cho High Court Decision 2009west0410 ( October 24, 2010)

Comprehensive real estate tax on unsold housing units;

It shall be excluded from the subject of cumulative taxation of comprehensive real estate holding tax only when the period of unsold in lots is not more than three years counting from the date of inspection

2010Nu27167 Revocation of the disposition of revocation of comprehensive real estate holding tax

○ Stock Company

○ Head of tax office

Seoul Administrative Court Decision 2010Guhap15599 decided July 8, 2010

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 defendant shall revoke the disposition of refusal of correction against the plaintiff on January 12, 2009 and the disposition of imposition of gross real estate holding tax for the year 2008 on November 20, 208, respectively.

1. Details of the disposition;

A. On December 28, 2001, the Plaintiff, a corporation running a building project, housing construction project, real estate sale and lease business, purchased land of ○○○○○○-dong 5-606, 5-749 (hereinafter “instant land”) as a multi-family housing site, and obtained a building permit for 14 households of multi-family housing to be newly constructed on the instant land on February 15, 2002. The Plaintiff commenced the said new apartment construction project on March 11, 2002 and sold the said multi-family housing after obtaining approval for use on December 27, 2002.

B. 8 households out of the above 14 households were sold in lots, but the remaining six households (hereinafter referred to as the “house unsold in lots”) were not sold in lots, and the Plaintiff owned in its name.

C. The Plaintiff reported each comprehensive real estate holding tax (including each special rural development tax; hereinafter the same shall apply) for unsold housing in this case in 2006 and 2007. From May 31, 2007 to April 8, 2008, the Plaintiff paid the comprehensive real estate holding tax for the housing unsold in this case for which the Defendant decided and imposed four times during the period from April 31, 2007 to April 8, 2008 (including additional charges). On November 20, 2008, the Defendant imposed the comprehensive real estate holding tax for the housing unsold in this case on the Plaintiff in 2008.

D. On December 15, 2008, the Plaintiff filed a request for correction with respect to each comprehensive real estate holding tax for the year 2006 and 2007 imposed by the Defendant on the ground that the instant unsold housing was subject to the exclusion of aggregate taxation under the Comprehensive Real Estate Holding Tax Act. However, on January 12, 2009, the Defendant issued a disposition to refuse the Plaintiff’s request for correction on the ground that the instant unsold housing falls under the housing subject to the exclusion of aggregate taxation for the instant unsold housing but is not subject to the exclusion from aggregate taxation for the year 2006 (hereinafter “instant disposition”).

E. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on February 6, 2009, but the Tax Tribunal dismissed the Plaintiff’s appeal on March 24, 2010.

F. Meanwhile, the details of comprehensive real estate holding tax imposed by the Defendant on the Plaintiff (before additional charges and aggravated additional charges are imposed on each tax amount for each year to which the tax belongs) are as follows.

[Ground for Recognition: Facts without dispute, Gap evidence 1 through 6, Eul evidence 1 through 7 (each entry and the purport of the whole pleadings)]

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Defendant imposed a comprehensive real estate holding tax without excluding the aggregate of the tax base on the ground that the housing unsold in this case had passed two years or more from the date of approval for use pursuant to paragraph (3) of the Addenda of the former Enforcement Rule of the Comprehensive Real Estate Holding Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 441 of May 31, 2005). This is contrary to the Comprehensive Real Estate Holding Tax Act which provides for exclusion of aggregate from the imposition of the comprehensive real estate holding tax in the case of housing owned not related to the legislative purpose of preventing excessive possession of real estate and speculative demand, and is also contrary to equity in light of the fact that the above provision does not provide for the dormitories and houses for employees' residence, therefore, the instant disposition based on the

The reason why the Plaintiff owned the instant unsold in lots is that a housing developer, as a housing developer for unexpected reasons after the construction of a multi-family housing, has no choice but to acquire the ownership transfer under the Plaintiff’s name for the purpose of excessive possession and speculation. Nevertheless, the Defendant imposed an excessive comprehensive real estate holding tax on the Plaintiff. As such, the Plaintiff lost its ownership on the instant unsold in lots due to auction, the Defendant’s disposition was unlawful.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) Whether to define a tax law as a certain content is a matter of policy and technical determination based on accurate data about the actual state of national finance, social economy, national income, and people's lives. As such, this may be deemed to be left to a policy and technical determination based on the legislative formation discretion of the legislator. Therefore, the provision of tax requirements in a tax law as well as tax exemption or tax exemption requirements, which are exceptional provisions therefor, belongs to the legislative discretion of the legislator unless the provision is significantly unreasonable (see, e.g., Supreme Court Decision 99Du7265, May 29, 2001).

(2) We examine the provisions on ‘unsale housing' which is not included in the scope of housing subject to the aggregate tax base of comprehensive real estate holding tax.

Article 8 (2) 2 of the former Gross Real Estate Tax Act (amended by Act No. 9273 of Dec. 26, 2008) provides for "houses prescribed by Presidential Decree which are not in conformity with the purport of imposing comprehensive real estate holding tax, such as housing unsold in lots constructed and owned by a housing construction business operator," among housing not included in the scope of housing subject to aggregate tax base. The former Enforcement Decree of the Gross Real Estate Tax Act (amended by Presidential Decree No. 20720 of Feb. 29, 2008 and Article 4 (1) 3 (b) of the former Gross Real Estate Tax Act (amended by Presidential Decree No. 20720 of Feb. 29, 2008) provides for housing unsold in lots for the first period of 20 years after the date on which the construction permit was issued under the Building Act (amended by Ordinance of the Ministry of Strategy and Finance No. 21098 of Oct. 29, 2008).

Meanwhile, in applying the provisions of each subparagraph of Article 4 of the Enforcement Rule of the former Enforcement Rule of the Gross Real Estate Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 441 of May 31, 2005) and (3) (Special Cases on the Scope of Unsold Housing Units), the "three years in cases of unsold housing units for which two years or more have passed from the date of inspection of use as of the tax base date of the comprehensive real estate holding tax in 2005 and the "three years in cases of unsold housing units for which one year or more has passed from the date of inspection of use or approval of use" are stipulated as "two years".

(3) In a systematic and comprehensive interpretation of the above relevant statutes, Article 4 Subparag. 2 of the Enforcement Rule of the said Act provides for the requirements for unsold housing units not in conformity with the purport of imposing comprehensive real estate holding tax upon delegation by higher statutes, and the purpose of Article 4 Subparag. 2 of the said Enforcement Rule is to provide support to housing units holding unsold housing units by excluding them subject to comprehensive real estate holding tax in the case of unsold housing units

On the other hand, paragraph (3) of the Addenda of the above Enforcement Rule also applies to the existing unsold housing units which had undergone a pre-use inspection (use approval) before June 1, 2005. The unsold period is as of June 1, 2005. In case where two years or more have elapsed, one year or more but less than two years have passed since June 1, 2005, it shall be excluded from the subject of aggregate comprehensive real estate holding tax for the next two years. The provisions of the Addenda of the above Enforcement Rule provide that a person who owned unsold housing units before June 1, 2005, like the Plaintiff (the old Comprehensive Real Estate Tax Act, which has the ground of exclusion of aggregate holding tax for unsold housing units, was enacted on January 15, 2005) constitutes a provision recognizing an exception to comprehensive real estate holding tax under a certain limitation, and its content is to enhance the fairness in taxation burden on real estate holding real estate by imposing comprehensive real estate holding tax on a large amount of real estate owner, stabilizing real estate prices, thereby contributing to the legislative purpose of the Comprehensive Real Estate Tax Act within the legislative discretion.

Therefore, the foregoing supplementary provision does not stipulate the exclusion period in the same way as the housing unsold in lots, which had undergone a pre-use inspection (approval) since June 1, 2005, and does not stipulate the exclusion period in the above supplementary provision as to housing unsold in lots, such as housing for employees, even though the above supplementary provision is not provided, the foregoing supplementary provision cannot be deemed as contrary to the equity

(4) Since the date of approval for use of the instant unsold house on December 27, 2002, when two years or more have elapsed from the date of approval for use as of June 1, 2005, which was the tax base date of the 2005 integrated tax base, if the "year 2-3 of Article 4 subparagraph 2-3 of the Enforcement Rule of the former Gross Real Estate Tax Act" was "one year", the instant unsold house from the comprehensive real estate holding tax for 2006 shall be deemed to be subject to the total tax base of the comprehensive real estate holding tax. Thus, the Defendant’s disposition of this case is legitimate, and the Plaintiff’s assertion on other premise is not acceptable

(5) In addition, as alleged by the Plaintiff, the reason why the Plaintiff owned the instant unsold housing as a housing constructor is that the Plaintiff had no ownership transfer registration under the Plaintiff’s name due to the unexpected reasons anticipated after the construction of the housing. Even though the housing unsold in this case was not a real estate acquired for the purpose of excessive possession and speculation of real estate, it is difficult to view that the instant unsold housing unsold in lots for which a certain period has elapsed as seen earlier is included in the subject of comprehensive real estate holding tax as well as the principle of proportionality between the legislative purpose and the means of comprehensive real estate holding tax. As to what contents of tax laws and regulations should be determined by the legislators based on accurate data about the actual state of national finance, social economy, people’s income, life, etc., which is left to policy and technical judgment based on the legislative formation discretion of the legislators. Thus, even if there is room for considering the Plaintiff’s circumstances, it cannot be deemed that the Defendant’s disposition is unlawful merely on such basis.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit, and the judgment of the court of first instance is just as it is concluded, and the plaintiff's appeal is dismissed. It is so decided as per Disposition.