Where a subsequent disposition in accordance with the purport of the re-audit decision is more unfavorable to the claimant than the original disposition, whether the subsequent disposition in violation of the principle of prohibition of disadvantageous change under Article 79(2) of the Framework Act on National Taxes is unlawful (affirmative)

The re-audit decision, which is conducted in practice as a type of decision on a request for adjudgment, is a modified decision in which the agency's intention to refrain from making a part of the decision on the request for adjudgment, etc., by entering into the results of re-audit of the matters pointed out in the ruling of the ruling agency, and it takes effect as a result of supplementing the contents of the subsequent disposition of the disposition agency. Therefore, if the subsequent disposition in accordance with the purport of the re-audit decision is more unfavorable to the claimant than the original disposition which was filed for a request for adjudgment, it violates the principle of prohibition of disadvantageous change under Article 79 (2

Articles 65(1), 79(2), and 81 of the Framework Act on National Taxes

Supreme Court en banc Decision 2007Du12514 Decided June 25, 2010 (Gong2010Ha, 1493)

Plaintiff

Head of Yeongdeungpopo District Tax Office and one other

Seoul High Court Decision 2015Nu64437 decided April 20, 2016

The part of the lower judgment regarding the imposition of global income tax for the year 2012 is reversed, and the judgment of the first instance corresponding to this part is revoked. The part regarding the imposition of global income tax for the year 2012, which exceeds KRW 20,730,862, out of global income tax for the Plaintiff on February 13, 2015, the part regarding the imposition of global income tax for the year 2012, and the remainder of the Plaintiff’s claim regarding the said imposition is dismissed. The remainder of the Plaintiff’s appeal against the Head of Youngpo District Tax Office and the remainder of the appeal against the Head of Youngpo District Tax Office is dismissed. The costs of appeal between the Plaintiff and the Head of Youngpo District Tax Office are assessed against the Plaintiff, and 1/20 of the total costs of lawsuit between the Plaintiff and the Head of Youngpo District Tax Office, and

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

1. Regarding ground of appeal No. 1

citing the reasoning of the judgment of the court of first instance, the court below acknowledged the facts as stated in its holding. Then, based on the following facts: ① the amount of sexual surgery of the hospital operated by the plaintiff is ordinarily limited to KRW 1,00,000 to KRW 4,000 per person depending on the type and location of surgery, and 324 persons deposited the money into the account of this case over 424 times, and the considerable of the depositors were confirmed to be the patients of the plaintiff hospital; ② the Nonparty’s wife, as the head of the office of the hospital’s management, deposited cash in the account of this case continuously and repeatedly using a bank close to the hospital; ③ the Plaintiff asserted that the remainder of the money deposited in the account of this case excluding the amount recognized as medical income by the Plaintiff himself, but there is no objective material to support this, the court below determined that the money deposited in cash or transferred from another person’s account constituted the Plaintiff’s medical income.

Examining the reasoning of the judgment below in light of the records, the above fact-finding and determination by the court below are justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by exceeding the bounds of the principle of free evaluation of evidence and by exceeding the bounds of logical and empirical

2. Regarding ground of appeal No. 2

A. Articles 65(1) and 81 of the Framework Act on National Taxes (hereinafter “the Act”) provide for a decision of dismissal, dismissal, revocation or correction of a disposition, or a decision of necessary disposition in the form of decision on a request for adjudgment. Article 79(2) of the Act provides that “The Council of Tax Judges or the Joint Session of Tax Judges shall not make a decision more disadvantageous to the requester than the disposition made in the request for adjudgment when making a decision pursuant to Article 65 which applies mutatis mutandis under Article 81.”

The re-audit decision, which is conducted in practice as a type of the decision on a request for adjudgment, is based on the results of the re-audit of the disposition agency, and thus constitutes a modified decision with the intent to take the contents of the subsequent disposition as part of the decision on the request for adjudgment, etc., and is effective as the subsequent disposition of the disposition agency is supplemented by its contents (see Supreme Court en banc Decision 2007Du12514, Jun. 25, 2010). Thus, if the subsequent disposition in accordance with the purport of the re-audit decision is more unfavorable to the claimant than the initial disposition, the part exceeding the amount of the initial disposition is unlawful.

B. According to the reasoning of the judgment of the first instance as cited by the lower court and the record, ① the head of the tax office on North Korea imposed global income tax for the year 2008 through 2012 by adding the amount of income omitted from sales in the Plaintiff’s global income tax return; ② the Plaintiff was dissatisfied with the above disposition and filed a request with the Tax Tribunal for a judgment; ② the Tax Tribunal accepted part of the Plaintiff’s assertion and decided on February 6, 2015 that “the tax base and tax amount are corrected by estimating the amount of income; ③ the head of the tax office on North Korea in 2008 through 2011 by estimating the amount of income; ③ the global income tax on February 12, 2015, for which the global income tax on February 13, 2012 belonged to the Plaintiff’s global income tax return on February 13, 2015, and thus, the said request for a judgment by the Tax Tribunal for a further review was not subject to the Plaintiff’s request for a judgment by the Tax Tribunal.

C. Examining such factual basis in light of the legal principles as seen earlier, the judgment of the Tax Tribunal on February 6, 2015 ordered the correction of the tax base and tax amount by conducting an estimated investigation without presenting specific correction criteria for calculating the tax base and tax amount. Thus, the determination constitutes a reinvestigation decision. As such, the part of global income tax for 2012 from the subsequent disposition is disadvantageous to the original disposition, and thus, the increased portion among the disposition imposing global income tax for 2012, is unlawful.

D. Nevertheless, the lower court determined that this part of the disposition was lawful on the ground that the additional taxation by the head of the Defendant North Incheon District Tax Office is not disadvantageous to the Plaintiff. In so doing, the lower court erred by misapprehending the legal doctrine on the principle of prohibition of disadvantageous alteration, thereby adversely affecting the conclusion of the judgment. The allegation contained in the grounds of appeal

3. Conclusion

Of the lower judgment, the imposition disposition of global income tax for the year 2012 shall be reversed. Since this part of the case is sufficient for the Supreme Court to directly render a judgment, the first instance judgment corresponding to this part shall be revoked, and the part exceeding 20,730,862 won among the imposition disposition of global income tax for the year 2012 by the head of the tax office North Korea, which belongs to February 13, 2015, shall be revoked. The remainder of the Plaintiff’s claims against the above imposition disposition shall be dismissed. The costs of appeal between the Plaintiff and the head of the tax office North Korea, and the Plaintiff shall be assessed against the Plaintiff. One-20 of the total costs of litigation between the Plaintiff and the head of the tax office North Korea, and the remainder shall be assessed against the Plaintiff. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Yong-deok (Presiding Justice)