Mel Social Social Social Social Social Inc. (Attorney Kim Jong-sung, Counsel for the defendant-appellant)

Head of the distribution tax office and one other (Law Firm Namsan, Attorneys Lee Chang-soo et al., Counsel for the defendant-appellant)

November 13, 2014

1. As to the plaintiff:

A. Attachment disposition by the director of the tax office on April 22, 2013 on each of the claims listed in the separate sheet of claims listed in the separate sheet of claims in attached Table 2, as stated by the director

B. The head of Seocho District Tax Office’s attachment disposition against each of the claims listed in the Attached Table 2 “Bond List” issued on June 11, 2013 shall be revoked.

2. The plaintiff's remaining claims against the director of the distribution office are all dismissed.

3. Of the costs of lawsuit, 3/5 of the part arising between the Plaintiff and the director of the tax office of distribution shall be borne by the director of the tax office of distribution of the remainder by the Plaintiff, and the part arising between the Plaintiff and the director of the tax office of Seocho, by

On April 3, 2013, the head of the tax office and the head of the distribution tax office designate the Plaintiff as the secondary taxpayer of Nonparty 1 (resident registration number omitted), and then revoke each disposition of imposition listed in the “list of Imposition of Taxation” listed in attached Table 1 against the Plaintiff on April 23, 2013, and attachment disposition of each real estate listed in attached Table 3 “Real Estate List” against the Plaintiff on April 23, 2013.

1. Details of the disposition;

A. The Plaintiff, a foreign corporation established in Hong Kong on 2006, is a shareholder with a 100% share of the Plaintiff’s Republic of Korea (hereinafter “Murora”) from Aurora Melba Co., Ltd., and Ltd (hereinafter “Mura”), and 100% of the shares of Orala exist in Nonparty 1. Nonparty 1 title trusted this shares to Lyd Busi Inc. (hereinafter “Lad”) of the Republic of Korea.

B. On April 13, 2011, the head of the tax office distributed the non-party 1, the head of the tax office of global income tax of 96,140,853,270 won (including additional taxes), global income tax of 113,280,649,100 won (including additional taxes), global income tax of 2008, global income tax of 47,212,79,740 won (including additional taxes), global income tax of 17,735,850,430 won (including additional taxes), global income tax of 3,030,107,530 won (including additional taxes) of global income tax of 206, 207, 208, 207, 307, 208, 207, 307, 209, 207, 207, 2097, 207, 2097, 2017, 2007.

C. Nonparty 1 filed a lawsuit on the imposition of global income tax, etc. 2012-Gu 94377, 2013. On August 14, 2013, Nonparty 1: (a) imposed on the Plaintiff (non-party 1); (b) 59,282, 071, 050-year income tax on April 13, 201; (c) 57, 848, 207, 3636, 47, 207, 207, 205, 306, 47, 207, 205, 306, 47, 207, 205, 306, 47, 206, 205, 306, 306, 47, 209, 205, 306, 207, 205, 207.

D. As Nonparty 1’s property is insufficient to collect national taxes in arrears, the director of the tax office having jurisdiction over the Plaintiff’s second taxpayer pursuant to Article 40 of the National Tax Collection Act on the premise that Nonparty 1 is a de facto shareholder holding 100% of the Plaintiff’s equity interest, imposed global income tax and other tax on the Plaintiff on April 3, 2013, up to the Plaintiff’s net asset value of KRW 89,789,479,944, up to the Plaintiff’s deadline for payment on April 25, 2013. On April 12, 2013, the director of the tax office changed the deadline for payment to April 20, 2013 (hereinafter “instant disposition of imposition against the Plaintiff”).

E. On April 22, 2013, the director of the tax office of distribution of the defendant attached Form 2 attached hereto, on the premise that the non-party 1 owns each of the claims listed in the separate sheet of claim (i.e., DS. Co., Ltd., City/Do merchant ship, target Heavy Industries Co., Ltd., and leading shipping Co., Ltd., and their shares and the right to claim dividends, etc.) on the basis of the instant tax claim against the non-party 1 (hereinafter “instant attachment disposition against non-party 1”), the director of the tax office of Seocho-gu attached each of the above claims on the basis of the instant tax claim against the non-party 1 (hereinafter “instant attachment disposition against non-party 1”). On June 11, 2013, the director of the tax office of the tax office of Seocho-gu attached each of the claims listed in the separate sheet of claim 2

F. On April 23, 2013, the director of the tax office of distribution of real estate seized each of the above real estate based on the tax claim against the Plaintiff on the premise that the Plaintiff owned each of the real estate listed in the attached Table 3’s real estate list (hereinafter “Attachment Disposition against the Plaintiff”).

G. The Plaintiff filed an appeal with the Tax Tribunal on July 2, 2013, against the disposition of imposition against the Plaintiff and the disposition of attachment Nos. 1 and 2 against Nonparty 1. However, the Plaintiff was dismissed on November 6, 2013. The Plaintiff appealed with the Tax Tribunal on July 26, 2013, but was dismissed on November 27, 2013.

【Ground of recognition】 The fact that there has been no dispute, Gap’s 1 through 7 evidence, Eul’s 1, 2, 5, and 43 evidence (including branch numbers; hereinafter the same shall apply), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) As Nonparty 1 did not own the Plaintiff’s shares, the disposition of imposition against the Plaintiff and the disposition of seizure based on which Nonparty 1 had secondary tax liability on the premise that Nonparty 1 is an oligopolistic shareholder of the Plaintiff is unlawful.

B. The Plaintiff’s secondary tax liability for Nonparty 1’s tax liability is 4,332,682,924 won at the exchange rate on April 25, 2013, which is the date of the payment deadline (=30,292,127HD x 143.03 won/HD) even if the Plaintiff bears the secondary tax liability for Nonparty 1’s tax liability, and the disposition of imposition exceeding the above amount and the disposition of seizure based on it is unlawful.

Consolidatedly, the Defendants seized each of the above claims against Nonparty 1 on the premise that Nonparty 1 owns each of the claims listed in [Attachment 2] List of Claim Claims. Since each of the above claims is owned by the Plaintiff, the disposition of seizure Nos. 1 and 2 against Nonparty 1 is unlawful.

Article 40(1)1 and 2 of the Framework Act on National Taxes recognize the secondary tax liability of a corporation only where “the Government intends to sell the shares owned or shares contributed by investors by re-auction or private contract but no one applies to purchase” and “the transfer of the shares owned or shares contributed by investors is limited by law or the articles of incorporation of the corporation.” Since the Plaintiff’s shares do not fall under the foregoing, the secondary tax liability imposed on the Plaintiff is unlawful.

B. Relevant statutes

Attached Table 7 is as indicated in the "relevant Acts and subordinate statutes"

(c) Fact of recognition;

(1) Non-party 1, who actually operates a City/Do group consisting of foreign corporations, such as a City/Do top line, City/Do top-down Korea office, City/Do top-down events, and target Heavy Industries, as well as leading shipping companies (hereinafter referred to as “stock companies,” in the name of the corporation”) with the office located in Seocho-gu Seoul Metropolitan Government ( Address 2 omitted), and a City/Do group consisting of foreign corporations, such as the Hong Kong, City/Do top-down service (CS; hereinafter referred to as “CCS”), City/Do top-down Hong Kong, and Do top-down, City/Do top-down, and CCCS, etc., which are registered as the representatives of the above City/Do top-down, City/Do top-down, Citying Hong Kong, and Japan.

[1] Since Nonparty 1 established a City/Do merchant, City/Do intermediary, City/Do intermediary, leading marine transportation, andCCS, etc. in the Republic of Korea, around 190, in which Nonparty 1 had been in charge of financial affairs for the sale and purchase of vessels in Japan, and in which the affairs such as vessel management and operation, insurance policy, etc., the Sheet Group has established the City/Do merchant, City/Do intermediary, Do intermediary, leading marine transportation, and CCCS. ① the prompt name “Perer,” established in Liberia, Daman Islands, which is a convenience shop for the ownership of vessels (hereinafter referred to as “special purpose corporation,” and one of the special purpose corporations established for the purpose of owning one vessel) and the officers and employees of each single vessel company to manage the vessel by being entrusted with the manufacture and operation of the vessel,

Secondly, each company belonging to the above City/Do group is a complicated multi-level investment structure using multiple pagescom (a phased investment structure in which a Patonercom holds 100% equity shares) as shown in [Attachment 4’s corporate governance structure of City/Do Group” and the final shareholder through a stock trust does not reveal the fact that he is Nonparty 1.

Applicant Nonparty 1 and his wife Nonparty 2 established the Plaintiff, Hong Kong Investment Company (Capital of KRW 954,252,00) with the funds of Nonparty 1, for the purpose of preventing the expansion of taxation risk and promoting the separation of ownership and management by lowering the risk of being assessed as “resident” under the Korean tax law, and facilitating the connection between the shareholders of City/Do group affiliates by means of dualizing their affiliates, and thereby promoting the separation of ownership and management. Nonparty 1 and his wife held 100% of the Plaintiff’s shares as the Plaintiff’s shares, and held 10% of the Plaintiff’s shares as the Plaintiff’s shares, and held 10% of the shares as the Plaintiff’s shares as the Plaintiff’s shares to the Roma Corporation owned by the “MMG pumps.”

(v) After the applicant’s challenge, the Plaintiff raised 30 billion won from Newbro and City/Do brokerage, and deposited the money into the bank account in the name of the Plaintiff opened in the Hong Kong branch account in the name of the Plaintiff in the name of the Hong Kong branch account in the name of the Plaintiff, and purchased 10 domestic real estate including the shares of City/Do merchant lines, leading maritime transport, and Seonam Industries and the land in Jongno-gu Seoul ( Address 3 omitted), including the shares of City/Do merchant lines, leading maritime transport, and Seonam Industries and the land in Jongno-gu ( Address 3 omitted), and the Plaintiff established heavy industry by investing 100%.

⑹ 원고는 2011. 4. 30. 기준으로 별지6 ‘원고 순자산가액 계산표’ 기재와 같이 자산 합계 123,516,946,944원, 부채 합계 33,718,467,000원의 자산 및 부채를 보유하고 있다.

【Ground of recognition】 The fact that there has been no dispute, Gap 6, 7 evidence, Eul 1 through 45, the purport of the whole pleadings

D. Determination

(1) As to whether Nonparty 1 is an oligopolistic shareholder of the Plaintiff

According to the above facts, the Plaintiff was actually established with the funds of Nonparty 1, and only the Plaintiff’s shares were owned without the human and physical facilities, i.e., the Plaintiff’s 100% shareholder, and Nonparty 1 owns 100% of shares of Lao, and Nonparty 1 actually operates the Plaintiff and the Plaintiff’s subsidiaries. In full view of these circumstances, it is reasonable to deem that Nonparty 1 is a shareholder holding 10% of the Plaintiff’s shares. Accordingly, the disposition of imposition against the Plaintiff on the premise that Nonparty 1 is an oligopolistic shareholder is legitimate.

B. As to the calculation of net asset value of the Plaintiff

According to the evidence Nos. 6-1 through 29, Eul evidence Nos. 10-1, 6-2, and 10-1, the Plaintiff’s net asset value calculation table as shown in the attached Table 6’s “Plaintiff’s net asset value calculation table”, the Plaintiff owned shares of City/Do merchant vessels, leading sea transportation, target middle industries, and D. E.S. (previous Western Heavy Industries) and real estate located in Jongno-gu Seoul Metropolitan Government, Jongno-gu. As of April 30, 2011, the total market value of the above assets as of April 30, 201 is KRW 123,516,944, and the total amount of the Plaintiff’s liabilities is KRW 33,718,479,944 won (=123,516,946,9444 won - 3,718,4600 won). Thus, the Plaintiff’s net asset value is obviously insufficient to recognize that it goes against the above evidence No. 1381.

ally, as to shareholders of shares, such as City/Do lines

According to the facts found above, the plaintiff purchased shares from the non-party 1, the non-party 2, etc. of City/Do merchant line and the non-party 1 and the non-party 2, etc. and actually paid the price for such shares (the seller of each of the above shares is a number of the non-party 1, the non-party 2, the non-party 3, and the non-party 4, etc. who became a shareholder of the above shares), and the plaintiff made a 100% contribution in establishing the target heavy industry on July 2007. The plaintiff also assessed the plaintiff's assets at KRW 123,516,946,944 on the premise that the above shares are owned by the plaintiff, such as the above City/Do merchant line, etc. (if the above shares are not owned by the plaintiff, the price of the above shares should be deducted from the plaintiff's assets, and the plaintiff's second tax liability should also be reduced within the scope). Thus, the disposition against the non-party 1 and the non-party 2 of this case is unlawful.

m. As to whether there is no or limited purchase or transfer of the shares of the plaintiff

As seen earlier, the non-party 1 established the plaintiff and established the plaintiff, and the non-party 1 held the plaintiff's nominal shareholders in the Ro-ro and held the shares in the Ro-ro, but it is difficult to deem that the plaintiff's shares in the Hong Kong corporation, which is the shareholder in the Ba-ro, can be sold by applying the Korean tax law, and it is reasonable to deem that there is a limitation on the transfer of the plaintiff's shares due to the commencement of complicated legal relationship with the plaintiff's shares (or the non-party 1 and the plaintiff intentionally bound them). Thus, the plaintiff's assertion that the requirements of Article 40 (1) 1 and 2 of the Framework Act on National Taxes are not satisfied can be deemed to constitute a violation of the good faith principle or an abuse of rights).

E. Sub-committee

Therefore, the “tax disposition against the Plaintiff” on the ground that Nonparty 1 is the Plaintiff’s oligopolistic shareholder and the “Seizure disposition against the Plaintiff” on the ground that the Plaintiff is the Plaintiff’s oligopolistic shareholder is lawful, and the “Attachment 1 and 2 against Nonparty 1” on the third party’s property should be revoked as it is unlawful.

3. Conclusion

Therefore, the plaintiff's claim is accepted within the scope of the above recognition, and the remaining claims are dismissed as it is without merit. It is so decided as per Disposition.

(attached Form omitted)

Judges Kim Jong-jin (Presiding Judge)