[1] Whether a donor’s obligation to pay gift tax is a subordinate obligation (affirmative)

[2] Whether Article 38 of the former Enforcement Decree of the Inheritance Tax Act is invalid against the mother law (negative)

[3] The case affirming the judgment of the court below that the gift tax paid by the donor on behalf of the donor did not fulfill the donor's obligation to pay the gift tax, but rather was a new gift and thus becomes subject

[4] The meaning of the principle of non-sufficiency in tax statutes

[1] A person liable to pay a gift tax is a donee, and a donor’s obligation to pay a gift tax is a subordinate obligation for a donee’s duty to pay a gift tax.

[2] Article 29-2 (2) of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993) provides that a donor's obligation to pay gift tax does not change from a subordinate obligation to a main obligation. Thus, Article 38 of the former Enforcement Decree of Inheritance Tax Act (amended by Presidential Decree No. 14082 of Dec. 31, 1993) explicitly lists cases where the donee's obligation to pay gift tax is recognized as a subordinate obligation, and thus, it does not conflict with the provisions of the Inheritance Tax Act of the parent corporation.

[3] The case affirming the judgment of the court below holding that the donor's payment of gift tax on behalf of the donee on behalf of the donee is not a duty of paying gift tax but a donation by the donee on behalf of the donee, except for the case where it is recognized that the donor is liable to pay gift tax directly to the donor pursuant to Article 38 of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 14082 of Dec. 31, 1993)

[4] The principle of retroactive taxation prohibition does not restrict the application of new Acts and subordinate statutes to the taxation requirement facts that have been pending before or after the enactment or amendment of tax laws and subordinate statutes, or when there is a change in the interpretation or guidelines of the tax authority on the grounds that the pertinent laws and subordinate statutes cannot be applied to the taxation requirement facts that have been settled before the effective.

[1] Article 29-2 (2) of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993) / [2] Article 29-2 (2) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 4662 of Dec. 31, 1993) (see current Article 4 (3) of the Inheritance Tax and Gift Tax Act), Article 38 of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 14082 of Dec. 31, 1993) (see current Article 4 (3) of the Inheritance Tax and Gift Tax Act) / [3] Article 29-2 (2) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 4662 of Dec. 31, 193), Article 4 (3) of the former Framework Act on National Taxes (amended by Act No. 4662 of Dec. 31, 1993) (see current Article 38 (14) of the Framework Act)

[1] [2] [3] Supreme Court Decision 94Nu3698 delivered on September 13, 1994 (Gong1994Ha, 2670) / [1/2] Supreme Court Decision 91Nu12813 delivered on February 25, 1992 (Gong1992, 1201), Supreme Court Decision 93Da49581 delivered on March 22, 1994 (Gong1994Sang, 1313) / [2/4] Supreme Court Decision 94Nu14308 delivered on August 11, 1995 (Gong195Ha, 3136) / [4] Supreme Court Decision 93Nu13131 delivered on May 24, 1994 (Gong194Ha, 198Ha, 19639Ha decided on March 26, 196)

Plaintiff

Head of Seocho Tax Office

Seoul High Court Decision 96Gu45377 delivered on April 30, 1997

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

1. On the first ground for appeal

Article 38 of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 14082 of Dec. 31, 1993) is a donee, and the donor's obligation to pay the gift tax is a subordinate obligation to the donee, which is the principal obligation. Since Article 29-2 (2) of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993), the donor's obligation to pay the gift tax does not change into the principal obligation. Thus, the provision of Article 38 of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 14082 of Dec. 31, 1993) explicitly lists cases where the donee's obligation to pay the gift tax is recognized as a subordinate obligation, and it does not conflict with the provisions of the Inheritance Tax Act of the mother Corporation. (See Supreme Court Decisions 94Nu3698 of Sep. 13, 199; 94Nu194928 of Feb. 198, etc.).

In the same purport, the court below rejected the plaintiff's assertion that it was paid instead of gift tax imposed on the plaintiff by the deceased non-party 1, the donor, due to the donation, and held that it is subject to gift tax. The judgment below did not err in the misapprehension of legal principles as to Article 29-2 (2) of the former Inheritance Tax Act and Article 38 of the Enforcement Decree of the same Act, as otherwise alleged in the ground of appeal.

2. On the second ground for appeal

The principle of retroactive taxation prohibition is not to limit the application of new Acts and subordinate statutes, etc. to the facts that have been pending before or after the enactment or amendment of tax laws and subordinate statutes, or to the interpretation or guidelines of tax authorities for the interpretation or handling of the laws and subordinate statutes, but to limit the application of new Acts and subordinate statutes, etc. (see Supreme Court Decisions 93Nu131 delivered on May 24, 1994, 94Nu14308 delivered on August 11, 1995, 96Nu9423 delivered on October 29, 196, etc.).

In the same purport, the court below is just in holding that the deceased non-party 1's payment of gift tax on behalf of the plaintiff on December 21, 1991. Thus, the issue of whether it constitutes a gift subject to gift tax shall be determined by the law and the interpretation of the law at that time. Accordingly, inasmuch as the deceased non-party 1's payment of gift tax on behalf of the plaintiff constitutes a new donation, the defendant's imposition of gift tax on behalf of the plaintiff cannot be deemed as a violation of the principle of prohibition of retroactive taxation, and there is no error in the misapprehension of legal principles as to the principle of prohibition of retroactive taxation, as otherwise

3. All of the grounds for appeal cannot be accepted.

Therefore, the appeal is 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 Cho Chang-hun (Presiding Justice)