Whether a corporation exempted from corporate tax, etc. for the transfer of a factory in a large city pursuant to Article 42 (1) of the Regulation of Tax Reduction and Exemption Act shall additionally collect the exempted tax if it fails to construct or complete a new factory within the prescribed period without any cause (negative)

Where a domestic corporation that operates a business with factory facilities in a large city transfers the factory site and buildings first to another local government, and is exempted from corporate tax, etc. pursuant to Article 42(1) of the Regulation of Tax Reduction and Exemption Act, even if it fails to construct or complete a new factory within the period as prescribed by Article 36(5) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 11942, Jun. 30, 1986), if the cause is a time for the reason that the taxpayer cannot be responsible for such as an error in statutory interpretation of the relevant authority or an amendment of the statutes, the tax amount exempted pursuant to Article 42(3) and Article 36(6) of the same Decree shall not be collected.

Article 42 (1) of the Regulation of Tax Reduction and Exemption Act and Article 36 (5) of the Enforcement Decree of the same Act

Supreme Court Decision 86Nu266 Decided February 10, 1987 87Nu115 Decided July 21, 1987

Attorney Kim Jin-jin, Counsel for the defendant-appellant

The director of the Southern Incheon District Office

Seoul High Court Decision 87Gu1340 delivered on March 3, 1988

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

1. Determination on the second ground for appeal by Defendant Litigation Performers

Where a domestic corporation operating a business with factory facilities in a large city transfers the relevant factory site and building in order to relocate the factory to a provincial area, and is exempted from corporate tax, etc. pursuant to Article 42(1) of the Regulation of Tax Reduction and Exemption Act (hereinafter referred to as the "Act"), even if it fails to construct or complete a new factory within the period under Article 36(5) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 11942 of Jun. 30, 1986) prior to the amendment by Presidential Decree No. 11942 of the same Act (hereinafter referred to as the "Decree"), if the cause is the time for which the taxpayer cannot be held liable, such as error in statutory interpretation by the relevant authorities or amendment of the law, the amount of tax exempted pursuant to Article 42(3) of the Act and Article 36(6) of the Decree shall not be collected (see, e.g., Supreme Court Decision 87Nu115, Jul. 21, 1987; 26Nu66).

The judgment of the court below with the same opinion is just and not justified.

2. Determination on the ground of appeal No. 1

The judgment of the court below which held that the plaintiff failed to construct a new factory within the period under Article 36 (5) of the Decree on the grounds that the plaintiff could not be held liable for the damages due to the fact lawfully confirmed by the court below is justified.

The issue is without properly understanding the circumstances of the taxation disposition of this case, on the premise that the plaintiff started the business after completing the relocation of the factory and transferred the old factory, and thus, it cannot be accepted as it criticizes the judgment of the court below without reasonable grounds.

3. Therefore, the defendant's appeal is dismissed, and the costs of appeal are assessed against the losing defendant. It is so decided as per Disposition with the assent of all Justices who reviewed the appeal.

Justices Lee Jae-sung (Presiding Justice)