Plaintiff (Attorney Song Dong-ho, Counsel for the plaintiff-appellant)

Head of Geumcheon-gu Daejeon Metropolitan City

September 1, 2010

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s disposition of imposition of KRW 276,00,00,000 against the Plaintiff on February 18, 2010, in excess of KRW 114,46,821, shall be revoked.

1. Details of the disposition;

A. From August 1, 1987 to December 31, 2008, the Plaintiff was engaged in the business of collecting and processing scrap metals, etc. and supplying them to a branch factory after completing business registration with the trade name of “○○○○○ Office” in the Jung-gu, Daejeon Special Metropolitan City (number 1 omitted), Daejeon Special Metropolitan City (hereinafter “instant land”). Meanwhile, on the other hand, on July 15, 2008, the Plaintiff was established at the representative director of the Jung-gu, Daejeon Special Metropolitan City (hereinafter “the instant company”) for the purpose of collecting and selling scrap metals, scrap metals, plastic materials, and recycling materials, and completed the registration and business registration, and had the Plaintiff take office from the date of the instant business to the said individual company, and the Plaintiff was engaged in the instant business.

B. The instant land, which was used as the instant company’s place of business, was incorporated into the business site of the Daejeon Metropolitan City’s notification No. 2009-206 and No. 2009-207, August 14, 2009. The Plaintiff acquired real estate in Daejeon Metropolitan City and the instant land at KRW 3,511,590,850 on January 22, 2010, after going through the consultation procedure with the Daejeon Metropolitan City and the instant land, for the purpose of using it as the instant company’s site. In addition, the Plaintiff acquired the instant real estate at KRW 10,472 square meters on February 18, 2010 (number 2 omitted), large 10,472 square meters, and (number 3 omitted), large 1,007 square meters on the said land, and KRW 13,094,600,000 on the said land (hereinafter “the instant real estate”).

C. On February 18, 2010, the Plaintiff reported and paid KRW 120,000,000 for registration tax, and KRW 24,000,00 for local education tax, and KRW 120,000 for acquisition tax on March 22, 2010 for total amount of KRW 120,000 for special rural development tax, and KRW 276,00,000 for total amount of KRW 12,000 for special rural development tax, and the Defendant determined to collect the Plaintiff’s local tax return and payment (local tax on the method of return and payment becomes final and conclusive when a taxpayer files a tax return, and as such, the Plaintiff reported and paid the amount of tax as above is referred to in the disposition of this case).

D. On February 24, 2010, the Plaintiff filed an objection with Daejeon Metropolitan City to the effect that the Defendant’s taxation on the instant real estate is improper, although it constitutes a substitute acquisition due to land expropriation, etc., and constitutes a non-taxable object under Article 109 of the Local Tax Act and Article 79-3 of the Enforcement Decree of the same Act. However, the said objection was dismissed on May 3, 2010.

[Ground of recognition] Facts without dispute, Gap evidence 1 to Gap evidence 7, Eul evidence 1, Eul evidence 2 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff asserts that the acquisition of the real estate of this case constitutes a non-taxable object under Article 109 of the Local Tax Act, but the disposition of this case, which the defendant imposed acquisition tax, etc., is unlawful.

(1) From around 1997, the Plaintiff engaged in a business as an individual entrepreneur without closing or suspending the business in the middle. However, on July 15, 2008, the Plaintiff changed the business entity to the company of this case while engaging in the same business at the same place as the Plaintiff’s individual and its family members. Since the business place of this case is substantially the same as that of the Plaintiff’s individual, it is reasonable to exempt the Plaintiff from taxation by deeming the Plaintiff as the person who registered the business in this case’s land. However, on the ground that the Plaintiff was an absentee real estate owner under Article 79-3 of the Enforcement Decree of the Local Tax Act, which provides for the exception of non-taxation under Article 109 of the Local Tax Act, on the ground that the Plaintiff was a business proprietor who closed his business prior to the date of the public notice of the approval of the business, it is unlawful to deem the Plaintiff as an absentee real estate owner. In addition

(2) In addition, on August 14, 2009, the date of the public notice of project approval of the project in this case, the Plaintiff continued to reside in the apartment located in the Seosung-dong, Daejeon-dong (Seongdong 4 omitted), which was not connected to the land in this case. However, the purport of recognizing special taxation is to block real estate speculation. The purport of recognizing special taxation is that only the person who resides in the Gu adjacent to the local tax law is to block speculation, and even if the Plaintiff did not engage in speculative act, the Plaintiff was residing in the same residential area. Furthermore, the Daejeon Metropolitan City should compensate the absentee real estate owner of the land exceeding KRW 100 million with the claim for the land compensation exceeding KRW 100 million, the Plaintiff cannot be deemed the owner of the absentee real estate in light of the fact that the Plaintiff paid the full amount of monetary compensation to the Plaintiff. In addition, when interpreting the law as the Defendant, it is necessary to transfer the residence to the adjacent area only in order not to be the owner

B. Relevant statutes

It is as shown in the attached Form.

(c) Markets:

(1) Facts recognized

According to the purport of Gap evidence 2, Gap evidence 5 (including provisional number) through Gap evidence 7, Gap evidence 9 through Eul evidence 13, and the purport of the whole pleadings, the plaintiff registered his business from August 1, 1987 to December 31, 2008 with the trade name "○○ Office" from the land of this case and operated the business of collecting, processing, and selling scrap metal as his personal business, ② on July 15, 2008, the company of this case was established on July 200, the representative director of the company of this case was 12,000, the plaintiff's wife of this case 2,000, the non-party 3, the non-party 4,000, the non-party 4,000, the non-party 8, the plaintiff's residence of this case, and the non-party 3, the non-party 2, who was the director, was not allowed to acquire the land of this case from Daejeon Metropolitan City, the land of this case 200 years to 8.

(2) Determination

(A) According to Articles 109 and 127-2 of the Local Tax Act, where a person who owns a real estate which is expropriated within a district where a project is publicly announced under the relevant Acts and subordinate statutes, such as the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects (hereinafter “Public Works Act”), enters into a contract for real estate, etc. which is to substitutely acquired after the date of the contract or the date of the public announcement of the project approval, or obtains a building permit and then acquires compensation therefor within one year from the date of the last receipt, the acquisition tax and registration tax for the acquisition shall not be levied unless the total amount of the value of the newly acquired real estate does not exceed the total value of the previous real estate. However, if an absentee real estate owner acquires real estate as prescribed by the Presidential Decree by substitute, it shall be excluded from the object of non-taxation. Under Article 79-3(2) of the Enforcement Decree of the Local Tax Act, the phrase “the owner of an absentee real estate as prescribed by the Presidential Decree” is a person who owns the real estate which is expropriated within the district where it is not farmland.

(B) Based on the facts acknowledged earlier, the Plaintiff closed its business on December 31, 2008, which was prior to the public announcement date of the public announcement date of the public announcement of the public announcement of the public announcement of the development project in the middle village, and thereafter, the instant company started its business after completing its business registration in the land in this case. As such, the Plaintiff cannot be deemed to have operated its business directly in the land in this case at the time of the public announcement date of the public announcement. The instant company is not the owner of the instant land, and the instant land is not expropriated due to public interest, so the Plaintiff cannot be deemed to have continued its business in the land in this case for 1 year prior to the public announcement date of the public announcement date of the public announcement. As seen earlier, the Plaintiff cannot be deemed to have continued its business in this case as an individual’s business in which the Plaintiff had already closed its business at the time of the public announcement date of the public announcement date of the public announcement date of the public announcement date of the public announcement date of the public announcement date of the public announcement, and the Plaintiff’s company cannot be deemed to have any special reason for the Plaintiff’s corporate entity in this case.

(C) Meanwhile, even if the land subject to expropriation is not connected to the plaintiff's residence, the plaintiff cannot be deemed an absentee real estate owner under Article 79-3 of the Enforcement Decree of the Local Tax Act, so the above provision shall be strictly interpreted as stated in the above legal principles. As seen above, the plaintiff's assertion is without merit unless it is geographically connected to the Daejeon Metropolitan City where the plaintiff's residence belongs and the Daejeon Metropolitan City where the land of this case belongs.

Accordingly, the Plaintiff’s resident registration and one year period of residence under Article 79-3(2) of the Enforcement Decree of the Local Tax Act are sufficient when the Plaintiff met only during the period prior to the public announcement date of the project approval. According to the evidence No. 9, the Plaintiff’s assertion that the Plaintiff is not an owner of an absentee real estate since it can be acknowledged that the Plaintiff had resided in Daejeon Dong-gu or Daejeon-gu adjacent to the land subject to expropriation for 23 years. However, the Plaintiff’s assertion that the Plaintiff is not an owner of an absentee real estate is 1 year from the date of the public announcement date of the project approval, and the Plaintiff

(D) In addition, the Plaintiff’s assertion that the absentee real estate owner is not the Plaintiff’s absentee real estate owner on the ground that the Daejeon Metropolitan City paid full compensation in cash to the Plaintiff even though it is obliged to compensate for the land exceeding KRW 100 million, but Article 63(6) of the former Public Works Act (amended by Act No. 10239, Apr. 5, 2010) provides that the Plaintiff shall not be obliged to pay the land compensation with bonds to the absentee real estate owner, but only provides that the Plaintiff may pay the land compensation with bonds, so it cannot be concluded that the Daejeon Metropolitan City is not the absentee real estate owner, solely on the ground that the Plaintiff was paid the land compensation in cash. Therefore, the Plaintiff’s assertion is without merit ( even if the Daejeon Special Metropolitan City considers the Plaintiff as not the absentee real estate owner, and thus the Plaintiff is not the absentee real estate owner, so long as it falls under the requirements prescribed in Article 79-3 of the Enforcement Decree of the Local Tax Act and thus, the Plaintiff is not the owner of the real estate in question.

(E) In addition, the Plaintiff’s assertion to the effect that when interpreting the local tax law as above, the restriction on the conversion of business into a corporation and the relocation of a house to an area other than the adjacent area would infringe on fundamental rights under the Constitution. However, the instant disposition merely prevents the Plaintiff from enjoying exceptional benefits, such as special taxation incidental to the Plaintiff’s freedom of business conversion or relocation based on fundamental rights under the Constitution, and thus, the instant disposition cannot be deemed unlawful as it violates the Plaintiff’s fundamental rights

(3) Sub-decisions

Therefore, the plaintiff's assertion is without merit, and the disposition of this case where the defendant collected local taxes by deeming the plaintiff as an absentee real estate owner under Article 97-3 (2) of the Enforcement Decree of the Local Tax Act is legitimate.

3. Conclusion

Therefore, the plaintiff's claim of this case is without merit, and it is so decided as per Disposition by the court below.

[Attachment]

Judges Choi Byung-jin (Presiding Judge)

(1) The Supreme Court Decision (Supreme Court Decision 2000Du1836 Decided August 23, 2002, 94Nu2077 Decided May 10, 1994, etc.) mentioned by the Plaintiff in the same claim is all the previous provisions (i.e., Article 79-3(2) of the Enforcement Decree of the Local Tax Act before the amendment (i.e., where the pertinent real estate is located or where the pertinent real estate is located or where the Gu/Si/Eup/Myeon or Eup/Myeon adjacent thereto is located or where the resident or the business is registered for at least one year, but where the resident or the business is not actually residing or operated for at least one year after the date of the contract or the public announcement of the project approval, it shall not be applied immediately to the case where the resident or the amended Act has not yet been used as the resident or the business registration for at least one year prior to the date of the contract or the amended Act).