[1] Whether the secondary taxpayer may assert the defect in the disposition of imposition against the principal taxpayer in a lawsuit seeking revocation of the disposition of imposition of the secondary tax liability against himself/herself, regardless of whether the secondary tax liability is unlawful (affirmative)

[2] Whether res judicata effect of the final and conclusive judgment in a previous suit affects the subsequent suit in a case where the previous suit instituted by the principal taxpayer and the subsequent suit brought by the secondary taxpayer are different in each of the different dispositions (negative)

[3] The meaning of "justifiable cause" and criteria for determining land for non-business use under Article 84-4 (1) 1 of the former Enforcement Decree of the Local Tax Act

[1] Article 24 (1) and (2) of the Local Tax Act / [2] Article 8 (2) of the Administrative Litigation Act, Article 216 of the Civil Procedure Act / [3] Article 84-4 (1) 1 (current deletion) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 15835, Jul. 16, 1998)

[1] Supreme Court Decision 67Nu146 delivered on December 23, 1969 (No. 17-4, 25), Supreme Court Decision 79Nu270 delivered on November 13, 1979 (Gong1980, 12421) / [2] Supreme Court Decision 95Nu5820 delivered on April 26, 1996 (Gong196Sang, 1741) / [3] Supreme Court Decision 95Nu5257 delivered on December 8, 1995 (Gong196Sang, 431) Supreme Court Decision 2001Du1888 delivered on July 12, 2002 (Gong200Ha, 1981)

Plaintiff (Law Firm Gyeong et al., Counsel for the plaintiff-appellant)

Jinju City (Law Firm, Kim & Lee LLC, Attorneys Yu-pon et al., Counsel for the plaintiff-appellant)

Do Governor of Gyeongnam-do

Busan High Court Decision 2006Nu392 decided August 18, 2006

The judgment below is reversed, and the case is remanded to Busan High Court.

The grounds of appeal are examined.

1. As to the Defendant’s first ground of appeal

Article 24(1) of the Local Tax Act provides that “If the money collectible by a local government on the business for which the transferor's tax liability becomes final and conclusive prior to the transfer date is insufficient to cover the money collectible by the transferor as the property of the transferor, the transferee shall assume secondary tax liability for the shortage up to the limit of the value of the property acquired by transfer.” Paragraph (1) of the same Article provides that “The transferee shall be deemed a person who comprehensively succeeds all the rights and obligations concerning the business by workplace (in the case of the rights and obligations concerning the amount receivable, such obligations concerning the amount receivable shall be deemed a comprehensive succession even if the transferor does not succeed to the whole amount of the rights and obligations concerning the amount payable), and the transferor shall be deemed

However, such secondary tax liability is established separately from the main tax liability, and is based on the existence of the main tax liability. As such, the reason for the secondary tax liability is, in principle, the so-called secondary tax liability that may affect the secondary tax liability. Therefore, it is reasonable to view that the secondary tax liability can assert the defect of the disposition of imposition against the main taxpayer in the lawsuit seeking revocation of the secondary tax liability against himself/herself, regardless of the determination of whether the secondary tax liability is illegal (see Supreme Court Decisions 67Nu146, Dec. 23, 1969; 79Nu270, Nov. 13, 1979).

The judgment of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to the object or scope of objection in the revocation lawsuit for revocation of the second tax liability.

2. As to the Defendant’s ground of appeal No. 2 and the Defendant’s ground of appeal No. 1

A taxation disposition is a procedure to confirm and confirm specifically the contents of a taxation disposition that has been established objectively and abstract by satisfying the taxation requirements prescribed by law. The subject matter of a taxation disposition lawsuit is the illegality which is the cause of cancellation, and the subject matter of the judgment is the objective existence of the tax base and tax amount, which is the tax obligation confirmed by the taxation disposition (see, e.g., Supreme Court Decisions 78Nu345, Oct. 14, 1980; 89Nu5386, Mar. 23, 1990). Meanwhile, the res judicata effect of the judgment of cancellation only affects the judgment on the existence of illegality of an administrative disposition which is the subject matter of a lawsuit, so if the prior suit and the subsequent suit differ from the subject matter of a lawsuit, the res judicata effect of the judgment in the previous suit does not extend to the subsequent suit (see Supreme Court Decision 95Nu5820, Apr. 26, 1996).

In light of the reasoning of the judgment of the court of first instance, the court below determined that the lawsuit filed against the defendant by Tae Young-young Corporation, the main taxpayer of the lawsuit against the defendant was related to the disposition on November 21, 1998 against Tae Young-young unemployment, while this case concerns the second taxpayer's disposition on June 19, 204 against the plaintiff, who is the second taxpayer, and thus, the administrative disposition which is the object of the lawsuit for revocation is not identical, but cannot be deemed to be a person who succeeded to the standing of the plaintiff as to the dispute in the previous lawsuit, and thus, the res judicata effect of the previous lawsuit cannot be deemed to affect the plaintiff.

According to the above legal principles and records, the judgment of the court below is just, and there is no error in the misapprehension of legal principles as to res judicata as shown in the grounds of appeal.

3. As to the Defendant’s ground of appeal No. 3 and the Defendant’s Intervenor’s ground of appeal No. 2

“Justifiable reason” under Article 84-4(1)1 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 15835, Jul. 16, 1998; hereinafter “former Enforcement Decree of the Local Tax Act”) concerning land for non-business use includes not only external reasons that the corporation cannot use in mind, such as prohibition by law, restriction, etc., but also internal reasons beyond the grace period due to lack of time, even though it has made normal efforts to use in its unique duties. In determining whether a justifiable reason exists, considering the legislative intent of heavy taxation, the determination should be made on an individual basis based on specific matters, including whether the corporation is a profit-making corporation or a non-profit corporation; the length and degree of the preparation period required for using the land for its unique purpose in light of the purpose of acquiring the land; whether the corporation has made a strong effort to use the land for its unique duties (see, e.g., Supreme Court Decision 9Nu25875, Dec. 8, 1995; 2008Du81785.

citing the reasoning of the first instance judgment, the lower court determined that, in light of the following circumstances: (a) although it is found that Tae Young-young Unemployment acquired the instant land for the business of Jinju department stores on December 20, 1995 and did not directly use it in the business of Jinju department stores within one year, the grace period from the acquisition of the instant land; (b) in order to start construction works of Jinju department stores, it was necessary to remove buildings on the instant land first; and (c) the removal work was completed on April 29, 1996, which was commenced on April 29, 196 and completed on June 30, 196, which was about 2 months before the grace period, corresponding to the commencement of construction works within the grace period, it constitutes a case where justifiable grounds provided for in Article 84-4(1)1 of the former Enforcement Decree of the Local Tax Act exist.

However, the following circumstances revealed by the record, i.e., Taeyoung Unemployment failed to make a report on the commencement of construction works within the grace period under Article 84-4 (1) 1 of the former Enforcement Decree of the Local Tax Act, and the period during which the removal work was made is about two months, and the reason why there was a building of a significant scale to be removed on the land of this case, etc. was already existing at the time of the acquisition of the land of this case, and it is difficult to find out the special circumstances that there was any unexpected reason despite the efforts to remove the land of this case, building permission, the progress and contents of construction work, and the actual disability and degree of disability in this Act, it cannot be deemed that it was a justifiable reason under Article 84-4 (1) 1 of the former Enforcement Decree of the Local Tax Act for not using the land of this case directly for its unique duties.

Nevertheless, the court below judged otherwise. The judgment of the court below is erroneous in the misunderstanding of legal principles as to legitimate grounds under Article 84-4 (1) 1 of the former Enforcement Decree of the Local Tax Act, and it has affected the conclusion of the judgment. The ground of appeal pointing this out is with merit.

4. Conclusion

Therefore, without examining the remaining grounds of appeal by the Defendant and the Intervenor, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Nung-hwan (Presiding Justice)