Busan High Court Decision 2016 Busan High Court Decision 2858 ( December 07, 2016)

A disposition of rejection against a request for return of erroneous or erroneous payments shall not be subject to an appeal litigation.

A rejection disposition against a request for return of erroneous or erroneous payment under Article 51 of the Framework Act on National Taxes cannot be a disposition subject to appeal litigation, and there is no room to regard it as a subsequent request for correction

Request for correction, etc. under Article 45-2 of the Framework Act

2017Guhap50469 Disposition rejecting the refund of value-added tax

○○○ Incorporated Company

○ Head of tax office

November 14, 2017

2018.01.09

1. The instant lawsuit shall be dismissed.

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

Cheong-gu Office

The Defendant’s refusal to refund KRW 1,012,679,753 for the second term portion of value-added tax in July 5, 2016 to the Plaintiff on July 5, 2016 is revoked.

1. Details of the disposition;

A. The Plaintiff is a company that processes and assembles Joseon Blus. Around February 2007 】 (Around February 2, 2007 】 (Blus city for the creation of shipbuilding facilities site from the Do Governor 】 area 】 】 (i) 】 96,308 square meters of the reclaimed land of this case on the one-time line 】 (hereinafter “the reclaimed land of this case”). The construction was suspended at a fair rate of 46.83% around June 2009.

B. On November 13, 2009, the Plaintiff agreed to contribute the instant reclaimed land to KRW 9,440,476,000 as the equity investment amount of KRW 9,40,476,00, and issued 1,88,095 shares of common shares (hereinafter “the instant new shares”) from △△ (hereinafter “the instant new shares”) with the Plaintiff around November 18, 2009.

C. On March 2010, the Plaintiff issued a revised tax invoice of KRW 9,440,475,00 for supply price to △△△ upon request for the issuance of a tax invoice to impose value-added tax on the reclaimed land of this case. On March 26, 2010, the Plaintiff issued a revised tax invoice of KRW 9,447,50 for supply price, KRW 4,720,238 for the investment in kind of the reclaimed land of this case, KRW 47,202,375 for additional tax returns, KRW 16,709,640 for additional tax, KRW 1,012,679,753 for additional tax return of KRW 209 for the investment in kind to the Defendant.

The Defendant issued a notice of unpaid payment on April 30, 201 by adding additional amounts to additional amounts, such as additional payments for wrong payment, to the Plaintiff. On July 21, 2011, the Plaintiff did not pay the said additional amount.

D. On February 22, 2010, 2010, the lower court (Seoul High Court 201Na17030) declared that the issuance of the new shares was null and void on the ground that the issuance of the new shares was null and void on November 18, 2009, which was the largest shareholder of △△△△ (hereinafter referred to as the “exclusive trust”) filed a lawsuit seeking invalidation of the issuance of the new shares by asserting that the issuance of the new shares was null and void. On November 26, 2010, the lower court issued the new shares and allocated them to the friendly Plaintiff for the purpose of defending management rights, on the ground that the issuance of the new shares was in violation of Article 418(2) of the Commercial Act, and the lower court (Seoul High Court 201Na17030) appealed the litigation by the representative director of △△△△, but the lower court dismissed the appeal by the Plaintiff on December 1, 2012.

E. On August 201, 201, the Plaintiff filed a claim with the Seoul Southern District Court for a payment order claiming payment of KRW 944,047,600 of value-added tax paid by filing a value-added tax report on the investment in kind of the instant reclaimed land with the Seoul Southern District Court (Seoul Southern District Court 201 tea 13401). On September 8, 2011, the said court ordered the Plaintiff to pay KRW 944,047,60 of value-added tax amount, and the said payment order was finalized around that time without the objection of △△ (hereinafter “instant payment order”).

F. When the Plaintiff applied for compulsory execution based on the instant payment order on December 6, 2013, △△△ issued new shares to the Plaintiff on December 6, 2013 by the Seoul Southern District Court 2013Gahap107936, which was denied the validity of the instant reclaimed land investment in kind. Accordingly, it is invalid for △△△ to have agreed to pay the Plaintiff the value-added tax on the instant reclaimed land. Therefore, the above court accepted the Plaintiff’s assertion on July 7, 2015, and rendered a judgment denying compulsory execution based on the instant payment order. Accordingly, the lower court rejected the Plaintiff’s appeal on March 30, 201, and transferred the Plaintiff’s assignment of the instant reclaimed land to the Plaintiff under Article 25(1)5 of the former Value-Added Tax Act (amended by Act No. 2516, Feb. 16, 2016; Act No. 14538, Mar. 30, 2016).

G. Around May 25, 2016, the Plaintiff filed a civil petition for grievance with the Anti-Corruption and Civil Rights Commission for claiming refund of overpaid or erroneously paid amounting to KRW 944,047,550, which was paid on July 21, 201. On June 20, 2016, the Anti-Corruption and Civil Rights Commission responded to the purport that the Plaintiff would submit a petition for refund of overpaid or erroneously paid amount to the Plaintiff before the national tax refund expires, and that the Plaintiff would use the petition for return of unjust enrichment

H. On June 1, 2016, the Plaintiff filed an application for the refund of value-added tax for the refund of overpaid or erroneously paid tax amounting to KRW 944,047,550 (hereinafter “instant value-added tax”) with the Defendant (hereinafter “instant application”). The Defendant dismissed the application on the ground that the Plaintiff erroneously paid the instant value-added tax or erroneously paid the value-added tax, or that the State cannot be deemed to have made unjust enrichment (hereinafter “instant disposition”).

I. The Plaintiff appealed and filed an appeal with the Tax Tribunal on July 8, 2016. However, the Tax Tribunal dismissed the appeal on December 7, 2016 (On the other hand, △△△ District Tax Office requested for correction to reduce the input tax amount of KRW 944,047,50 from the output tax amount in 2010, and the head of △△△△ District Tax Office dismissed the request for correction on May 18, 2010, and all the administrative appeals thereon were dismissed).

(j) On July 19, 2016, the Plaintiff filed a lawsuit claiming the return of the value-added tax in this case against the State by asserting that it was unjust by the State due to an erroneous payment of national taxes. On April 11, 2017, the said court rendered a judgment dismissing the Plaintiff’s claim on the ground that the defect in the Plaintiff’s return and payment of value-added tax exists by investing the reclaimed land in kind and paying the value-added tax is serious or unclear, and the Plaintiff’s appeal is currently in progress.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 18, Eul evidence Nos. 1 through 4 (including branch numbers; hereinafter the same shall apply), the purport of the whole pleadings

2. Relevant statutes;

Attached Form is as shown in the attached Form.

3. Judgment on the main defense of this case

A. Summary of the main defense

The Defendant asserts that the instant disposition, which the Plaintiff refused to refund the value-added tax of this case, is unlawful, since the disposition of this case is not subject to appeal litigation.

B. Determination

Article 51 of the former Framework Act on National Taxes (wholly amended by Act No. 14382, Dec. 20, 2016; hereinafter the same) constitutes unjust enrichment received or held by the State without any legal cause despite the existence of tax liability from the beginning or the lapse of the tax liability. The provisions pertaining to the determination of national tax refund merely stipulate internal procedures for refund of the national tax refund for which the tax payer’s right to repayment has already become final and conclusive, and it does not become final and conclusive only by the determination of national tax refund under the above provision. Thus, the determination of refusal of refund to the above determination of national tax refund or the request for this determination is not a disposition that has a specific and direct effect on the existence or scope of the taxpayer’s right to repayment, and thus is not a disposition subject to an administrative litigation (see, e.g., Supreme Court Decision 2007Du4018, Nov. 26, 2009).

According to the statement in Eul evidence No. 1, June 1, 2016, the plaintiff's tax agent submitted an application to the defendant on July 21, 2016, stating that since the value-added tax of this case paid by the plaintiff on July 21, 201 falls under the amount of erroneous or erroneous payment, the plaintiff's agent submitted to the defendant an application under the title "Submission of a written claim for refund of erroneous or erroneous payment" to immediately refund the amount of the value-added tax, and the amount of value-added tax 1,012,679,750 and additional dues, etc. paid by the claimant on the basis of the above-mentioned facts are the amount of erroneous or erroneous payment under Article 51 of the Framework Act on National Taxes. In full view of the above-mentioned facts, it can be acknowledged that the amount of value-added tax paid by the claimant on July 21, 2011 should be immediately refunded in accordance with Articles 51 and 54 of the Framework Act on National Taxes.

According to the above facts, the Plaintiff’s application to the Defendant on June 1, 2016 is apparent that the claim for return of erroneous or erroneous payment under Article 51 of the former Framework Act on National Taxes has been filed. Thus, even if the disposition in this case refused the Plaintiff’s claim for return of erroneous or erroneous payment, it shall not be a disposition that specifically and directly affects the existence or scope of the Plaintiff’s claim for refund of national

Therefore, there is no disposition to revoke the plaintiff's lawsuit of this case, so the defendant's main defense is justified.

4. Judgment on the plaintiff's assertion of family

A. The plaintiff's second letter of defense against the defendant's main defense

1) The Plaintiff asserts that the instant application is an ex post facto request for correction pursuant to Article 45-2(2)1 of the former Framework Act on National Taxes, and the Defendant’s refusal disposition is subject to appeal litigation as a subsequent request for correction. The purport of the Plaintiff’s assertion is that even though the instant application is prepared as a claim for refund by erroneous or erroneous payment, the court’s determination is different by pre-explosion of the instant application, notwithstanding the language and text thereof.

2) According to the Plaintiff’s assertion, the appellate court (Seoul High Court 2015Na2054538) held that the agreement on the investment in kind between the Plaintiff and △△△ in this case cannot be transferred by dividing it into the permission for reclamation of public waters, and thus, it does not constitute the supply of goods under the Value-Added Tax Act because the agreement on the investment in kind between the Plaintiff and △△△ (Seoul High Court 2015Na2054538) did not constitute a transaction for which the instant reclaimed land was transferred and invalid.

3) Accordingly, the above judgment constitutes “the time when the transaction, act, etc., which served as the basis for the calculation of the tax base and the amount of tax, becomes final and conclusive as different by a ruling on the relevant lawsuit” as prescribed in Article 45-2(2)1 of the former Framework Act on National Taxes.

4) The Plaintiff filed the instant application within three months from the time the said judgment became final and conclusive, which constitutes a subsequent claim for rectification to the effect that the instant value-added tax amount would be refunded, and the instant application is not a claim for the refund of national tax overpaid or erroneously paid.

B. Determination

1) First, as seen earlier, it is apparent that the Plaintiff’s tax agent (corporation) who is an expert in tax litigation clearly files an application for the refund of national taxes under Article 51 of the former Framework Act on National Taxes. Therefore, it is not likely to harm the Plaintiff’s assertion as a subsequent request for correction pursuant to Article 45-2(2)1 of the former Framework Act on National Taxes (Evidence A5).

2) Moreover, the Seoul High Court Decision 2015Na2054538 does not constitute a judgment that served as the basis for filing a subsequent claim for correction pursuant to Article 45-2(2)1 of the former Framework Act on National Taxes.

The purpose of Article 45-2(2) of the former Framework Act on National Taxes is to expand the protection of taxpayers’ rights by allowing taxpayers to file a request for reduction of the tax base and the amount of tax when there is a change in the basis of calculation of the tax base and the amount of tax due to the occurrence of a certain later cause after the establishment of the tax liability. The term “when a transaction or act, etc., prescribed in Article 45-2(2)1 of the former Framework Act on National Taxes, becomes final and conclusive as different by a judgment in the relevant lawsuit” refers to a case where a dispute arises over the transaction, act, etc., which is the basis of calculation of the tax base and the amount of tax after the initial return, determination or correction, and then becomes final and conclusive by a judgment in the relevant lawsuit (see, e.g., Supreme Court Decision 2009Du2379, Jul. 28, 2011).

As seen earlier, it is invalid from the beginning that the Plaintiff transferred the instant reclaimed land, even though it was not possible for the Plaintiff to transfer the reclaimed land separately from the public waters reclamation license in accordance with the provisions of the relevant laws and regulations such as the Public Waters Act, and thus, it is not the supply of goods subject to the collection of value-added tax.

Therefore, the purport of the above judgment is merely to confirm the invalid transaction from the beginning, and since the existence or legal effect of the transaction or act, etc. is not determined to be different from the first one due to the dispute over the validity, etc. between the parties to the transaction after the first transaction, it cannot be deemed that the above judgment constitutes the basis for a subsequent request for correction.

As above, the instant application cannot be deemed to be an application for ex post facto correction under Article 45-2(2)1 of the former Framework Act on National Taxes. However, it may be deemed that the instant application is an ordinary request for correction pursuant to Article 45-2(1) of the former Framework Act on National Taxes (amended by Act No. 12848, Dec. 23, 2014). The foregoing provision provides for the exclusion period for filing a request for correction within three years from the statutory reporting period. The transaction date of the instant application for investment in kind is November 8, 2009; according to Articles 5(1)1 and 49(1) of the Value-Added Tax Act, the second value-added tax period of the Value-Added Tax Act (amended by Act No. 981, Jul. 1, 2009; Dec. 31, 2009) is unlawful by filing an application for exclusion and correction of the instant report period with the statutory reporting period as of January 25, 2010>

3) Meanwhile, the Plaintiff’s assertion to the effect that the disposition of this case should be deemed to have been rejected by the Plaintiff’s request for correction since it is extremely unfair for the Plaintiff to pay the value-added tax because it is not necessary for the Plaintiff to pay the value-added tax, and that this part of the Plaintiff’s assertion is without merit.

A) According to the evidence No. 18, the Plaintiff’s employee at the time (the president of the Strategic Headquarters) knew that the instant reclaimed land was not subject to value-added tax, but was issued a tax invoice upon the request by △△ upon having requested the Plaintiff to pay value-added tax, and thus, the Plaintiff’s own payment of value-added tax is the Plaintiff’s responsibility.

B) As seen earlier, △△ has received the instant reclaimed land from a friendly Plaintiff for the purpose of maintaining the management right, and allocated new stocks, and during that process, he committed an act that infringes on the preemptive rights of existing shareholders, and the Plaintiff acted in that act.

C) As seen earlier, △△△△ had already filed an application for rectification to revoke the instant value-added tax amount with 2010, and was dismissed, and the administrative appeal was also dismissed.

Considering the above circumstances, the Plaintiff’s failure to file a claim for correction of the value-added tax of this case is due to the Plaintiff’s erroneous determination and active non-exercise of rights. Accordingly, this court does not seem to have any need to arrange as a subsequent claim for correction of a clear application for refund of national tax erroneously or erroneously.

5. Conclusion

Therefore, the lawsuit of this case is unlawful and dismissed, and it is so decided as per Disposition.