Seoul Administrative Court 2010Guhap3870 ( October 27, 2011)

Cho High Court Decision 2010Du0214 (Law No. 25, 2010)

(1) The amount of penalty paid upon the termination of the lease agreement shall not be refunded to the existing lease deposit that has been paid in excess.

A request for a trial filed after the lapse of 90 days from the date of becoming aware of the disposition of imposition following the designation of the secondary taxpayer is unlawful and the period for filing the lawsuit has expired, and the payment in this case is not only returned to the previous vehicle which was paid in excess, but also constitutes a penalty for breach of contract upon

2011Nu40839, revocation of disposition, etc. of imposing corporate tax

SP et al.

Head of Central Tax Office

Seoul Administrative Court Decision 2010Guhap33870 decided October 27, 2011

May 30, 2012

July 11, 2012

1. The part of the judgment of the first instance against the Plaintiff A shall be revoked. The lawsuit filed by the Plaintiff A shall be dismissed.

2. The appeal filed by Plaintiff XX is dismissed.

3. The costs of the lawsuit are assessed against the Plaintiffs.

The decision of the first instance court is revoked. On February 18, 2009, the defendant designated the Plaintiff Company as the second taxpayer on April 17, 2009 and revoked the disposition of imposition of KRW 000 of the corporate tax for the year 2003 (hereinafter referred to as the “Plaintiff Company”) against the Plaintiff Company XX (hereinafter referred to as the “Plaintiff Company”) (hereinafter referred to as the “Plaintiff Company”).

1. Details of disposition;

A. On September 7, 2000, the husband ParkB of Jung-CC, the representative director of the OB Co., Ltd. (hereinafter referred to as the "OO"), recommended the Plaintiff Lee Jung-gu, Seoul, to invest in the business of operating △△△△ (hereinafter referred to as the "△△△△△"), by leasing buildings located in XX 00-0, and located in Seoul, Jung-gu, Seoul (hereinafter referred to as the "the building in this case"). This was accepted the proposal of ParkB and agreed to establish and operate the Plaintiff Company (hereinafter referred to as the "the business in this case") with ParkB, Jung-gu, and the business in this case around September 7, 200.

B. On September 4, 200, theO entered into a lease agreement with Hadddi et al. (hereinafter referred to as Haddi et al) and Haddi et al. to lease the instant building from October 21, 2000 to October 20, 201 (it shall be renewed by the agreement of the parties before the expiration of the contract, but shall be automatically extended and the two-year contract period shall be guaranteed), lease deposit amount of KRW 00, and monthly rent of KRW 00 (the separate payment of value-added tax of KRW 00).

C. On September 4, 200, theO entered into a sublease contract with △△△△△ and the building in this case as the monthly rent of KRW 000 or the amount of KRW 0.16 of the monthly sales of △△△△△△△△ (excluding value-added tax). The sub-lease contract concluded that, if the above lease contract is rescinded or terminated due to the reasons attributable to theOO and the period of business operation of △△△△△△ is less than four years and ten months, the OO would be obligated to pay the damages agreed on the △△△△△△△ (00 won if the period of business operation is less than one year, 00 won if it is less than two years, 00 won if it is less than three years, 00 won if it is less than four years, and 00 won if it is less than four years and 10 months, respectively).

D. On September 10, 200, the Plaintiff Company agreed to lease the instant building under the same conditions as Hadd, etc. (hereinafter “instant lease contract”) and agreed to sublease the instant building under the same conditions as △△△. (hereinafter “the instant sublease contract”).

E. On October 21, 200, the Plaintiff Company paid KRW 000,000 as lease deposit plus KRW 000,000,000,000,000,000,000 from Doha, etc., and thereafter, △△△, the former lessee, operated the clothing store in the instant building (hereinafter “instant store”).

F. Hadd, etc. sold the instant building to △△ on January 27, 2003, and on February 27, 2003, △△△ transferred KRW 000 to △△△ upon the termination of the instant lease agreement, as the lease deposit and penalty, etc. Around May 2003, △△△△ again remitted KRW 00 won to the Plaintiff Company and KRW 000,000 in total, around July 2003.

G. After conducting a tax investigation on △△△ in around 2008, the head of Mapo Tax Office determined that the Plaintiff Company’s 000 won out of 000 won received from △△△△ in 2003 (hereinafter “the instant payment”) constituted penalty upon the termination of the instant lease agreement, and notified the Defendant of the taxation data.

H. On February 18, 2009, the Defendant imposed corporate tax of 000 won on the Plaintiff Company for the year 2003, but the Plaintiff Company was delinquent (the Plaintiff Company was dissolved on December 4, 2006). On April 17, 2009, the Plaintiff Company designated the Plaintiff Company as the oligopolistic shareholder on the Plaintiff Company’s shareholder registry (shares 99.96%) and notified the Plaintiff Company that it would pay KRW 000 of the tax amount equivalent to the Plaintiff Company’s share out of the amount in arrears, and the notification reached the Plaintiff Company on April 20, 2009.

On May 18, 2009, the Plaintiff Company filed an objection with the director of the Seoul Regional Tax Office regarding the imposition disposition of corporate tax for the year of 2003. On July 22, 2009, the director of the Seoul Regional Tax Office rendered a reinvestigation on the suitability of appropriation of goodwill and depreciation, and the propriety of recognition of rent for out-of-the-counter payment, and made a reinvestigation on the determination of correction, maintenance, or revocation of the imposition disposition. On October 1, 2009, the Defendant made an investigation upon a decision of reinvestigation, and then reduced corporate tax for the year of 2003 from KRW 00 to KRW 00 (hereinafter referred to as the “final reduced disposition”). On February 18, 2009, the Defendant issued the Plaintiff Company a disposition of reduction of corporate tax for the year of 200 won to the Plaintiff Company as KRW 200 (hereinafter referred to as “the Plaintiff’s final disposition of reduction of corporate tax for the year of 200 or less”).

I. On December 28, 2009, the Plaintiffs filed a request for a trial with the Tax Tribunal on the first and second imposition dispositions, and on May 25, 2010, the Tax Tribunal confirmed whether the Plaintiff’s shares owned by the Plaintiff A are Plaintiff A and decided to conduct a re-audit that the remainder of the request for a trial is dismissed. The Defendant confirmed by OO, etc. that the Plaintiff is the owner of the nominal shares, and notified the Plaintiff A of the results of the second imposition disposition that the second imposition disposition is correct around June 2010.

Grounds for Recognition: Facts without dispute, Gap evidence Nos. 1, 3, 4, 7, 13, 14, 15, Eul evidence No. 1 through 7 (including paper numbers; hereinafter the same shall apply), the purport of the whole pleadings

2. The plaintiffs' assertion

(a) The assertion that it is not a penalty (Plaintiffs);

ParkB guaranteed the monthly sales revenue of KRW 00 won at the time of proposing investment in the Plaintiff A. Based on this, at the time of entering into the instant lease agreement, the Plaintiff Company entered into the instant lease agreement with the Had, etc., that the monthly sales revenue of the instant store would be KRW 000,000, and if the monthly sales revenue is below KRW 000,000, the monthly sales revenue would be KRW 000,000,000,000,000,000,0000,000,0000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,00,000,00.

B. The plaintiff Lee Dong-A is not an oligopolistic shareholder

Of the total 10,00 shares issued on the register of shareholders of the Plaintiff company, 9,96 shares in the name of the Plaintiff is deemed to be the name of the Plaintiff. However, at the time of the incorporation of the Plaintiff company, the O paid 00 won of the shares at the time of the establishment of the Plaintiff company, as well as the O issued to the Plaintiff, a written agreement that stated that the actual owner of 6,000 shares of 9,966 shares is an OO was an OO, and issued by the OO to the Plaintiff. Considering the fact that the OO was engaged in the accounting of the Plaintiff company, banking transactions, payment of corporate tax, distribution of profits, etc., it cannot be deemed to be the largest shareholder of the Plaintiff company, and rather, the OO, who is the owner of 6,000 shares of the Plaintiff company, constitutes the second taxpayer. Therefore, a disposition imposing taxes on the Plaintiff under a different premise is unlawful.

3. Relevant statutes;

The entries in the attached Table-related statutes are as follows.

4. Determination as to the action brought by the plaintiff Lee Dong-A

A. Determination on the legitimacy of the lawsuit

We examine whether the action made by thisA is unlawful or not, even with the time limit for filing the action.

In a case where a tax appeal is not filed within 90 days from the date on which the existence of a disposition is known, the subsequent lawsuit filed is unlawful as the period for filing a lawsuit has expired. After a ruling on a tax appeal filed in excess of 90 days from the date on which the relevant disposition is known, a lawsuit seeking revocation against the original disposition is filed within 90 days from the date on which the written ruling was served (see, e.g., Supreme Court Decision 2011Du18786, Nov. 24, 2011).

On December 28, 2009, after the elapse of 90 days after receiving the notice of the imposition disposition No. 20 on April 20, 2009, Plaintiff A filed a petition with the Tax Tribunal for a trial on December 28, 2009, and filed the instant lawsuit on August 25, 2010 after the decision of the Tax Tribunal. As long as Plaintiff A’s claim for a trial made by the Tax Tribunal is unlawful, it is not possible to file a lawsuit within 90 days from the date of receiving the notice of the decision of the Tax Tribunal. Thus, Plaintiff A’s lawsuit is unlawful as it goes after the lapse of the filing period.

In addition, the Plaintiff Company filed a lawsuit concerning the first imposition disposition after having lawfully obtained the decision of the Tax Tribunal on the first imposition disposition after going through the procedures for raising an objection against the first imposition disposition. However, the Plaintiff cannot be deemed to have filed an objection in relation to the second imposition disposition. The reasons are as follows.

(2) In the case of tax administration, two or more administrative dispositions for the same purpose were taken in the process of step-by-step and development, and are related to each other. Whether the tax authority made a change in the taxation disposition subject to such disposition during the course of tax litigation and the reason for illegality is common, or where several persons are subject to the same obligation due to the same administrative disposition, one of the persons liable for tax payment has given an opportunity to make a new determination on the basic facts and legal issues, as in the preceding disposition or when one of the persons liable for tax payment has gone through legitimate pre-trial procedure, and if there is a justifiable reason such as where it seems that it would be harsh that the taxpayer would have gone through the pre-trial procedure and that the taxpayer would not be obliged to pay taxes, the taxpayer may file an administrative lawsuit claiming the revocation of the taxation disposition even without going through the pre-trial procedure (see, e.g., Supreme Court Decision 2005Du10170, Apr. 14, 2006). Accordingly, the Plaintiff’s assertion that it does not correspond to the first imposition disposition.

2) In order to establish the secondary tax liability, a fact that constitutes the requirements, such as the failure of the principal taxpayer, must arise, and a notice of payment to the secondary taxpayer regarding the secondary tax liability, including where the exclusion period of imposition is proceeding separately from the main tax liability, is an independent disposition against the principal taxpayer (see Supreme Court Decision 2006Du11750, Oct. 23, 2008).

3) As seen earlier, when there is a justifiable reason, such as when one of the persons jointly liable for tax payment, who are jointly liable for the same tax payment, goes through the pre-trial procedure, such as “where one of the persons jointly liable for tax payment,” and it appears that it would be harsh to have caused the taxpayer to undergo the pre-trial procedure, the taxpayer may file an administrative suit claiming the revocation of the tax disposition even without going through the pre-trial procedure, but even in such case, the taxpayer may not undergo the pre-trial procedure, but shall file

On April 20, 2009, the Plaintiff Company was notified of the second imposition disposition. At that time, on May 18, 2009, the Plaintiff Company filed an objection with the director of the Seoul Regional Tax Office against the director of the Seoul Regional Tax Office, and on July 22, 2009, after the period of objection against the second imposition disposition expires, the Seoul Regional Tax Office’s re-examination decision on the Plaintiff Company’s objection against the second imposition disposition was made on July 22, 2009. Plaintiff A has separate legal personality with the Plaintiff Company, and there was no circumstance that the Plaintiff Company was unable to file a claim for tax trial against the second imposition disposition. Accordingly, even if the Plaintiff Company filed an objection against the second imposition disposition within the period of objection against the second imposition disposition, it cannot be deemed that the Plaintiff Company could not go through the previous trial proceeding against the second imposition disposition without going through the first instance trial procedure, or even if the period of objection can not go through the previous trial procedure.

B. Additional determination on the merits

In addition, we examine the argument on the merits of this case by the Plaintiff. The reasons for this decision are as follows: (a) on the ground that it is difficult for the Plaintiff to believe that the Plaintiff had been well aware of the corporation system as a certified public accountant from the management department of the Plaintiff’s University (Evidence No. 25 and the purport of the entire pleadings); (b) from the time of its establishment to June 15, 2001, the representative director of the Plaintiff Company was the Plaintiff A; and (c) thereafter, the Plaintiff A was aware of the instant agreement (Evidence No. 11) and the instant agreement (Evidence No. 11), despite being written, it is difficult to obtain the reasons why the Plaintiff did not change the name of shares other than the ownership of the Plaintiff A., until now, the pertinent part of Article 8(2) of the Administrative Litigation Act and Article 40 of the Civil Procedure Act shall be cited pursuant to the main sentence of Article 8(2) and Article 40 of the Civil Procedure Act.

5. Determination as to the legitimacy of the first imposition disposition

According to the following circumstances, the facts acknowledged earlier, Eul evidence Nos. 2 and 4, witness KimE of the first instance trial, and the testimony of HanF, which are acknowledged by comprehensively taking account of the overall purport of the pleadings, the payment of the instant case is not merely a return of the existing difference that has been paid in excess, but also a penalty that has been paid upon the termination of the instant lease agreement. Therefore, the allegation made by the Plaintiff Company is without merit, and the first imposition disposition is lawful.

1) △△△ acknowledges the fact that the instant payment was a penalty, and Doddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddd to △△△△ on February 27, 2003. At the time of △△△△△△ at the time of the instant sub-lease contract.

2) The instant lease agreement merely states monthly rent of KRW 000, but did not state the agreement of this case asserted by the Plaintiff Company, and KimE also concluded the instant lease agreement with the Plaintiff Company upon delegation of DoD, etc., which was a monthly rent of KRW 000 under the instant lease agreement, and the remainder KRW 1,000 and value-added tax was deposited into the bank account in the name of DoD, and DoD, etc. was directly paid in cash, and DoD, etc. did not state the agreement of this case separately between DoD and the Plaintiff Company.

3) Furthermore, even if ParkB guaranteed the sales revenue of at least 000 won in proposing to make an investment in the Plaintiff A, such circumstance is difficult to deem that such circumstance is related to HaD, etc., which is a lessor, and there is no special reason to conclude the instant agreement unfavorable to the Plaintiff Company. Even if the instant agreement was concluded, there is no reason to return the excess rent for which △△ purchased the instant building had not been received by itself.

4) The address of the Plaintiff Company was transferred from 17th of June 17, 2001 to 'Y0-0,000, Gangnam-gu, Seoul, ○○○○-dong, 17th of June, 2001 to 'Y 00-0,00'. The registration was already made on June 20, 2001, but it was made on July 2001. However, the Plaintiff Company's address column of the instant agreement was still written on July 2001, and the previous address was still written on July 200, so it is doubtful whether the instant agreement was written on July 201.

5) The Plaintiff Company’s assertion that monthly sales have increased to KRW 000 for 20 months from July 2001, which drafted the instant agreement, is difficult to believe in light of the characteristics of the clothes industry where sales have increased or decreased depending on seasons, and the fact that sales have increased to KRW 000 on or after July 2001, which was drafted the instant agreement, was excessively mutually beneficial.

6. Conclusion

The part of the judgment of the first instance against the plaintiff Lee-A shall be revoked and the part of the lawsuit shall be dismissed. The appeal filed by the plaintiff company shall be dismissed.