With the amendment of tax-related Acts and subordinate statutes, where there are no special transitional provisions concerning the amended provisions in the Addenda, the establishment time of the applicable Acts and subordinate statutes and the secondary tax liability.

Article 39(1)2(a) and (2) of the Framework Act on National Taxes

Supreme Court Decision 2003Du13083 Decided April 15, 2005 (Gong2005Sang, 760) Supreme Court Decision 2004Du3656 Decided November 25, 2005

Plaintiff

Head of Eastern Tax Office

Seoul High Court Decision 2004Nu22178 delivered on June 15, 2005

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

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

A. The lower court determined that each of the instant dispositions imposed by the Defendant on the ground that the Plaintiff is an oligopolistic shareholder under Article 39(2) of the former Framework Act on National Taxes (amended by Act No. 5579, Dec. 28, 1998; hereinafter “former Framework Act on National Taxes”) and is practically exercising the right to shares equivalent to 49/100 of the total amount of issued and outstanding stocks of Taecheon Construction Co., Ltd. (hereinafter “ Taecheon Construction”), but there is no evidence to deem that the Plaintiff exercised the right to shares, and therefore, the Plaintiff does not constitute the secondary taxpayer under Article 39(1)2(a) of the Framework Act on National Taxes before the amendment.

B. However, in a case where a tax statute was amended and there is no separate transitional provision in relation to the amended provision, the statute in force at the time when the tax liability was established shall apply. On the other hand, in order to establish the secondary tax liability, the fact that the principal taxpayer is in arrears, etc. must meet the requirements. Thus, the time of establishment shall be deemed to have passed at least after the expiration of the “time limit for payment of the principal tax liability” (see Supreme Court Decision 2003Du13083, Apr. 15, 2005).

According to these legal principles and the facts and records established by the court below, the plaintiff's secondary tax liability of this case is related to Taecheon Construction's 197, 198, 1, 208, and 1998 corporate tax belonging to the business year of Taecheon Construction's 199, and the period of the secondary tax liability is at least after Taecheon Construction's failure to pay taxes. The payment period of each of the above value-added tax and corporate tax liability of Taecheon Construction's 30 January 30, 200, which is the date of the payment period designated by the defendant in each of the pertinent tax payment notice. Thus, the plaintiff's secondary tax liability of this case was revised by Act No. 5579 of Dec. 28, 199, which was enforced from January 1, 199, which was amended by Act No. 5579 of Dec. 1, 199; the amendment of the Framework Act on National Taxes was established after the enforcement date of the amended Framework Act on National Taxes.

C. Furthermore, in light of the reasoning of the judgment below and the records as to whether the Plaintiff constitutes an oligopolistic shareholder under Article 39(1)2(a) of the revised Framework Act on National Taxes, the Plaintiff owned shares equivalent to 49/100 of the total number of issued and outstanding shares of Taecheon Construction as of the date of establishment of each liability for the payment of the value-added tax and the corporate tax in this case, and registered as the representative director of Taecheon Construction from March 19, 197 to March 10, 2004. Nonparty 1, the husband of the Plaintiff, is the actual owner of the remaining shares under the name of Nonparty 2 and 3 (51/100 in total as of December 31, 1998) and actually controlled the management of Taecheon Construction with the limit of 10/100 of the total number of issued and outstanding shares under the proviso to Article 39(1)2(a) of the revised Framework Act on National Taxes, regardless of the existence of the Plaintiff’s rights to the above amendment.

D. Nevertheless, on the premise that the Framework Act on National Taxes prior to the amendment applies, the judgment of the court below that the plaintiff does not constitute a secondary taxpayer with respect to the amount in arrears of Taecheon Construction shall be deemed to have erred by misapprehending the legal principles on the application of the Act and the secondary taxpayer, thereby affecting the conclusion of the judgment.

2. Therefore, without examining the remaining grounds of appeal, we reverse the judgment of the court below and remand the case to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Nung-hwan (Presiding Justice)