[1] The scope of secondary tax liability of the business transferee

[2] The method of determining additional tax in bad faith

[1] The secondary tax liability of the transferee under Article 41 of the former Framework Act on National Taxes (amended by Act No. 4672 of Dec. 31, 1993) is limited to the value of the acquired property in light of the purpose of the system and the spirit of substantial no taxation without law.

[2] Although value-added tax and special consumption tax are fixed at the time of filing a tax base and amount of tax, if the tax return is not paid properly, the tax authority's imposition of additional tax is separately required to determine the liability for payment of additional tax.

[1] Article 41 of the former Framework Act on National Taxes (amended by Act No. 4672 of Dec. 31, 1993) / [2] Articles 22(1) and 47(1) of the Framework Act on National Taxes; Article 10-2 subparag. 1 and 3 of the Enforcement Decree of the Framework Act on National Taxes; Article 19 of the Value-Added Tax Act; Articles 9 and 13(1) of the Special Consumption Tax Act

[1] Supreme Court Decision 82Nu192 delivered on December 14, 1982 (Gong1983, 290) 95Hun-Ba38 delivered on November 27, 1997 (Hun-Ba198, 68) / [2] Supreme Court Decision 91Nu1313 delivered on April 28, 1992 (Gong192, 1766) 91Nu96 delivered on May 26, 1992 (Gong192, 2051)

Plaintiff (Attorney Cho Jae-sik, Counsel for the plaintiff-appellant)

Jindo Director of the Tax Office

Seoul High Court Decision 94Gu20619 delivered on September 7, 1995

All appeals are dismissed. The costs of appeal are assessed against each appellant.

1. Article 41 of the former Framework Act on National Taxes (amended by Act No. 4672 of Dec. 31, 1993) provides that when the transferor transfers or acquires a business of this case and there is a shortage of national taxes, additional dues, and disposition fee for arrears with respect to the business which the transferor imposes on or pays to the transferor, the transferee of the business determined by Presidential Decree shall be subject to secondary tax liability for the shortage. In light of the purport of the system and the spirit of substantial no taxation without law, the secondary tax liability of the transferee shall be limited to the value of the acquired property. Thus, even if the national tax imposed on the transferor prior to the transfer of the business exceeds the value of the property acquired by the transfer of the business, the transferee shall be liable for such excess. However, as determined by the court below, the court below did not err by misapprehending the legal principles as to the disposition of tax payment notice as alleged in the ground of appeal by the plaintiff.

2. Although value-added tax and special consumption tax, which are the principal tax of the instant additional tax, are finalized at the time when the tax base and tax amount are reported, if the tax base and tax amount are not paid yet, the tax authority's imposition of additional tax is separately required to determine the liability for additional tax due to erroneous payment. In the same purport, the lower court did not err in the misapprehension of legal principles as to the determination of additional tax, as otherwise alleged in the grounds of appeal, since the value-added tax and the special consumption tax and education tax for April of the same year were already determined by the transferor's voluntary report prior to the transfer and acquisition of the business, and the Plaintiff, the transferee, who is the transferee, becomes liable for tax payment. However, since each of the above national taxes is imposed and notified to the transferor only after the transfer and acquisition of the business, the tax liability for additional tax and its additional tax are not determined yet, and thus, the Plaintiff cannot be subject to secondary tax liability as to the additional tax and its additional tax.

3. Therefore, the appeal by the plaintiff and the defendant is without merit, and each of them is dismissed, and the costs of appeal are assessed against each losing party. It is so decided as per Disposition.

Justices Lee Don-hee (Presiding Justice)