Whether “real estate acquired by a corporation to use directly for the purpose of its head office” under the main sentence of Article 102(2) of the Enforcement Decree of the former Local Tax Act includes real estate acquired by a corporation to use as a place for business activities of its head office (affirmative)

Article 138(1)3 and (3) of the former Local Tax Act (wholly amended by Act No. 10221, Mar. 31, 2010); Article 102(2) of the former Enforcement Decree of the Local Tax Act (wholly amended by Presidential Decree No. 22395, Sept. 20, 2010; hereinafter “former Enforcement Decree”) and Article 55-2 of the former Enforcement Rule of the Local Tax Act (wholly amended by Ordinance No. 177, Dec. 23, 2010) include not only real estate acquired by a corporation to use directly for the purpose of its head office, but also real estate acquired to use as a place for business activities of the head office.

Article 138(1)3 (see current Article 28(2) and (3) (see current Article 28(5)) of the former Local Tax Act (wholly amended by Act No. 1021, Mar. 31, 2010); Article 102(2) (see current Article 45); Article 55-2 (see current Article 6) of the former Enforcement Decree of the Local Tax Act (wholly amended by Presidential Decree No. 22395, Sept. 20, 2010); Article 55-2 (see current Article 2) of the former Enforcement Rule of the Local Tax Act (wholly amended by Act No. 1777, Dec. 23, 2010)

Seocho Liberael Co., Ltd. (Law Firm LLC, Attorneys Kang Han-hun et al., Counsel for the plaintiff-appellant)

The head of Sung-nam City/Gu (Law Firm Barun, Attorneys Lee Dong-sung et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2012Nu9729 decided August 22, 2012

The part of the judgment of the court below regarding the first disposition is reversed, and that part of the case is remanded to the Seoul High Court. The remaining appeals are dismissed.

The grounds of appeal are examined.

1. As to the ground of appeal on the first disposition at the time of the original adjudication

A. Article 138(1)3 of the former Local Tax Act (wholly amended by Act No. 10221, Mar. 31, 2010; hereinafter the same) provides that “Real estate registration following the establishment of a corporation, the establishment of its branch or sub-branch, and the relocation of its head office, branch or sub-branch into a large city shall be subject to heavy registration tax.” Article 102(2) of the former Enforcement Decree of the Local Tax Act (wholly amended by Presidential Decree No. 22395, Sept. 20, 2010; hereinafter the same) upon delegation of Article 138(3) of the same Act provides that “Real estate registration is made for the establishment of a corporation, the establishment of its branch or sub-branch, or the relocation of its head office, main office, branch or sub-branch into a large city under the provisions of Article 138(1)3 of the Act (wholly amended by the Ordinance of the Ministry of Public Administration and Security, etc.)” means the establishment of a corporation or sub-branch or sub-branch into a large city.

In light of the language and text, legislative purport, amendment history, system of relevant provisions, etc., the phrase “real estate acquired by a corporation to use directly for the purpose of its head office” under Article 102(2) of the former Enforcement Decree of the Local Tax Act includes not only the real estate acquired by the corporation to use directly for the purpose of its head office, but also the real estate acquired by the corporation to use directly for the purpose of its head office as the place of its business.

B. The court below cited the judgment of the court of first instance that the plaintiff, who is a corporation that runs the business of housing and medical welfare facilities for the aged (hereinafter "welfare facilities business"), etc. of this case, transferred the portion of the 1st unit of the 3th unit of the 1st unit of the 3th unit of the 1st unit of the 3th unit of the 1st unit of the 3th unit of the 1st unit of the 3th unit of the 1st unit of the 1st unit of the 3th unit of the 1st unit of the 3th unit of the 1st unit of the 1st unit of the 3th unit of the 1st unit of the 3th unit of the 1st unit of the 1st unit of the 3th unit of the 2nd unit of the 1st unit of the 2nd unit of the 1st unit of the 3th unit of the 1st unit of the 2nd unit of the 1st unit of the 3th unit of the 2nd unit of the 2nd unit of the 3 unit of the 2.

C. Examining the reasoning of the judgment below in light of the aforementioned legal principles, since the Plaintiff’s head office appears to be operating a welfare facility business for the aged, even in the case of the rest of the community facilities and sanatoriums other than the office part of the instant case, it is highly likely that the Plaintiff’s place where the Plaintiff was equipped with human and material equipment and used for the welfare facility business for the aged, which is the head office, falls under the subject of registration tax out of the registration tax under Article 138(1)3 of the former Local Tax Act and the proviso of Article 102(2) of the former Enforcement Decree of the Local Tax Act. Therefore, the court below should have deliberated on whether the Plaintiff acquired the rest of the community facilities and sanatoriums of this case, other than the office part of this case, for the welfare facility business for the aged, which is the head office, with human and material equipment, and determined

D. Nevertheless, without further proceeding to examine this point, the lower court, solely for the reasons indicated in its reasoning, determined that the remainder of the disposition No. 1, excluding the office part of this case, was unlawful. In so doing, the lower court erred by misapprehending the legal doctrine on the interpretation of the subject and requirements of registration tax, thereby failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment. The allegation contained

2. As to the ground of appeal on the second disposition at the time of the original adjudication

Article 120(1) of the former Local Tax Act provides that a person who acquired an object of taxation of acquisition tax shall file a return on and pay the relevant amount of tax within 30 days from the date of acquisition. In light of the aforementioned provisions and legislative intent, if a sales contract for land within an area subject to land transaction permission is in a flexible invalidation state because it did not obtain land transaction permission, even if the sales contract for land within the area subject to land transaction permission does not have the actual or contractual payment date stipulated at the time of acquisition under each subparagraph of Article 73(1) of the former Enforcement Decree of the Local Tax Act, it cannot be said that the sales contract has the final and conclusive validity, and thus, it cannot be said that the person is liable for filing a return and payment of acquisition tax. Since the sales contract becomes final and conclusive due to such reasons as obtaining a land transaction permission or cancelling the designation of land transaction permission, it is reasonable to interpret that the return and payment of acquisition tax under Article 120(1) of the former Local Tax Act should be made within 30 days from that time (see Supreme Court Decision 2012Du16695, Nov. 2

In the same purport, the lower court is justifiable to have determined that the second disposition was unlawful at the time of the original adjudication against which the return and payment of acquisition tax, etc. on the instant land was made within 30 days from the date on which the land transaction permission was obtained. In so doing, contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal principles on the time of acquisition of land within the land transaction permission zone, the time of return and payment of acquisition tax, etc

3. As to the ground of appeal on the third disposition at the time of the original adjudication

This part of the grounds of appeal is merely an error in the selection of evidence and fact-finding which belong to the lower court’s exclusive jurisdiction, and it cannot be deemed a legitimate ground of appeal.

4. Conclusion

The part of the judgment of the court below regarding the first disposition is reversed, and that part of the case is remanded to the court below for a new trial and determination. The remaining appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Sang-hoon (Presiding Justice)