Embroping Co., Ltd. (Law Firm Snbling, Attorneys White-ray, Counsel for the defendant-appellant)

Kimpo-market

May 31, 2012

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of acquisition tax of KRW 146,922,160 against the Plaintiff on February 8, 2011, the special rural development tax of KRW 14,692,210, registration tax of KRW 146,92,922,160, and local education tax of KRW 29,384,430, each disposition of KRW 146,92,160, and the local education tax of KRW 29,384,430, as of the date of the disposition stated in the written complaint, is apparent that

1. Details of the disposition;

A. On December 18, 2008, the Plaintiff’s incorporation into a site for a general industrial complex development project (No. 2008-529 of the Gyeonggi-do Notice; hereinafter “instant project”) by the land of the same Ri (number 2 omitted), (number 3 omitted), and (b) the ground building, etc. (hereinafter “instant expropriated real estate”) on the land owned by the Plaintiff into the land of the Kimpo-si, Kimpo-si. On January 27, 2010, the Plaintiff acquired the instant real estate from the Korea Land Trust Co., Ltd. (number 4 omitted) and filed an application for local tax reduction or exemption on the ground that the instant expropriated real estate was replaced by the land expropriation by reporting the above acquisition to the Defendant on January 29, 2010.

B. The Defendant: (a) deemed that the Plaintiff’s acquisition of the instant real estate constitutes a “alternative acquisition through land expropriation” subject to non-taxation, such as acquisition tax and registration tax, as prescribed by Articles 109 and 127-2(2) of the former Local Tax Act (wholly amended by Act No. 1021, Mar. 31, 2010; hereinafter the same) and exempted the Plaintiff from acquisition tax, etc.

C. Gyeonggi-do notified the Defendant of the audit results that the Plaintiff constitutes an absentee real estate owner and the acquisition of the instant real estate is not subject to non-taxation as a result of a comprehensive audit conducted from June 21, 2010 to June 29, 2010.

D. Accordingly, on February 8, 2011, the Defendant: (a) deemed that the Plaintiff fell under “an absentee real estate owner” as prescribed by Article 109(2) of the former Local Tax Act and Article 79-3(2) of the former Enforcement Decree of the Local Tax Act (wholly amended by Presidential Decree No. 22395, Sept. 20, 2010; hereinafter the same) and the acquisition of the instant real estate is not subject to non-taxation, such as acquisition tax; (b) deemed that the acquisition of the instant real estate is not subject to non-taxation; and (c) accordingly, KRW 146,922,160 (including additional tax) calculated by applying the tax rate, etc. under Article 112(1) of the former Local Tax Act to KRW 14,692,210 (including KRW 1,272,210), KRW 146,92,160 (including registration tax); and (d) additional tax (including additional tax); and (c) KRW 23434,2047,2047.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 7, Eul evidence Nos. 1, 2 and 3, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

Since Article 79-3(2) of the former Enforcement Decree of the Local Tax Act explicitly states that the standard date of determining “unreal estate owner” is the date of contract or the date of public announcement of project approval, the determination of whether the Plaintiff constitutes an unreal estate owner based on the date of public announcement of project approval, although the Plaintiff is deemed an unreal estate owner based on the date of public announcement of project approval.

(b) Related statutes;

It is as shown in the attached Form.

(c) Fact of recognition;

The following facts can be acknowledged in full view of the purport of the entire evidence presented above.

(1) On December 26, 2007, the Plaintiff established the location of the business place in the Yong-si, Young-gu, Young-gu, Young-gu, Sin-si, in order to conduct business registration for the purpose of construction business, real estate business, etc., and on October 10, 2008, the business place was transferred to the Yong-si, Kimpo-si, Kimpo-si (number 6 omitted).

(2) On December 18, 2008, Kimpo-si designated and publicly announced the Korea Development Institute as the site for the instant project (No. 2008-529 of the Gyeonggi-do Public Notice) in the two sides of Kimpo-si, which included the instant expropriated real estate.

(3) On December 17, 2009, the Plaintiff entered into an agreement on compensation for losses with the Korea Appraisal Board, a trustee of the instant business, setting the standards for calculating compensation for the land incorporated into the instant business with respect to the land of the said 11 parcel, and accepting the construction work. On December 22, 2009, the Plaintiff entered into an agreement on compensation for losses with respect to the said building, etc. on the same basis.

(4) On January 20, 2010, the Plaintiff was issued a “written confirmation of expropriation of land, etc.” for the purpose of local tax exemption to the effect that the Plaintiff acquired the instant real estate as substitute due to the expropriation of the instant expropriated real estate by the Korea Appraisal Board, a stock company on behalf of the project implementer.

D. Determination

(1) Contents of relevant laws and regulations

According to Articles 109 and 127-2 of the former Local Tax Act and Article 79-3 (2) of the former Enforcement Decree of the Local Tax Act, where a person who purchased or expropriated a real estate enters into a contract for real estate to substitute for acquisition after the date of contract or the date of public announcement of project approval, or where a person who purchased or expropriated the real estate acquired the substitute real estate within one year from the date of the final receipt of the compensation, the compensation therefor shall not be imposed (Article 109 (1) of the former Local Tax Act). In such cases, the registration tax for the registration of the real estate shall not be imposed (Article 127-2 (2) of the former Local Tax Act); in other cases, where the land is not farmland, the owner of the absentee real estate, i.e., the owner of the Gu/Si/Eup/Myeon/Eup/Myeon and the Gu/Si/Eup/Myeon adjacent thereto, and where a business operator (including a corporation) who has not registered the business continuously for one year before the date of contract or public announcement of project approval, acquisition tax shall be imposed (Article 29 (2).

The former Act on the Acquisition of Land, etc. for Public Works and the Compensation therefor (amended by Act No. 10239, Apr. 5, 2010; hereinafter “Public Works Act”) stipulates that the acquisition or use of land, etc. for public works by consultation and the case by expropriation (section III) shall be divided into cases by consultation (section IV) and the case by expropriation (section IV), respectively, concerning the expropriation or use of land, etc. and the project approval (Article 19, 20) by a project operator. In such cases, a project operator who is able to expropriate land, etc. by obtaining project approval shall undergo a consultation procedure with a landowner, and the provisions on the acquisition or use by consultation shall apply mutatis mutandis to such case. However, if the project approval had gone through the above consultation procedure before project approval was granted, it may be exempted from such procedure again after project approval was granted.

(2) Interpretation of Article 79-3(2) of the former Enforcement Decree of the Local Tax Act

In light of the principle of no taxation without law, or the requirements for tax exemption or tax exemption, the interpretation of tax laws shall be interpreted in accordance with the text of the law, barring any special circumstance, and it shall not be extensively interpreted or analogically interpreted without reasonable grounds. In particular, it accords with the principle of fair taxation to strictly interpret that the provision is clearly preferential among the requirements for tax exemption or exemption (see Supreme Court Decision 97Nu20090, Mar. 27, 1998, etc.).

In full view of the aforementioned legal principles and the contents of the relevant laws and regulations, the non-taxation provisions on alternative acquisition under Article 109(1) of the former Local Tax Act is premised on the case where a project operator obtains land, etc. by expropriation. The non-taxation requirement is stipulated as “the case where a project operator concludes a contract for real estate to be substituted after the date of the contract or the date of the public announcement of the public announcement of the project, or obtains a building permit, and acquires the substitute real estate within one year from the date of the last public announcement of the project approval,” which combines the contract date and the public announcement of the project approval. In the case where the real estate is sold to a project operator after the consultation procedure prior to the public announcement of the project approval, even if the contract was concluded before the date of the public announcement of the public announcement of the project approval, it is reasonable to view that the real estate owner, an exception to the non-taxation provisions under Article 79-3(2) of the former Enforcement Decree of the Local Tax Act, which is a real estate owner before the date of the public announcement of the project approval.

According to the above facts, on December 26, 2007, the Plaintiff established a corporation and registered its business, and on October 24, 2008, transferred the place of business to Kimpo-si, the location of the pertinent expropriated real estate, and on December 18, 2008, the instant expropriated real estate was incorporated into the instant project site pursuant to Article 208-529 of the notification of Kimpo-si on December 18, 2008. The Plaintiff constitutes an absentee real estate owner subject to exemption from acquisition tax because it falls under the case where the Plaintiff did not continuously register its business for one year prior to the location of the instant expropriated real estate as of the date of the public notification of the authorization of the establishment of the instant expropriated real estate.

Therefore, the instant disposition that the Defendant considers the Plaintiff as an absentee real estate owner and imposed acquisition tax, etc. on the Plaintiff is legitimate. Therefore, the Plaintiff’s above assertion is rejected.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so decided as per Disposition.

[Attachment Form 5]

Judges anti-Japanese (Presiding Justice) Kim Young-young