The taxation imposed by the tax authority on a nominal lender cannot be deemed as a violation of substantial taxation or a violation of substantial taxation.

Even if the defect is so serious, it cannot be deemed that it would be apparent in appearance, and thus, it cannot be deemed that the illegal taxation disposition that misleads the fact of taxation requirements is void as a matter of course

Article 14 of the Framework Act on National Taxes

2017Guhap5823 Action to nullify the detailed statement of global income and the disposition

Han 00

00. Head of tax office

August 10, 2017

September 7, 2017

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

On September 1, 2014, the Defendant confirmed that the imposition of global income tax of KRW 77,843,750 on the Plaintiff for the year 2013 is null and void.

1. Details of the disposition;

A. The Plaintiff is a person whose name is registered as the representative of meat wholesale and retail chain Aflus (business registration number: 126-92-&&&&&&&) and meat packaging business chain Bflus (business registration number: 126-92-*****; hereinafter the above business entities referred to as "each business entity in the instant case").

B. On September 1, 2014, the Defendant issued a disposition imposing global income tax of KRW 77,843,750 on the Plaintiff for the year 2013 (hereinafter “instant disposition”).

[Reasons for Recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) As the Plaintiff did not receive a tax notice on the instant disposition, the instant disposition is null and void.

2) The actual operation of each of the instant businesses is South C, the Plaintiff’s external village, and the Plaintiff merely lent its business registration name to South C, and thus, the instant disposition is null and void as it violates the substance over form principle under Article 14 of the Framework Act on National Taxes.

B. Determination

1) Determination as to the assertion that a tax payment notice was not served

Comprehensively taking account of the purport of the entire pleadings, evidence Nos. 2, 3, and 4, a notice of tax payment regarding the instant disposition may be issued electronically to the Plaintiff on September 2, 2014, and the Plaintiff’s inspection by using an authorized certificate on September 3, 2014. Accordingly, the Plaintiff’s assertion on this part is without merit.

2) Determination on the assertion that the substance over form principle is invalid

A) Generally, a taxation disposition made on a person who does not have the factual basis of the legal relation, income, act, etc. subject to taxation is deemed to be significant and apparent, but in a case where there are objective circumstances that could mislead him to believe that it is subject to taxation with respect to certain legal relations or factual relations which are not subject to taxation, the determination of whether it is subject to taxation can only be clarified by accurately investigating the factual basis, if such defect is not obvious even if it is serious, and thus, it cannot be deemed that the taxation disposition by mistake of the fact subject to taxation is null and void automatically (see, e.g., Supreme Court Decision 2001Du7268, Sept. 4, 2002).

B) We examine the instant case in light of the aforementioned legal principles. The instant case, even based on the Plaintiff’s assertion, was based on the Plaintiff’s loan the name of the business operator to South C, a third village, and thus, constitutes an objective circumstance to mislead the Plaintiff to be subject to taxation, and constitutes a case where it is possible to clarify whether the Plaintiff is subject to taxation by accurately investigating the facts. Therefore, the Plaintiff’s assertion on this part is unreasonable.

3. Conclusion

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