Korea

CC Development Co., Ltd. (Law Firm current, Attorneys Kim Gi-hun et al., Counsel for the plaintiff-appellant)

June 8, 2012

1. The defendant shall pay to the plaintiff 4,313,391,340 won with 5% interest per annum from May 9, 2006 to May 2, 201, and 20% interest per annum from the next day to the day of full payment.

2. The costs of the lawsuit are assessed against the defendant.

3. Paragraph 1 can be provisionally executed.

The same shall apply to the order.

1. Basic facts

A. On March 31, 2005, the Defendant calculated the tax base at KRW 48,638,206,288, the calculated tax amount at KRW 13,120,315,697 and filed a corporate tax return for the business year 2004.

B. On March 31, 2006, the Defendant calculated the tax base at KRW 15,975,523,516, the calculated tax amount at KRW 0,000, and reported the corporate tax for the business year 2005.

C. In addition, on March 30, 2006, the defendant filed a request with the head of Yeongdeungpopo District Tax Office to refund KRW 4,313,391,349 by deducting the deficit of 15,975,516 in the business year 2005 from the limit of the corporate tax amount of the business year 2004 to the defendant on April 19, 2006 under Article 72(1) of the Corporate Tax Act (amended by Act No. 8141, Dec. 30, 2006; hereinafter the same), on the ground that the defendant constitutes a small and medium enterprise under Article 25(1)1 of the Corporate Tax Act (amended by Act No. 8141, Dec. 30, 2006; hereinafter the same), and on May 9, 2006, the Yeongdeungpopo Tax Office notified the defendant to refund KRW 4,313,391,340 out of the corporate tax amount of the business year 2004.

D. On the other hand, the Seoul Regional Tax Office denied the retroactive deduction of losses by deeming that the defendant's business type was not a small and medium enterprise when conducting a regular audit on the Yeongdeungpo tax secretary's letter as being the real estate supply business. On January 6, 2007, the Seoul Regional Tax Office notified the defendant that corporate tax of KRW 4,686,068,360 should be imposed. On February 8, 2007, the defendant appealed against this and filed a request for pre-assessment review, but the Commissioner of the National Tax Service decided not to accept the defendant'

E. On January 16, 2008, on the ground that the Defendant does not constitute a small or medium enterprise under Article 25(1)1 of the Corporate Tax Act that is subject to a retroactive deduction of deficit, the head of Yeongdeungpo-gu Tax Office rendered a disposition of imposing additional tax of KRW 4,929,343,630 on the Plaintiff by adding the amount equivalent to the interest to the refund in this case based on Article 66(2)1 and (4) of the Corporate Tax Act. On April 10, 2008, the Defendant filed a request for a trial with the Tax Tribunal on April 10, 2008, and the Tax Tribunal rendered a decision of reducing the amount equivalent to the interest in the disposition of KRW 615,952,285 won from the amount equivalent to the interest in the disposition of corporate tax of KRW 4,929,343,630 in the year of May 205 (hereinafter “the disposition of imposing additional tax of KRW 4,313,9345 won”).

F. The Defendant asserted that the instant disposition was unlawful and filed a lawsuit seeking revocation of the disposition imposing corporate tax against the head of Yeongdeungpopo District Tax Office (Seoul Administrative Court 2009Guhap32093). The above court rendered a decision revoking the instant disposition on the grounds that the instant disposition is irrelevant to the rectification of the tax base and tax amount stipulated in Article 60, Article 66(2)1, and Article 66(4) of the Corporate Tax Act. Thus, the disposition based on the above provision is unlawful and the claim for restitution of unjust enrichment was not possible, and there is no ground to deem that the instant refund amount can be collected as corporate tax for the business year in which the pertinent loss occurred, and the Yeongdeungpopo District Tax Office appealed (Seoul High Court 2010Nu14484) and the final appeal (Supreme Court 2010Du1714444) but all of the final appeals were pronounced dismissed.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 4, Eul evidence Nos. 3 and 4 (including identification numbers with serial numbers, hereinafter the same), the purport of the whole pleadings

2. The parties' assertion

A. The plaintiff's assertion

Although the Defendant constitutes a real estate supplier under the Korean Standard Industrial Classification and is not a small or medium enterprise subject to a retroactive deduction of losses as prescribed by the Restriction of Special Taxation Act, the Plaintiff is obligated to refund the refund amounting to KRW 4,313,391,340, as unjust enrichment, and delay damages therefrom.

B. Defendant’s assertion

1) ① In the course of running a construction business, the Defendant not only operated a construction business on the Korean Standard Industrial Classification Table that, as a part of the marketing, the Defendant was engaged in a part of the process under his general responsibility, but also operated a construction business on the Korean Standard Industrial Classification Table. ② The “Act” under Article 2(3) of the Restriction of Special Taxation Act is also included in the Income Tax Act, and the construction and sales business also constitutes a construction business under the relevant provisions of the Income Tax Act. Therefore, the Defendant is a small and medium enterprise

2) Even if the Plaintiff did not run the construction business, the Plaintiff’s decision to refund the Defendant’s corporate tax on the application for refund of corporate tax constitutes a “disposition as an exercise of public authority as an administrative agency’s law enforcement with respect to specific facts,” and as long as the above decision to refund was not null and void, the Defendant’s refund of corporate tax was made in accordance with the Plaintiff’s refund disposition, and thus, the Defendant did not have a duty to refund the corporate tax

3. Determination

A. Relevant regulations and issues

Article 7(1) of the former Restriction of Special Taxation Act (amended by Act No. 7949 of Apr. 28, 2006) lists the "construction business" as a type of business eligible for special tax reduction or exemption for corporate tax, etc., and the classification of specific types of business under Article 2(3) is as follows: "Except as otherwise provided in this Act, it shall be governed by the Korean Industrial Standards Classification publicly notified by the Commissioner of the Statistics Korea pursuant to Article 17 of the Statistics Act." According to the Korean Standard Industrial Classification at the time, the term "construction business (45212)" is defined as "construction business (452)" and excludes "an apartment construction business (7012) directly sells after entrusting another construction business with the construction business (7012)," and separately defines "real estate supply business (7012)" as "real estate supply business (7012)" and does not directly construct and sell the land and building constructed by giving a contract to another person, such as the housing site, industrial site, etc., and does not directly sell or resell the residential building (201).).

As can be seen, the Korean Standard Industrial Classification classifys the sale of buildings, etc. that are entrusted to or constructed by contracting to other construction companies as “real estate supply business” rather than “construction business.” If the defendant’s business in this case can be seen as falling under “construction business,” the defendant’s corporate tax shall be refunded. Therefore, the issue of this case is whether the defendant can be deemed to have engaged in the construction business.

B. Whether the Defendant constitutes a small or medium enterprise capable of retroactive deduction of losses

1) Comprehensively taking account of the aforementioned evidence and evidence evidence Nos. 15 and 16 as well as the purport of the entire pleadings, the Defendant concluded a contract for the construction of ○○○○○○ (hereinafter “the apartment of this case”) located in Sungnam-si, Sungnam-si, with the contract amount of KRW 401,267,00,00 (including value-added tax) and applied the contract scope to the construction of the residential part, electricity, facilities (including fire-fighting), civil engineering, landscaping, and landscaping construction. The Defendant executed some construction works directly, such as landscaping, artificial construction, artificial engineering, and alleviated packing construction, and the cost of construction in the construction field that the Defendant asserted as a direct construction is merely 8.4% of the total cost of construction.

In the event that a seller of an apartment supplies an apartment by directly executing a part of the construction work, the degree of his own construction work may be deemed to fall under the category of apartment construction business subject to corporate tax reduction and exemption only if the seller is deemed to have actually constructed the apartment by taking into comprehensive account the degree of the buyer's participation in the entire construction work, the details of the sale of the apartment, the intention of the parties, etc. In light of the above facts, even if the part of the construction work directly executed by the defendant is part of the construction work, the apartment of this case cannot be deemed to have been directly constructed. Therefore, it is reasonable to view that the defendant engaged in the real estate supply business, not the apartment construction business, in relation to the new construction and sale of the apartment of this case, and the each of the items of subparagraphs B through 17 alone is insufficient to reverse

2) On the premise that the "Act" under Article 2 (3) of the Restriction of Special Taxation Act is included in the "Act", the defendant asserts to the effect that the construction and sales business under the Income Tax Act is engaged in construction business, and thus, the defendant is engaged in construction business. However, the interpretation of the tax law is interpreted in accordance with the law, unless there are special circumstances, and it is not permitted to expand or analogically interpret the tax law without any reasonable reason, and in particular, it accords with the principle of fair taxation (see Supreme Court Decision 2002Du9537, Jan. 24, 2003, etc.). Thus, it is clear that the "this Act" under Article 2 (3) of the Restriction of Special Taxation Act is referred only to the Restriction of Special Taxation Act, and there is no ground to view it as referring also to the Income Tax Act. Therefore, the above argument by the defendant is without merit.

C. Whether the Plaintiff can file a claim for return of unjust enrichment

The defendant asserts to the effect that the plaintiff's decision to refund corporate tax constitutes "disposition" and thus, it does not constitute unjust enrichment unless the refund disposition is null and void as a matter of course. The defendant's argument as above is viewed to the purport that the defendant cannot immediately make a claim for return of unjust enrichment by civil litigation without going through a fair administrative act by using the fair administrative act. It is difficult to view the above fair administrative act as a case where the plaintiff, who is the taxable subject of corporate tax refund, erroneously refunded corporate tax according to the defendant's application for refund not subject to corporate tax refund, falls under the case where

D. Sub-committee

Ultimately, the Defendant did not constitute a real estate supplier and did not constitute a small or medium enterprise under the Restriction of Special Taxation Act, and received corporate tax refund from the Plaintiff on the premise that it constitutes a small or medium enterprise, and thus, constitutes an application for corporate tax refund under the premise that it constitutes a small or medium enterprise.

Therefore, the Defendant, upon return of unjust enrichment, is obligated to pay to the Plaintiff the refund amounting to KRW 4,313,391,340, and damages for delay calculated at the rate of 5% per annum prescribed by the Civil Act from May 9, 2006 to May 2, 2011, which is apparent that the date when the duplicate of the complaint of this case was served on the Defendant from May 9, 2006, and 20% per annum prescribed by the Act on Special Cases concerning Expedition, etc. of Legal Proceedings from the following day to the date of full payment.

4. Conclusion

Therefore, the plaintiff's claim of this case shall be accepted on the grounds of its reasoning, and it is so decided as per Disposition.

Judges Kim Sung-soo (Presiding Judge)