In a case where Party A entered into a contract to purchase real estate from Party B, etc. and notified Party B, etc. of the cancellation of the sales contract when the procedure was delayed, and Party B, etc. filed a civil lawsuit seeking the remainder payment, etc., and mediation was established, such as reduction of the purchase price of real estate was made, and Party A filed a request for reduction or correction of acquisition tax, etc., and Party A rejected the request, the case holding that the above disposition was unlawful on the ground that Party A’s reduction of the purchase price of real estate constitutes the ground for request for correction under Article 51(2)

Article 10(1), (2), and (5)3 of the Local Tax Act; Article 18(3)1 of the former Enforcement Decree of the Local Tax Act (Amended by Presidential Decree No. 24296, Jan. 1, 2013); Article 51(2)1 of the Framework Act on Local Taxes

Plaintiff (Law Firm LLC, Attorneys Lee Jong-soo et al., Counsel for the plaintiff-appellant)

The head of Gangdong-gu Seoul Metropolitan Government

Seoul High Court Decision 2013Nu51857 decided June 25, 2014

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. The main sentence of Article 10(1) of the Local Tax Act provides that “The tax base of acquisition tax shall be the value at the time of acquisition,” and Article 10(2) provides that “The value at the time of acquisition under paragraph (1) shall be the value reported by the acquisitor: Provided, That where there is no indication of the reported or reported value or where the reported value is less than the standard market value stipulated in Article 4, the standard market value shall be the standard market value.” Meanwhile, Article 51(2)1 of the Framework Act on Local Taxes provides that “if any transaction or act, etc., which is the basis of calculating the tax base and the amount of tax in the first return, determination or correction, becomes final and conclusive as different by the judgment (including reconciliation or other act having the same effect as the judgment) on the relevant lawsuit.”

2. After finding the facts as stated in its reasoning, the lower court: (a) concluded a contract to purchase each of the instant real estate from the Nonparty, etc. on August 11, 201; (b) concluded the instant sales contract again on November 7, 2011; (c) determined the remaining time for payment on the premise that the land of Gangdong-gu Seoul ( Address omitted) was partitioned out; (b) notified the Nonparty, etc. of the cancellation of the instant sales contract; and (c) filed a civil suit against the Plaintiff for the remaining payment of the purchase price, etc.; (d) determined that the Plaintiff would have an effect on the content and validity of the instant sales contract if the Plaintiff asserted revocation or cancellation of the sales contract; and (e) determined that the Plaintiff’s disposal of the instant real estate by the former Enforcement Decree of the Local Tax Act was unlawful on the grounds that it would have been 100,000 won, excluding the acquisition price of the instant real estate as stated in Article 30 of the Local Tax Act.

Examining the reasoning of the judgment below in light of the above provisions and relevant legal principles and records, the judgment of the court below is just and acceptable, and there is no error of law such as misunderstanding of legal principles as to the grounds for ex post facto request for correction of local taxes

3. Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jo Hee-de (Presiding Justice)