Early High Court Decision 2009Du0551 (Law No. 24, 2009)

Comprehensive real estate holding tax on forest preserved in its original form is not contrary to the Constitution.

The original preserved forest shall comply with the Constitution that shall be subject to separate taxation without conditions, and the Plaintiff’s assertion that the membership golf course and the golf course located in the Seoul Metropolitan Area shall always be treated the same as the non-member golf course and the golf course located in the non-Seoul Metropolitan Area shall not be accepted.

Plaintiff ○○

Defendant ○ Head of tax office

November 24, 2010

January 19, 2011

1. Each claim of the plaintiff shall be dismissed.

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

The Defendant’s rejection disposition against the Plaintiff on November 24, 2008 against the claim for rectification of the comprehensive real estate holding tax for the year 2005 is revoked. The Defendant’s revocation of the portion exceeding KRW 507,635,410, global income tax for the year 2008 imposed on the Plaintiff on November 22, 2008, KRW 101,527,080, global income tax for the special rural and rural development tax for the year 2008, KRW 3,463,960, global income tax for the year 2008, global income tax for the special rural and rural development tax for the year 3,463,960, and KRW 692,790, respectively (a).

1. Details of the disposition;

A. The Plaintiff is a company that operates a ○○○-gu ○○○○-gu ○○○○○-gu ○○○○-1, a member golf course in ○○○-gu, ○○○○-gu, ○○○○-gu.

B. The Plaintiff classified the original preserved forest land in the instant golf course owned by it as a general aggregate taxation subject to comprehensive real estate holding tax and reported the comprehensive real estate holding tax and special rural development tax to the Defendant pursuant to Article 11 of the Comprehensive Real Estate Holding Tax Act and Article 182 (1) 1 and 2 of the former Local Tax Act (amended by Act No. 8864 of Feb. 29, 2008; hereinafter referred to as the “former Local Tax Act”). Thereafter, the Plaintiff filed a request for correction to the Defendant to the effect that the report classified the original preserved forest into general aggregate taxation is erroneous in accordance with the unconstitutional and unlawful laws and regulations, and that comprehensive real estate holding tax should be refunded. However, the Defendant issued a request for correction refusal against the Plaintiff’s correction rejection. The Plaintiff filed a tax appeal against the disposition rejecting the correction of the instant case, but the details are as shown below.

C. On November 22, 2008, the Defendant issued a disposition imposing global income tax of KRW 507,635,410 for the year 2008 and special rural development tax of KRW 101,527,080 for the year 2008. The Defendant, on January 29, 2008, reduced KRW 507,635,410 for the global income tax of KRW 443,540,230 for the year 2008, and the special rural development tax of KRW 101,527,08,080 for the special rural development tax of KRW 88,70 for 88,040 (hereinafter “instant disposition”). The Plaintiff dissatisfied with the disposition of imposition of this case, filed a tax appeal on February 13, 2009, but was dismissed on April 24, 2009.

[Reasons for Recognition] Facts without dispute, Gap evidence 1-2, Gap evidence 2, 3, 4, Eul evidence 1-1, 2-2, Eul evidence 2, 3, 4, Eul evidence 5-1, 5-2, and the purport of the whole pleadings

2. Relevant legislation

Attached Form 1. The entry in the relevant statutes is as follows.

3. Whether each of the dispositions of this case is legitimate

The issue and determination of the Plaintiff’s assertion, the instant case, and the instant judgment are identical to the description as to the legitimacy of the instant disposition on February 16, 2010 (the grounds for the judgment of the Jeonju District Court Decision 2009Guhap1607, Feb. 16, 2010; hereinafter the current appellate court is continuing), and the addition are as follows: “Where the tax base and the amount of tax recorded in the return of tax base (where any determination or correction is made pursuant to the respective tax laws, referring to the tax base and the amount of tax after such determination or correction) exceed the tax base and the amount to be reported pursuant to the tax law” (see Article 45-2(1)1 of the Framework Act on National Taxes). As such, in the case of revocation of the correction refusal, on the premise that it is possible to examine the unconstitutionality and illegality of the relevant tax law and the Enforcement Decree thereof, the issue is whether the Plaintiff’s

A. Whether the Comprehensive Real Estate Holding Tax Act is unconstitutional or not

Since the Comprehensive Real Estate Tax Act was enacted on January 5, 2005 by Act No. 7328, it is clear that there has been controversy about the constitutionality of the Comprehensive Real Estate Tax Act.

However, there is no final declaration that the comprehensive real estate holding tax law itself should be excluded in accordance with the procedures set forth in the Constitution and laws beyond the doubt and possibility of the unconstitutionality of the comprehensive real estate holding tax law after a considerable period of time has passed since the enactment date of the law.

Furthermore, Article 182 of the former Local Tax Act, which is a taxation on land, is Article 182 of the former Local Tax Act, and Article 182 of the former Local Tax Act continues to maintain its normative power after the establishment of June 16, 1989.

Along with the legislative improvement of the comprehensive real estate holding tax system by reflecting the legitimate rights of landowners in the Comprehensive Real Estate Holding Tax Act, the application of the Comprehensive Real Estate Holding Tax Act itself cannot be ruled out comprehensively in light of the unconstitutionality of the comprehensive real estate holding tax system (see, e.g., Constitutional Court en banc Order 2006Hun-Ba112, Nov. 13, 2008; Constitutional Court en banc Order 2008Hun-Ga27, Dec. 28, 2010).

B. Whether the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 19817, Dec. 30, 2006; hereinafter referred to as the "former Enforcement Decree of the Local Tax Act") and the proviso of Article 131-2(3)14 (excluding, however, forests and fields within land for membership golf courses under the Installation and Utilization of Sports Facilities Act are unconstitutional or illegal, etc.

(a) The forests and fields provided for in Article 131-2 (3) 14 of the Enforcement Decree of the Local Tax Act, amended by Presidential Decree No. 19817, Dec. 30, 2006, shall be excluded from the land for membership golf courses under the Installation and Utilization of Sports Facilities Act:

However, if the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 19817, Dec. 30, 2006) and the proviso of Article 131-2 (3) 14 (hereinafter "the proviso of this case") are unconstitutional or unlawful, the core issue of this case is unconstitutional and unlawful (amended by Presidential Decree No. 19817, Dec. 30, 2006) and the proviso of Article 131-2 (3) 14 (hereinafter "the proviso of this case") are unconstitutional or unlawful, each disposition of this case is unlawful. Thus, since the core issue of this case is unconstitutional and unlawful, the main issue of this case does not differ from the method and form of a special taxation under the proviso of Article 131-2 (3) 14 (hereinafter "the proviso of this case") regardless of the method and form of a special taxation under Article 131-2 (17) of the Local Tax Act (amended by Presidential Decree No. 19817, Dec. 30, 2006).

From the standpoint of the Plaintiff, the instant proviso provisions cannot be easily accepted. However, the characteristic of a membership golf course recognized as property in addition to the provision of sports opportunity by attempting to discriminate from a public golf course, and the characteristics of a membership golf course, the original preservation forest (which means the reduction of forest land to be preserved in its original form, and the undeveloped land) is still offered as members or users’ use of a golf course, and the characteristics of the property are still maintained. Any person is unable to access the boundaries of golf courses, and only the general public can access the forest to the original form preservation in light of the fact that the original conservation forest plays a role in blocking golf courses and forests, as it is difficult for the golf course users to access the original form preservation forest as it is difficult to easily, and that the land area to be incorporated into a membership golf course without destroying considerable parts of mountainous districts and forests due to lack of population comparison and considerable damages to the mountainous districts and forests, despite these characteristics, the area of land to be incorporated into a membership golf course is considerably wide, and the original form preservation forest is merely a part of the forest and land subject to comprehensive real estate holding tax.

Comprehensively taking account of the provisions of Articles 188(1)1(c), 182(1)3(c), and 112(2) of the former Local Tax Act, and Article 20 of the Enforcement Decree of the Installation and Utilization of Sports Facilities Act, the separate taxation rate shall be 40/1,00 of the tax base (20/1,00 of the tax base amount for golf clubs outside the Seoul Metropolitan area under Article 2 subparag. 1 of the Seoul Metropolitan Area Readjustment Planning Act shall be 40/1,00 of the tax base by classifying only the land subject to the separate taxation (development areas such as golf courses) and the land which is not subject to the separate taxation (undeveloped areas such as original forests) and the land which is subject to the separate taxation, and then the separate taxation rate shall be 40/1,000 of the Enforcement Decree of the Local Tax Act, which is less than the property tax rate for golf clubs and the land which is subject to the separate taxation in its original form, and it shall not be deemed that there is an error in the amendment of the Local Tax Act.

Therefore, the Plaintiff’s assertion that forest preserved in its original form conforms to the Constitution that should be subject to special aggregate taxation, and that the membership golf course and the golf course located in the Seoul metropolitan area conforms to the Constitution that should always be treated as the same as the non-member golf course and the non-Seoul metropolitan area.

(c) Other.

This case’s each disposition cannot be deemed unlawful solely on the grounds that the tax base applied is too higher than the market price, and that the tax assessment based on the officially announced land price can be directly contested, separate from the process of determining the officially announced land price.

4. Conclusion

Thus, the plaintiff's claim of this case is dismissed as it is without merit.