[1] Meaning of “when a transaction or act, etc. becomes final and conclusive as different by a judgment on a lawsuit related thereto” under Article 45-2(2)1 of the former Framework Act on National Taxes / In a case where a judgment becomes final and conclusive as different from the transaction or act, etc., which served as the basis for calculating the tax base and the amount of tax in the initial declaration, etc., whether it constitutes a ground for filing a request for correction under Article 45-2(2)1 of the former Framework Act on National Taxes (affirmative in principle) and whether a taxpayer’s justifiable request for correction can only be asserted as a ground for filing a request for ordinary correction under each subparagraph of Article 45-2(1) of the former Framework Act on National Taxes (negative)

[2] Where Party A, etc. transferred the real estate to Party B and reported and paid the transfer income tax with the total transfer value of KRW 3.5 billion, but the tax authority imposed a disposition of rectification and notification to additionally pay the transfer income tax on the premise that the transfer value of the real estate, including the lease deposit, was KRW 3.83 billion, and Party A, etc. filed a claim for correction of the transfer income tax on the ground that the judgment that the transfer value of the real estate was KRW 3.5 billion against Party B, etc. was final and conclusive in a lawsuit seeking confirmation of non-existence of the obligation against Party B, the case holding that Party A, etc. may file a claim for correction of the taxation disposition on the basis of the final and conclusive judgment, on the ground that Party A, etc., was entitled

[1] The purport of Article 45-2(2) of the former Framework Act on National Taxes (amended by Act No. 13552, Dec. 15, 2015; hereinafter “the Act”) under Article 45-2(2) is to expand the protection of taxpayers’ rights by allowing taxpayers to file a request for reduction in cases where a change occurs in the basis of calculating the tax base and the amount of tax due to the occurrence of a certain subsequent cause after the establishment of the tax liability. In this context, the term “where a transaction, act, etc. becomes final and conclusive as different by a judgment in a lawsuit against it” under Article 45-2(2)1 of the Act refers to a case where the existence or legal effect of the transaction, act, etc. becomes final and conclusive as the ground of calculating the tax base and the amount of tax after the first declaration, etc. was made and the first declaration, etc. becomes final and conclusive by a judgment in the lawsuit against it.

In addition, in light of the language and text, legislative purport, etc. of the above provision, in case where there is a judgment confirming transaction or act, etc. which is the basis of calculating the tax base and the amount of tax in the initial return, barring any special circumstance, it constitutes a ground for requesting correction under Article 45-2 (2) 1 of the Act, barring any special circumstance. The mere fact that the taxpayer can contest the contents of the judgment as the ground for claiming correction under the ordinary provisions under each subparagraph of Article 45-2 (1) of the Act, the taxpayer’s legitimate

[2] Where Party A, etc. transferred the real estate to Party B and reported and paid the transfer income tax with the total transfer value of KRW 3.5 billion, but the tax authorities imposed a disposition of rectification and notification to additionally pay the transfer income tax on the premise that the transfer value of the real estate, including the lease deposit, was KRW 3.83 billion, and Party B, etc. filed a claim for correction of the transfer income tax on the ground that the judgment against Party A, etc. became final and conclusive in a lawsuit seeking confirmation of non-existence of an obligation against Party B, etc., but the tax authorities refused such request, the case held that the dispute arose regarding the specific scope of the transfer value on the basis of the assessment basis of the tax base and the calculation of the amount of tax, and that the said disposition cannot be duly maintained on the grounds that the transfer value was determined by the judgment that the transfer value was only KRW 3.5 billion, and thus, Party A, etc.’s final and conclusive judgment can be claimed for correction of the disposition of imposition on the grounds of Article 45-2(2)1 of the former Framework Act on National Taxes (amended by Act).

[1] Article 45-2(1) and (2)1 of the former Framework Act on National Taxes (Amended by Act No. 13552, Dec. 15, 2015) / [2] Article 45-2(2)1 of the former Framework Act on National Taxes (Amended by Act No. 13552, Dec. 15, 2015)

[1] Supreme Court Decision 2005Du7006 Decided January 26, 2006 (Gong2006Sang, 345), Supreme Court Decision 2009Du22379 Decided July 28, 201 (Gong2011Ha, 1846)

Plaintiff 1 and one other (Law Firm Yoon, Attorneys Lee In-seok et al., Counsel for the plaintiff-appellant)

Head of the tax office;

Seoul High Court Decision 2016Nu81361 decided April 4, 2017

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. Article 45-2(2) of the former Framework Act on National Taxes (amended by Act No. 13552, Dec. 15, 2015; hereinafter “the Act”) provides that “Any person who has filed a tax base return by the statutory due date of return, or who has received a decision on the tax base and amount of national taxes, may file a claim for the decision or rectification within two months from the date on which he/she becomes aware of the occurrence of any of the following grounds,” and subparagraph 1 of the same Article provides that “if any transaction or act, etc., on which the tax base and amount of tax are calculated is based in the first return, determination or correction (hereinafter “the first return, etc.”) becomes final and conclusive as different by a final judgment (including reconciliation or other act having the same effect as the judgment) in the relevant lawsuit.”

The purport of the ex post facto request for correction is to expand the protection of taxpayers’ rights by allowing taxpayers to file a request for reduction of their tax base and amount of tax when there is any change in the basis for calculating the tax base and amount of tax after the establishment of the tax liability. The phrase “when the transaction or act, etc. becomes final and conclusive as different by a ruling on the relevant lawsuit” under Article 45-2(2)1 of the Act refers to a case where the existence of the transaction or act, etc. becomes final and conclusive as the basis for calculating the tax base and amount of tax is different by a ruling in the relevant lawsuit (see, e.g., Supreme Court Decisions 2005Du706, Jan. 26, 2006; 2009Du2379, Jul. 28, 2011).

In addition, in light of the language and text, legislative purport, etc. of the above provision, in case where there is a judgment confirming transaction or act, etc. which is the basis of calculating the tax base and the amount of tax in the initial return, etc. as different contents, barring any special circumstance, it shall be deemed that a request for correction under Article 45-2 (2) 1 of the Act constitutes the ground for filing a claim for correction under Article 45-2 (1) of the Act, barring any special circumstance. The mere fact that the taxpayer can contest the contents of the judgment as the ground for filing

2. Review of the reasoning of the lower judgment and the record reveals the following facts.

A. On November 5, 2008, the Plaintiffs transferred the instant real estate owned by their respective 1/2 shares to the Korea Development Bank (hereinafter “Korea Development Bank”) and reported and paid the transfer income tax with the total transfer value of KRW 3.5 billion.

B. On January 2, 2012, the Defendant calculated the tax amount on the premise that the transfer value of the instant real estate against the Plaintiffs is KRW 3.83 billion, including the lease deposit amount of KRW 330,000,000,000, and issued a correction and notification so that the transfer income tax for the year 2008 should be additionally paid to the Plaintiffs.

C. On the other hand, on December 1, 2014, the KOB filed a lawsuit seeking confirmation of the existence of an obligation with the Seoul Central District Court on the ground that the Plaintiffs claimed that the transfer value was KRW 3.83 billion, despite having determined the transfer value as KRW 3.5 billion in the sales contract for the instant real estate and paid all of them, the KOB additionally claimed that the transfer value was KRW 3.83 billion.

D. On April 23, 2015, the said court rendered the instant civil judgment that the transfer value of the instant real estate pursuant to the said sales contract is KRW 3.5 billion, and that the Plaintiff, the buyer, paid the sales price of KRW 3.5 billion to the Plaintiffs, and thus, the said court rendered the instant civil judgment with the purport that there is no obligation to pay the purchase price of KRW 3.5 billion under the said sales contract concluded between the Plaintiff and the Plaintiff. The said judgment became final and conclusive on May 16, 2015.

E. On May 22, 2015, the Plaintiffs filed a request for correction of the transfer income tax reverted to the Defendant in 2008 on the grounds that the instant civil judgment became final and conclusive, and the Defendant rejected the said request for correction on July 28, 2015.

3. Examining these facts in light of the aforementioned legal principles and records, the instant disposition was rendered on the premise that the transfer value of the real estate of this case was KRW 3.83 billion. However, there was a dispute over the specific scope of transfer value under the transaction transaction, which serves as the basis for calculating the tax base and amount of tax, for the said disposition. The said transfer value was determined by the civil judgment of this case, and the instant disposition of this case cannot be properly maintained. Thus, it is reasonable to view that the Plaintiff, the taxpayer, can file a request for correction of the instant disposition based on the civil judgment of this case which became final and conclusive, on the ground of Article 45-2(2)1 of the Act, for reasons under Article 45-2(1) of the Act.

4. Nevertheless, the lower court determined that the determination of the civil judgment of this case does not constitute the grounds for filing a subsequent claim for correction on the grounds stated in its reasoning. In so doing, it erred by misapprehending the legal doctrine on the grounds for filing a request for correction under Article 45-2(2)1 of the Act, thereby adversely affecting the conclusion of the judgment.

5. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Ko Young-han (Presiding Justice)