Whether a disposition imposed by mistake of fact constitutes an invalidation as a matter of course

Although there is a significant defect in the disposition imposed by mistake of fact, if it can only be found after the date on which the tax authority accurately investigated the facts, it cannot be deemed that the defect is apparent, so it does not constitute abrupt invalidation.

Article 88 (Definition of Transfer) of Income Tax Act

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff.

The defendant's disposition of KRW 121,936,360 against the plaintiff on July 16, 2004 (which seems to be a clerical error in the statement of July 1, 2004) is invalid.

1. Details of the disposition;

A. Of each land listed in the separate sheet Nos. 1 and 3 in the separate sheet (hereinafter referred to as the “instant land”), each land listed in the separate sheet Nos. 1 and 3 in the separate sheet (hereinafter referred to as the “instant land”) owned by the largest ○○○○○○○○, the ownership transfer registration was made on June 12, 2002 each Plaintiff on the land listed in the separate sheet No. 2, and on November 3, 2003, each ownership transfer registration was made on October 20, 2003 on the instant land.

B. Accordingly, the Defendant deemed that the Plaintiff transferred the instant land to ○○○○. On July 1, 2004, the Defendant issued the instant disposition imposing capital gains tax of KRW 121,936,360 (the sum of the penalty taxes for a return and an unfaithful payment) on the Plaintiff.

Each entry of evidence Nos. 1, 2, 3, 5 (including paper numbers), 1 and 2, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff primarily asserts that this case's transfer of ownership was made in the future by forging related documents, and that the plaintiff did not transfer this case's land to this ○○○○, and that the transfer of ownership registration of this case made in the future from the plaintiff is merely a registration of restoration to original state due to the termination of title trust, and it cannot be deemed a transfer of real estate. Ultimately, the plaintiff asserts that the disposition of this case, based on the premise that the plaintiff transferred this case's land to this ○○○ for compensation, is null and void due to significant and apparent defects in its contents.

B. Determination

(1) Judgment on the main argument

In light of the purport of the entire pleadings, this case’s land was leased only in the Plaintiff’s name to build a commercial building on the land of this case and the registration of ownership transfer was completed under the Plaintiff’s name for convenience when cancelling the title trust with the Plaintiff, so the Plaintiff’s assertion is without merit. Thus, the Plaintiff’s assertion is without merit.

(2) Judgment on the conjunctive assertion

However, in order for a taxation disposition to be deemed null and void as a matter of course, the mere fact that there is an illegality in the disposition is insufficient to be sufficient to say that there is an obvious reason, and it should be objectively clear that the defect is in violation of important laws and regulations, and in determining whether the defect is significant and obvious, the purpose, meaning, function, etc. of the laws and regulations, which serve as the basis for the pertinent taxation, should be examined in a teleological perspective, and at the same time, reasonable consideration should be made on the specificity of the specific case itself. In addition, in a case where there are objective circumstances that make it clear that the defect of the taxation disposition is grave and obvious, but in a case where there is a certain legal relation or factual relation which is not subject to taxation, which is not subject to taxation, it cannot be deemed as null and void a taxation disposition that misleads the fact of taxation, even if it is serious, if it is apparent that it is necessary to accurately investigate the factual basis (see Supreme Court Decision 200Da24986, Jul. 10, 2001).

As seen earlier, even though the registration of transfer of ownership in this case was merely a registration of restoration to original state on the ground of termination of title trust, the disposition of this case imposing transfer income tax by the Defendant is significant. However, in light of the fact that the grounds for registration specified in the register, which is a taxation data, are the sale and purchase, the issue of whether the registration of transfer of ownership in this case was made due to the termination of title trust can only be made after the date on which the Defendant, who is the tax authority, can accurately investigate the facts and can not be seen as apparent that the defect is apparent (see, e.g., Supreme Court Decision 97Nu6568, Jul. 22, 1997). Thus, the Plaintiff’s above assertion is without merit.

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.