[1] The case affirming the judgment below which held that "implementer of a tourism complex development project under the Tourism Promotion Act" under Article 277 (1) of the former Local Tax Act means not only a tourism complex designation but also a project operator who has obtained approval of a development plan under the Tourism Promotion Act

[2] In a case where a person liable for the payment of acquisition tax and registration tax properly filed a tax return by multiplying the tax base by the tax rate, but the final tax amount to be paid is erroneously reported after making a decision on the tax amount reduced or exempted (negative)

[1] The case affirming the judgment below holding that in case where Gap corporation, which operated a resort facility, and the Do governor having jurisdiction over it designated and publicly announced as a tourism complex pursuant to the Tourism Promotion Act, acquired real estate, such as condominiums, within a tourism complex, and received a reduction or exemption of acquisition tax and registration tax, etc. pursuant to Article 277 (1) of the former Local Tax Act (wholly amended by Act No. 1021, Mar. 31, 2010; hereinafter the same), but acquired real estate without obtaining the approval of a development plan, and was subject to a disposition of imposition, such as acquisition tax and registration tax, on the ground that the acquisition of real estate is not subject to reduction or exemption of acquisition tax and registration tax, on the ground that the "tourist complex development project implementer under the Tourism Promotion Act" under Article 277 (1) of the former Local Tax Act means not only the designation of a tourism complex, but also the project implementer who obtained the approval of a development plan pursuant to the Tourism Promotion Act.

[2] Articles 120(1), 121(1)1, 150-2(1), and 151 subparag. 1 of the former Local Tax Act (wholly amended by Act No. 10221, Mar. 31, 2010; hereinafter the same) provide that “calculated tax amount,” which is the basis for calculating additional tax returns on acquisition tax, shall be “tax amount calculated under Articles 111 and 112”; the main text of Article 151 of the former Local Tax Act provides that “calculated tax amount,” which is the basis for calculating additional tax on negligent tax returns, shall be “tax amount calculated under Articles 130 through 143, 145, and 146,” and that “an amount of tax calculated under Articles 151, which is the basis for calculating additional tax on negligent tax returns, shall not be determined by comprehensively taking into account the subject matter of tax abatement or exemption under separate provisions under Article 261 of the former Local Tax Act, and that an additional tax on negligent tax return, as a taxpayer’s or an additional tax base.”

[1] Article 10-3(2)14 of the former Local Tax Act (Amended by Act No. 4415, Dec. 14, 191; see current Article 54); Article 128-2(2)14 (see current Article 54); Article 277(1) of the former Local Tax Act (Amended by Act No. 10221, Mar. 31, 201; see current Article 54 of the Restriction of Special Local Taxation Act); Articles 2 subparag. 7 and 9, and 55(1) and (2) of the Tourism Promotion Act / [2] Article 120(1) (see current Article 20(1) and (2)14 of the former Local Tax Act (Amended by Act No. 1021, Mar. 31, 2010; see current Article 20(1)); Article 121(1)12(1)1 of the former Local Tax Act (see current Article 120(1) and Article 215(1)2(1)1)2)1-2(3)1(3) of the former Local Tax Act

Large Leisure Industry and one other (Law Firm LLC, Attorneys So-young et al., Counsel for the plaintiff-appellant)

Hongcheon-gun

Seoul High Court (Chuncheon) Decision 2013Nu371 decided August 20, 2014

The part of the judgment of the court below concerning the imposition of the acquisition tax and the registration tax for negligent tax returns is reversed, and that part of the case is remanded to Seoul High Court. All remaining appeals

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Regarding ground of appeal No. 1

The ground of appeal on the purport that the part of the disposition of penalty tax in this case is unlawful because it was a duplicate imposition disposition that was conducted without revocation of the previous disposition of penalty tax, is not a legitimate ground of appeal. In addition, according to the records, the defendant revoked ex officio the previous disposition of penalty tax on March 18, 2013, stating the grounds for calculation of penalty tax in the notice of tax payment in its official authority and then again stated the grounds for calculation of penalty tax. Thus, the above ground of appeal cannot be accepted in this regard.

2. Regarding ground of appeal No. 2

A. The main sentence of Article 277(1) of the former Local Tax Act (wholly amended by Act No. 10221, Mar. 31, 2010; hereinafter the same shall apply) provides that “any real estate acquired by an implementer of a tourism complex development project under the Tourism Promotion Act to implement a tourism complex development project shall be exempted from acquisition and registration taxes.” In addition, Article 2 of the Tourism Promotion Act provides that “tourism complex” under subparagraph 7 shall be construed as “a place designated pursuant to this Act as a tourism hub where various tourist facilities are developed for the purpose of various tourism and relaxation for tourists,” “development plan” under subparagraph 9 shall be construed as “plan for the development and management of tourist facilities necessary for the promotion of the protection and use of a tourism destination or tourism complex,” and Article 55 shall be construed as “project implementer for the implementation of a development plan (hereinafter referred to as “development project”) with approval from the Governor of a Special Self-Governing Province, other than where special provisions exist in this Act or other Acts and subordinate statutes, and shall be construed as “project implementer of a development plan.”

B. Based on the evidence adopted, the lower court: (a) from November 1, 1987 to 1, operated the Plaintiff Hongcheon-gun ( Address 1 omitted); (b) on November 21, 2008, the Governor of Gangwon-do recognized the acquisition tax and registration tax of the Plaintiff Hongcheon-gun ( Address 1 omitted); and (c) on the ground that the Defendant did not obtain the Plaintiff’s imposition of the acquisition tax and registration tax pursuant to Article 17(1) of the former Tourism Promotion Act on the ground that it did not obtain the Plaintiff’s imposition of the acquisition tax and registration tax under Article 17(1) of the former Local Tax Act on the ground that it did not obtain the Plaintiff’s imposition of the acquisition tax and registration tax under Article 28(1) of the same Act on the ground that it did not obtain the Plaintiff’s acquisition tax and registration tax from around 21, 2008 to October 27, 2008; and (d) on the ground that it did not obtain the Plaintiff’s acquisition tax and registration tax from the Defendant.

Then, the lower court determined that: (a) Article 55(1) of the Tourism Promotion Act defines the term “project operator” as the only provision that defines the term “project operator” under the Tourism Promotion Act; (b) Article 55(2) provides that “project operator” is a person who has obtained approval for a development plan; and (c) on the other hand, Article 7(2) of the former Tourism Promotion Act provides that a private developer who intends to develop a tourism complex shall not be deemed to have obtained any specific status or qualification under the Tourism Promotion Act until he/she obtains approval for a development plan; and (d) Article 110-3(2)4 and Article 128-2(2)14 of the former Local Tax Act provides that a project operator under the Tourism Promotion Act shall be exempted from acquisition tax and fixtures acquired for a development project to obtain approval for a tourism complex; and (e) Article 7(2) of the former Tourism Promotion Act provides that the Plaintiffs are not subject to approval for a development plan under Article 5(2)7(1)5 of the Local Tax Act.

C. Examining the text, structure, and legislative history of the aforementioned provisions, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on the interpretation of “tourist complex development project implementer under the Tourism Promotion Act” under Article 277(1) of the former Local Tax Act.

3. As to the third ground for appeal

After recognizing the facts as indicated in its reasoning based on the adopted evidence, the lower court rejected the Plaintiffs’ assertion that the instant disposition violates the principle of trust protection, on the grounds that: (a) it cannot be deemed that there was an expression of a public opinion of the tax authority subject to the principle of trust protection; and (b) it is difficult to deem that there was no cause attributable to the Plaintiffs solely on the ground that the public official belonging to the Defendant provided false information on the reduction or exemption of the real estate of this case to the Plaintiffs, or that the Defendant provided false acceptance of the Plaintiffs’ application for reduction

In light of the relevant legal principles and records, the above determination by the court below is just, and contrary to what is alleged in the grounds of appeal, there were no errors of misapprehending the legal principles on the principle of trust protection, or of violating logical and empirical rules and free evaluation

4. As to the fourth ground for appeal

A. As to the requirements for imposing additional tax on negligent tax returns

(1) Additional tax on negligent tax returns on acquisition tax and registration tax

Article 120 (1) of the former Local Tax Act provides that "any person who acquires an object of taxation of the acquisition tax shall, within thirty days from the date of its acquisition, return and pay the tax amount calculated by applying the tax rate under Article 112 to the tax base under the conditions as prescribed by the Presidential Decree." Article 121 (1) 1 provides that "if a person liable to pay the acquisition tax fails to make a return under Article 120 or the reported tax amount falls short of the calculated tax amount, the additional tax on negligent tax returns equivalent to 20/100 of the calculated tax amount or underpaid tax amount shall be levied." Article 150-2 (1) of the former Local Tax Act provides that "if a person liable to pay the registration tax fails to make a return under Article 131 through 146 to the head of the local government having jurisdiction over the place of tax payment, before the registration or enrollment is made, under the conditions as prescribed by the Presidential Decree, the amount of tax calculated by applying the tax rate under Articles 130 through 146."

In light of the language and structure of the relevant provisions, the main text of Article 121(1) of the former Local Tax Act provides that “calculated tax amount”, which is the basis of calculating the additional tax on negligent tax returns on acquisition tax, shall be “tax amount calculated under Articles 111 and 112”; the main text of Article 151 provides that “calculated tax amount”, which is the basis of calculating the additional tax on negligent tax returns on registration tax, shall be “tax amount calculated under Articles 130 through 143, 145, and 146” and does not provide that “tax amount calculated under Articles 130 through 143, 145, and 146” shall be “tax amount calculated separately under Article 261 of the former Local Tax Act, and the additional tax on negligent tax payment, in principle, shall be a sanction on the failure of a taxpayer to fulfill his duty to report the tax base, calculated tax amount, etc.; it is reasonable to view that the additional tax on negligent tax return, even if a taxpayer has made a legitimate tax return and wrong tax amount by multiplying each tax base.

According to the evidence duly admitted by the court below, when the plaintiffs reported the acquisition tax and registration tax for the real estate of this case, they properly stated the calculated tax amount by multiplying each tax base by the tax rate. However, it can be found that the remaining tax amounts were reduced and exempted under Article 277(1) of the former Local Tax Act, which were erroneously stated that the acquisition tax and registration tax are reduced and exempted, and the final tax amount

Examining these facts in light of the legal principles as seen earlier, since the plaintiffs fulfilled their duty to report the acquisition tax and registration tax under the former Local Tax Act on the real estate of this case, the defendant's imposition of additional tax on negligent tax returns is unlawful, and the remaining amount of tax to be paid after the plaintiffs erroneously determined whether the acquisition tax and registration tax of this case were reduced or exempted cannot be viewed differently on the ground

Nevertheless, the lower court determined otherwise, on the ground that “calculated tax amount”, which is the basis of calculating the acquisition tax and the registration tax under the former Local Tax Act, means the final tax amount to be paid. In so doing, the lower court erred by misapprehending the legal doctrine on the negligent tax returns on the acquisition tax and the registration tax under the former Local Tax Act, thereby adversely affecting the conclusion of the judgment. The allegation in the grounds of appeal assigning this error is with merit.

(2) Additional tax on negligent tax returns

Article 260-5 subparag. 1 of the former Local Tax Act provides that the person liable to pay the local education tax shall impose the “amount of tax for negligent tax returns equivalent to 10/100 of the calculated tax amount or underpaid tax amount when the amount of tax failed to be reported under Article 260-4(1) or the amount of tax reported falls short of the calculated tax amount.” Article 260-3(1)1 of the same Act provides that the “amount of tax calculated” shall be “amount of tax calculated under Article 260-3(1).” Article 260-3(1)1 of the same Act provides that the “amount of tax for the local education tax payable by a person liable to pay the registration tax shall be “amount of tax to be paid under this Act” and

The lower court determined that the part of the additional tax on negligent tax returns among the instant disposition was lawful on the ground that the amount of the local education tax that the Plaintiff should have reported was the same as the final amount of the local education tax to have been paid.

In light of the language and structure of the above provisions, the above determination by the court below is just, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal principles on local education tax under the former Local Tax Act.

B. As to whether there exists a justifiable reason to exempt an additional duty

For reasons indicated in its holding, the court below is just in holding that the plaintiffs cannot be deemed to have justifiable grounds for exempting penalty, and there is no error in the misapprehension of legal principles as to the legitimate grounds for exempting penalty as alleged in the grounds of appeal.

5. Conclusion

The part of the judgment of the court below regarding the imposition of the acquisition tax and the registration tax for negligent tax returns shall be reversed, and that part of the case shall be remanded to the court below for a new trial and determination. The remaining appeals shall be dismissed in entirety. It is so decided as per Disposition by the assent

Justices Kim Yong-deok (Presiding Justice)