In a case where an increase or a correction disposition of the initial tax assessment is made after the enforcement of Article 22-2 of the Framework Act on National Taxes, the subject of adjudication in an appeal litigation (i.e., an increase or decrease disposition), and whether the grounds for illegality regarding the initial report or decision can be asserted

Even after the enforcement of Article 22-2 of the Framework Act on National Taxes, where an increase or decrease disposition is made, the original report or decision shall lose its independent value by absorbing the increase or decrease disposition. As such, in principle, the increase or decrease disposition shall be subject to an appeal litigation regardless of the lapse of the objection period against the initial report or decision, etc., and it is reasonable to interpret that a taxpayer may also claim illegal grounds for the initial report or decision in an appeal litigation.

Article 22-2 of the Framework Act on National Taxes, Article 19 of the Administrative Litigation Act

Supreme Court Decision 91Nu6108 delivered on February 25, 1992 (Gong1992, 1196), Supreme Court Decision 91Nu9596 delivered on May 26, 1992 (Gong1992, 2051), Supreme Court Decision 96Nu8796 delivered on May 16, 197 (Gong1997Sang, 1787), Supreme Court Decision 2002Du9261 Delivered on August 16, 2004 (Gong2004Ha, 1550)

Plaintiff (Attorney Yellow-nam, Counsel for the plaintiff-appellant)

Sung-dong Tax Office (Law Firm Doll, Attorneys O Jae-joon et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2005Nu25549 delivered on October 24, 2006

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

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

1. As to the grounds of appeal Nos. 1 through 3

In a case where a corrective disposition is taken to increase the amount of tax originally reported or determined, the previous Supreme Court has held that the person liable for duty payment may, in principle, file a claim for cancellation by taking the disposition to correct the amount of tax so reported or determined as the object of a lawsuit. In this case, even if the original declaration or decision was concluded after the lapse of the objection period or the completion of the procedure of the previous trial, the litigation procedure for the corrective disposition to correct the amount of tax so reported or determined, as well as the portion concerning the amount of tax initially reported or determined as the portion concerning the amount of tax so increased (see, e.g., Supreme Court Decisions 91Nu9596, May 26, 1992; 97Nu16329, May 28, 199; 200Du1083, Dec. 27, 2001).

Article 22-2 of the Framework Act on National Taxes (amended by Act No. 6782, Dec. 18, 2002) provides that "an increase of the amount of tax initially determined under the provisions of tax-related Acts shall not affect the rights and obligations under this Act or tax-related Acts with respect to the amount of tax originally determined," under the title of "an increase of the amount of tax initially determined under the provisions of tax-related Acts". The revised disposition does not add only the amount of tax initially determined but also includes the increased portion of tax, and determines a single tax amount again as a whole (see Supreme Court Decisions 91Nu9596, May 26, 1992; 2003Du12721, Jun. 10, 2005; 2003Du12721, etc.). The purport of the revised disposition of Article 22-2 of the Framework Act on National Taxes, which seeks to stipulate that an increase in the amount of tax initially determined under the provisions of tax-related Acts, as the object of a return or rejection disposition, is justifiable.

In the same purport, the court below acknowledged the facts as stated in its holding, and held that the plaintiff can assert the illegal grounds for the initial reported tax amount together in a lawsuit seeking the revocation of the disposition of this case, which did not request the correction of the amount of the tax originally reported, and there is no error in the misapprehension of legal principles as to the effect of correction, etc. under Article 22-2 of the Framework Act on National Taxes or the requirements for litigation

2. As to the fourth ground for appeal

The court below acknowledged the facts as stated in its decision after comprehensively taking account of the adopted evidence. The court below accepted the plaintiff's assertion that personnel expenses of 202,474,813, which the plaintiff omitted in the initial return, should be deducted additionally from the processing expenses, among the dispositions of this case, which the defendant denied the processing expenses from the plaintiff's original report, and judged that the part exceeding the reasonable tax amount calculated accordingly is unlawful. In light of the records, the court below's determination is just and there is no

3. Conclusion

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 Shin Young-chul (Presiding Justice)