Requirements for a defective administrative disposition to be void as a matter of course

In order for a defective administrative disposition to be null and void as a matter of course, it must be objectively obvious that the defect is a material breach of the essential part of the law and regulations.

Transfer income tax on the acquisitor of Newly-built houses under Article 99-3 of the Restriction of Special Taxation Act

2015 Ghana 5327323 Unlawful gains

AA

Korea

January 19, 2016

February 2, 2016

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

Defendant’s delivery of KRW 00,000,000 to the Plaintiff as well as a copy of the instant complaint to the Plaintiff

The rate of 15% per annum shall be paid from the date of full payment.

1. Basic facts

A. On April 24, 1995, the Plaintiff acquired a house located in 00-0, Seoul, ○○-dong 00,000 (hereinafter “the previous house”), but acquired the previous house on July 12, 2002, Seoul, ○○○-dong 000,000 (hereinafter “the newly-built house”).

B. On June 7, 2006, the Plaintiff transferred the newly-built house of this case. On the ground that the newly-built house of this case was transferred within five years from the date of its acquisition, the Plaintiff reported the transfer income tax for the year 2006 under Article 99-3(1) of the former Restriction of Special Taxation Act (amended by Act No. 9272, Dec. 26, 2008; hereinafter “Special Act on Taxation Restriction”).

C. On May 2, 2012, the head of Seoul Tax Office: (a) deemed that the transfer income accrued from the acquisition date of the previous house to the date prior to the date of acquisition of the newly-built house of this case is not the amount deducted from the income amount subject to capital gains tax; and (b) rendered a disposition imposing capital gains tax of KRW 00,000,000 (including additional tax) on the Plaintiff (hereinafter “instant disposition”).

D. The Plaintiff dissatisfied with the instant disposition and filed a request for examination with the Commissioner of the National Tax Service on August 9, 2012. However, on September 4, 2012, the Commissioner of the National Tax Service rendered a decision to dismiss the Plaintiff’s request, and the said decision became final and conclusive depending on the fact that the Plaintiff did not institute an administrative litigation against the decision of dismissal by

[Reasons for Recognition] A without dispute, Gap evidence Nos. 1 through 5, Eul evidence No. 1, the purport of the whole pleadings]

2. Summary of the plaintiff's assertion

According to Article 99-3(1) of the Restriction of Special Taxation Act, the Plaintiff rendered the instant disposition by erroneous interpretation of Article 99-3(1) of the Restriction of Special Taxation Act even though the total amount of capital gains tax is reduced or exempted in the case of transfer within five years from the date of acquisition of newly-built house, and the method of calculating capital gains tax was made in accordance with the method of arbitrary choice without any legal basis. Any part of this case’s disposition is null and void. Accordingly, the Defendant is obliged to return to the Plaintiff the total

3. Determination

A. In order for the taxation to be a unjust enrichment, the tax payment or the collection of tax must be null and void as it has no legal basis at all in substance or in procedure, or due to the significant and apparent defect of the taxation disposition. In a case where the defect of the taxation disposition is limited to the extent that the tax disposition can only be revoked, the tax payment due to the defect cannot be deemed as unjust enrichment unless the tax authority voluntarily revokes it or revokes it by the appeal procedure. Even if an administrative disposition is unlawful, the effect of the administrative disposition is not denied without permission on the ground of the defect, except in the case where the defect is deemed to be null and void as it is significant and apparent (see, e.g., Supreme Court Decision 94Da2800, Nov. 11, 1994). This administrative act is not identical with the res judicata effect of the judgment, but if the defect of the administrative act is merely a ground for revocation of the defect that falls within the objective scope of the fairness of the judgment, unless the disposition is revoked (see, e.g., Supreme Court Decision 94Da2800, etc.).

B. In order for a defective administrative disposition to be null and void as a matter of course, it must be objectively obvious that the defect is a serious violation of the important part of the law, and the purpose, meaning, function, etc. of the law should be examined from a teleological perspective in determining whether the defect is significant and obvious, and at the same time, reasonable consideration should be given to the specificity of the specific case itself. In a case where an administrative agency has taken an administrative disposition by applying a certain provision of a law to a certain legal relationship or fact-finding, despite the lack of room for dispute over the interpretation of the law, the legal principles as to the legal relation or fact-finding are clearly stated and thus, if an administrative agency took the disposition by applying the above provision, it shall be deemed that the defect is significant and obvious. However, if there is room for dispute over the interpretation of the law because the legal principles as to the legal relation or fact-finding are not clearly revealed, it is merely erroneous as to the fact of the administrative disposition, and it cannot be said that the defect is evident (see, e.g., Supreme Court Decision 2002Da68485, Oct.

C. The main text of Article 99-3(1) of the Act on Special Cases concerning Tax Restriction provides that "the income accruing from the transfer of a newly-built house by a resident within five years from the date of acquisition shall be exempted from the tax amount equivalent to 100/100 of the transfer income tax (hereinafter referred to as "former"), and the transfer income accruing for five years from the date of acquisition of the newly-built house shall be subtracted from the income amount subject to the transfer income tax (hereinafter referred to as "after the latter") if the newly-built house is transferred after the lapse of five years from the date of acquisition of the newly-built house. In the case of transfer within five years from the date of acquisition of the newly-built house in this case, the initial date of acquisition of the newly-built house shall be the date of acquisition of the newly-built house, and the transfer income from the date of acquisition of the newly-built house shall not be specifically stipulated in the above provisions until the date of acquisition of the newly-built house, and the latter part and other formula different from the former part of Article 99-3(1) of the Act shall be divided within five years from the transfer period.

Therefore, even if the Defendant issued the instant disposition by mistake in the interpretation of the above provision, considering the following circumstances: (a) there is room for dispute over the interpretation of the above provision; (b) in light of the Supreme Court Decision 2013Du12690 Decided December 11, 2014, it is difficult to recognize that the Plaintiff’s assertion alone was an obvious defect in the instant disposition; and (c) there is no other evidence to acknowledge it. Accordingly, the Plaintiff’s assertion premised on the premise that the instant disposition is null and void as a matter of course is without merit.

4. Conclusion

Thus, the plaintiff's claim of this case is dismissed for reasons.