[Plaintiff, Appellee]
[Defendant, Appellant] Orion Electric Co., Ltd. (Attorneys of Law Firm Changgong, Park Hae-bong and 3 others, Counsel)
[Judgment Below] Daegu District Court Decision 2012Na13697 decided April 18, 2013
[Order]
The judgment below is reversed, and the case is remanded to the Panel Division of the Daegu District Court.
[Reasoning]
The grounds of appeal (including the supplementary brief on grounds of appeal submitted after the expiration of the period for submitting the grounds of appeal, to the extent it supplements the grounds of appeal) are examined.
1. As to the argument that the withholding tax amount should be deducted
(1) Pursuant to Article 21(2)(1) of the Framework Act on National Taxes (국세기본법), the duty to pay withheld income tax, etc. imposed on a person obligated to collect such tax arises, in principle, at the time the relevant income is paid, and the corresponding duty of the recipient to accept such withholding likewise arises at that time; accordingly, the payer may not collect or deduct the withholding tax in advance before the time for payment of the income arrives (see Supreme Court Decision 86Daka2872 decided October 24, 1988; Supreme Court Decision 91Da38075 decided May 26, 1992, etc.). However, where the withholding agent's duty to pay arises because, for instance, the payment of income is deemed to have been made, and the withholding agent actually pays the income tax, etc. that must be withheld before the actual payment of the income amount, the amount of tax lawfully and actually so paid may be deducted in advance from the income amount to be paid.
(2) In this case, where the Plaintiffs claimed payment of retirement allowances, etc. against the Defendant, the Defendant argued that the amount to be paid to the Plaintiffs should be calculated after deducting the withholding tax amount already paid by the Defendant. In response, the court below, citing the above Supreme Court Decision 91Da38075, rejected the Defendant's argument on the grounds that a payer may not collect or deduct withholding tax in advance before the time of payment of the income amount; that this conclusion is unaffected even if the Defendant had paid the withholding tax in advance; that the Defendant may withhold the income tax, etc. at the stage when the judgment becomes final and the retirement allowance is paid; and that if the Plaintiffs, as recipients, refuse to receive the retirement allowance after deduction of the withholding tax, the Defendant may be discharged from the obligation by depositing the amount for performance.
(3) In light of the legal principles set forth above, the above determination by the court below is incorrect.
Article 146(1) of the former Income Tax Act (소득세법) (before amendment by Act No. 9897 of December 31, 2009) provides that "when a withholding agent pays retirement income classified as Class A, the agent shall withhold the income tax calculated by applying the withholding tax rate to the tax base of the retirement income." Article 147(1) of the same Act provides that "where a withholding agent liable to pay retirement income fails, by December 31 of the relevant year, to pay the retirement allowance of a person who retired between January and November, the retirement allowance shall be deemed to have been paid on December 31." Furthermore, according to the record, including the descriptions in Evidence B No. 6-1 and 6-2 adopted by the court below, it can be seen that the Plaintiffs retired as of October 31, 2005, and that while the Defendant had not paid the retirement allowance, etc. to the Plaintiffs, the Defendant, pursuant to the above provisions, as a withholding agent, paid the income tax and resident tax on the Plaintiffs' retirement income on November 15, 2006.
Examining these facts in light of the above provisions of the Income Tax Act and the legal principles set forth above, since the payment of retirement income to the Plaintiffs is deemed to have been made pursuant to the above provisions of the Income Tax Act, thereby giving rise to the Defendant's duty to withhold the income tax, etc. thereon, and since the Defendant, based thereon, actually paid the income tax, etc. on the Plaintiffs' retirement income, the amount of retirement income which the Defendant is subsequently obligated to pay to the Plaintiffs must be calculated by deducting the lawfully paid tax amount already paid from the original amount. As the Plaintiffs argue, if there were circumstances in which it is difficult to find that taxable retirement income had accrued to the Plaintiffs—because there was a dispute between the Plaintiffs and the Defendant as to the existence or scope of the retirement allowance claim, etc., leading to this lawsuit—then it would also be difficult to recognize that the Defendant's duty to withhold the income tax, etc. had arisen, and a different conclusion might be warranted. However, considering the reasoning of the judgment below and the judgment of the first instance, the above evidence, and the contents of the parties' arguments appearing in the record of this case, it appears that in this case there was no substantial dispute as to the Defendant's obligation to pay retirement income to the Plaintiffs or as to the amount itself, and that the dispute mainly concerned whether delay interest should be paid due to the delay in payment and issues of appropriation therefor. The Supreme Court Decision 91Da38075 cited by the court below, as examined above, involved a different case and is not appropriate to invoke in this case.
Therefore, the court below should have calculated the amount of retirement income subsequently recognized as due to the Plaintiffs by deducting, as of that date, the lawfully paid income tax, etc. that the Defendant paid on November 15, 2006 as a withholding agent from the original amount of retirement income, and, based thereon, calculated the delay interest and examined how each subsequent payment by the Defendant was appropriated toward performance. Instead, the court below, for the reasons stated above, rejected the Defendant's argument for deduction of the withholding tax amount and recognized the amount of retirement income to be paid to the Plaintiffs as including the amount already paid by the Defendant as the above income tax, etc. Therefore, the judgment below contains an error of law that misapprehended the legal principles regarding deduction of withholding tax in calculating the income amount which a withholding agent is obligated to pay, thereby affecting the judgment. (Incidentally, it should be pointed out that, according to the entries in Attachment 1 attached to the first instance judgment cited by the judgment below, the amount paid by the Defendant to Plaintiff 1 on February 4, 2008 is recorded as KRW 400,000 in both the "Defendant company's payment amount" column and the "delay interest appropriation" column, but the balance after appropriation in the "delay interest appropriation" column appears to reflect a miscalculation treating the amount paid as KRW 800,000.)
2. As to the argument that grounds for exclusion from the application of delay interest under the Labor Standards Act exist
(1) The Defendant argued that, because the illegal occupation of the factory by employees led by the labor union prevented the normal progress of matters such as the sale of the company, the Defendant was unable to secure the funds to pay the retirement allowance, and therefore grounds for exclusion from the application of delay interest under Article 37(2) of the Labor Standards Act (근로기준법) and Article 18(4) of the Enforcement Decree of the Labor Standards Act (근로기준법 시행령) exist. However, the court below rejected this argument on the ground, among others, that there was no evidence to prove such facts.
Examining the record, including the evidence adopted by the court below, the above findings and determination of the court below are justified. There is no error of law departing from the limits of the principle of free evaluation of evidence by failing to exhaust the necessary examination or by violating the rules of logic and experience.
(2) The Defendant argued that this case falls under a case where it is deemed appropriate for the court or the Labor Relations Commission to adjudicate a dispute concerning the existence, in whole or in part, of wages and retirement allowances whose payment is delayed, and therefore grounds for exclusion from the application of delay interest under Article 18(3) of the above Enforcement Decree exist. The court below determined that, since all of the Plaintiffs' claims were recognized, this argument could not be accepted.
As examined above, the Defendant's argument that the withholding tax amount should be deducted is well-founded, and therefore the court below's statement that all of the Plaintiffs' claims are recognized is not appropriate. However, examining the reasoning of the judgment below and the judgment of the first instance cited by the court below, together with the above evidence and the record, the scope of the Plaintiffs' claims that would be rejected pursuant to the Defendant's above deduction argument in this case is merely a very small portion of the total claimed amount, and moreover, the dispute over such deduction does not appear to be the reason for the delay in payment of the retirement allowance, etc. to the Plaintiffs, nor is there any other evidence sufficient to recognize that this is a case where it would be deemed appropriate for the court or the Labor Relations Commission to adjudicate the existence of the retirement allowance, etc. The conclusion of the court below rejecting the Defendant's above argument is correct, and there is no error of law therein.
3. Conclusion
Therefore, the judgment below is reversed, and the case is remanded to the court below for further hearing and determination, this judgment being rendered as set forth in the Order by the unanimous opinion of the Justices participating in the decision.
Justice Lee Sang-hoon (Presiding Justice), Shin Yeong-cheol, Kim Chang-seok, Cho Hee-dae (Justice in charge)