2021.06.22

2020 (Gyo-Hi) 337

Minshu Vol. 75, No. 7

Judgment concerning the attribution of money that was allotted to local taxes pertaining to seizures in the dispositions of delinquency wherein an individual's inhabitants taxes for multiple fiscal years that are subject to general collection are the local taxes pertaining to seizures, which was appropriated to inhabitants taxes for the fiscal years that are considered not to have existed at the time of the allotments as a result of the subsequent decisions of reduced assessment

Case seeking refund of payment to the government by mistake, etc.

Judgment of the Third Petty Bench, quashed and remanded

Sapporo High Court, Judgment of September 10, 2020

When money was allotted to local taxes pertaining to seizures in the dispositions of delinquency, wherein an individual's inhabitants taxes (municipal inhabitants tax and prefectural inhabitants tax) for multiple years that are subject to general collection are the local taxes pertaining to seizures, and was appropriated to inhabitants taxes for the fiscal years that are considered not to have existed at the time of the allotments as a result of the subsequent decisions of reduced assessment, if the individual's inhabitants taxes for other fiscal years existed at the time of the allotments out of the local taxes pertaining to seizures, that money is appropriated to said individual's inhabitants taxes for other fiscal years in accordance with the provisions of Article 489 of the Civil Code (prior to amendment by Act No. 44 of 2017).

Article 17 and Article 331, paragraph (6) of the Local Tax Act, Article 129, paragraph (1), item (i) of the National Tax Collection Act (prior to amendment by Act No. 10 of 2014), Article 129, paragraph (1), item (i) of the National Tax Collection Act (prior to amendment by Act No. 7 of 2018), Article 489 of the Civil Code (prior to amendment by Act No. 44 of 2017), and Article 488, paragraph (4) of the Civil Code

Local Tax Act
(Refund of Money Paid by Mistake)
Article 17 If there is money collected by a local body that was paid by mistake (hereinafter referred to as "money paid by mistake" in this Chapter), the head of the local body must refund that money as specified by Cabinet Order without delay.
(Disposition of Delinquency Pertaining to Municipal Inhabitants Tax)
Article 331
(6) The dispositions provided in the preceding paragraphs and other dispositions of delinquency for money collected by a local body pertaining to municipal inhabitants tax are governed by the rules for the dispositions of delinquency provided in the National Tax Collection Act.

National Tax Collection Act (prior to amendment by Act No. 10 of 2014)
Article 129 (1) The money set forth in item (i) or (ii) of the preceding Article (hereinafter referred to as "proceeds of realization, etc.") is to be allotted to the following national taxes and other claims:
(i) national taxes pertaining to seizures;

National Tax Collection Act (prior to amendment by Act No. 7 of 2018)
Article 129 (1) The money set forth in item (i) or (ii) of the preceding Article (hereinafter referred to as "proceeds of realization, etc.") is to be allotted to the following national taxes and other claims:
(i) national taxes pertaining to seizures;

Civil Code (prior to amendment by Act No. 44 of 2017)
(Statutory Allocation)
Article 489　In cases where neither the person who tenders the performance nor the person who receives such performance does not designate the allocation of performance pursuant to the provision of the preceding Article, the allocation shall be effected as stipulated in each of the following items:
(i)　if the obligations include those which are due and those which are not due yet, the applicable performance shall be allocated to those which are due;
(ii)　if all obligations are due, or none of the obligations are due, the applicable performance shall be allocated in the order of the obligations which shall result in more benefit to the obligor when performed;
(iii)　if all obligations would have equal benefit to the obligor when performed, the applicable performance shall be allocated in the order of the obligations which have, or should have, the earliest due date; and
(iv)　the performance of obligations which are equal in terms of the matters listed in the preceding two items shall be allocated in proportion to the amount of each obligation.

Civil Code
(Appropriation of One Payment or Delivery among Two or More Obligations Requiring the Same Kind of Payment or Delivery)
Article 488 (4)　Neither the person that makes the performance nor the person that accepts the performance makes designation under the provisions of paragraph (1) or paragraph (2), the performance is appropriated pursuant to the provisions of the following items:
(i)　if the obligations include those which are due and those which are not yet due, the performance is appropriated to those which are due;
(ii)　if all obligations are due, or none of the obligations is due, the performance is appropriated in the order of the obligations which are to result in more benefit to the obligor when performed;
(iii)　if all obligations would have equal benefit to the obligor when performed, the performance is appropriated in the order of the obligations which have, or should have, the earliest due date; or
(iv)　the performance of obligations which are equal in terms of the particulars set forth in the preceding two items is appropriated in proportion to the amount of each obligation.

The judgment in prior instance is quashed.

This case is remanded to the Sapporo High Court.

Concerning the reasons for a petition for acceptance of final appeal stated by the counsel for final appeal, SAKAGUCHI Tadahiko, et al.

1. The mayor of Wakkanai City (hereinafter referred to as the "mayor") received payment of or collected by the dispositions of delinquency the appellant's municipal inhabitants tax and prefectural inhabitants tax (subject to general collection; hereinafter referred to as "municipal and prefectural inhabitants taxes") for the period from fiscal 2009 to 2011 (hereinafter referred to as the "Municipal and Prefectural Inhabitants Taxes"), as well as delinquent charges therefor, etc., in sequence. However, after that, the mayor made decisions of assessment to reduce the amounts of the Municipal and Prefectural Inhabitants Taxes (hereinafter referred to as the "Decisions of Reduced Assessment") and determined that these decisions resulted in generating overpayments. Based thereon, the mayor refunded those amounts of overpayments and paid interests on tax refunds to the appellant. In this case, the appellant argues that the calculation of the amounts of overpayments by the mayor contains an error and demands that the appellee refund the shortfall of the amounts of overpayments and pay the relevant interests on tax refunds, and also compensate loss or damage under Article 1, paragraph (1) of the State Redress Act.

2. The outline of facts determined by the court of prior instance is as follows.

(1) The assessment and collection of an individual's prefectural inhabitants tax is, in principle, to be conducted by a municipality within the prefecture together with the assessment and collection of the individual's municipal inhabitants tax for the municipality by using the same rule as that used for the assessment and collection of the municipal inhabitants tax (first sentence of Article 41, paragraph (1) and Article 319, paragraph (2) of the Local Tax Act). In this case, interests on tax refunds and delinquent charges, etc. are to be calculated based on the total sum of the amounts of prefectural inhabitants tax and municipal inhabitants tax (second paragraph of Article 41, paragraph (1) of the same Act). The dispositions of delinquency for money collected by a local body pertaining to municipal inhabitants tax are to be governed by the rules for the dispositions of delinquency provided in the National Tax Collection Act (Article 331, paragraph (6) of the Local Tax Act).

(2) The appellant filed tax returns for income taxes for the period from 2008 to 2010. The district director of the competent tax office then made dispositions of reassessment to increase both the amount of gross income and the amount of tax to be paid for the tax returns (hereinafter referred to as the "Dispositions of Reassessment to Increase the Amounts") respectively on March 14 and 30, 2011.

In response to this, on April 25, 2011, with regard to the Municipal and Prefectural Taxes, the mayor made the decisions of assessment to increase the amount of tax for fiscal 2009 from 0 yen to 19,316,300 yen and the amount for fiscal 2010 from 0 yen to 25,616,300 yen, respectively (for both assessments, the due date for payment was May 20, 2011). On June 10, 2011, the mayor made a decision of assessment to determine the amount of tax for fiscal 2011 as 11,928,700 yen (the due date for payment was on or after June 30, 2011).

(3) As stated in Attachment 1 of the judgment in first instance, the mayor received the payment of or collected by the dispositions of delinquency the Municipal and Prefectural Inhabitants Taxes from the appellant during the period from July 7, 2011 to December 26, 2017. The money paid or collected as such (64,689,760 yen in total) was appropriated to the Municipal and Prefectural Inhabitants Taxes and delinquent charges therefor, etc. in sequence, as stated in the "Breakdown of Appropriation" column in the same attachment.

Regarding the above, the outline of the dispositions of delinquency made by the mayor (hereinafter referred to as the "Dispositions of Delinquency") is as stated in [i] to [iv] below, and the proceeds of realization, etc. obtained by the Dispositions of Delinquency were allotted to the local taxes pertaining to seizures, etc. (hereinafter money allotted in the dispositions of delinquency is sometimes referred to as "allotted money").

[i] Seizure of a claim on July 19, 2011

Local taxes pertaining to the seizure: Municipal and prefectural inhabitants taxes for fiscal 2009 and 2010

Claim subject to the seizure: The appellant's claim for the refund of an ordinary deposit

[ii] Seizure of a claim on July 19, 2011

Local taxes pertaining to the seizure: Municipal and prefectural inhabitants taxes for fiscal 2009 and 2010

Claim subject to the seizure: The appellant's claim for the refund of an ordinary deposit

[iii] Seizure of a claim on October 4, 2011

Local taxes pertaining to the seizure: Municipal and prefectural inhabitants taxes for the period from fiscal 2009 to 2011

Claim subject to the seizure: Claim for the payment of monthly salaries etc. to be paid to the appellant in and after October 2011

[iv] Seizure of a claim on April 1, 2016

Local taxes pertaining to the seizure: Municipal and prefectural inhabitants taxes for fiscal 2009 and 2011

Claim subject to the seizure: Claim for the payment of monthly salaries, etc. to be paid to the appellant in and after April 2016

(4) The appellant filed an action for the rescission of the Dispositions of Reassessment to Increase the Amounts, and the court rendered a judgment to the effect that the Dispositions of Reassessment to Increase the Amounts are to be rescinded in relation to the part exceeding the amounts of tax returns on the grounds of an error in the calculations of the amounts of gross income and the amounts of tax to be paid. This judgment became final and binding on December 15, 2017.

In response to this, regarding the Municipal and Prefectural Inhabitants Taxes, the mayor made the Decisions of Reduced Assessment to reduce the amount of tax for fiscal 2009 to 10,545,700 yen, that for fiscal 2010 to 20,792,200 yen, and that for fiscal 2011 to 5,565,000 yen, respectively, on December 27, 2017.

(5) The mayor determined that the Decisions of Reduced Assessment resulted in generating overpayments and paid to the appellant 19,958,400 yen as the refund of the amounts of overpayments and 772,600 yen as interests on tax refunds on December 27, 2017.

As stated in Attachment 2 of the judgment in first instance, in calculating the aforementioned amounts of overpayments the mayor first calculated the amounts of taxes in arrears for the relevant fiscal years by immediately considering that overpayments arose at the amounts equivalent to the amounts of money allotted to the local taxes pertaining to seizures in the Dispositions of Delinquency, which were appropriated to municipal and prefectural inhabitants taxes for the fiscal years that are considered not to have existed at the time of the allotments as a result of the Decisions of Reduced Assessment, while not considering that those amounts of overpayments were appropriated to municipal and prefectural taxes for other fiscal years that existed at the time of the allotments, out of the local taxes pertaining to seizures. Based on the amounts of taxes in arrears for the relevant fiscal years thus calculated, the mayor calculated the amounts of delinquent charges pertaining to the Municipal and Prefectural Inhabitants Taxes after the reductions of the amounts by the Decisions of Reduced Assessment, as stated in Attachments 3 to 5 of the same judgment.

(6) In this action, the appellant argues that money that was allotted to the local taxes pertaining to seizures in the Dispositions of Delinquency, which were appropriated to the municipal and prefectural inhabitants taxes for the fiscal years that are considered not to have existed at the time of the allotments as a result of the Decisions of Reduced Assessment, should be appropriated to municipal and prefectural inhabitants taxes for other fiscal years that existed at the time of the allotments, out of the local taxes pertaining to seizures, as stated in Attachment 6 of the judgment in first instance. The appellant also argues that the amounts of delinquent charges pertaining to the Municipal and Prefectural Inhabitants Taxes after the reductions of the amounts by the Decisions of Reduced Assessment should be calculated based on the amounts of taxes in arrears after that appropriation, as stated in Attachments 7 to 9 of the same judgment. The appellant then argues that in the calculation by the mayor as mentioned in (5) above that differs from this, the amounts of delinquent charges were overcalculated and the amounts of overpayments to be refunded to the appellant were thus undercalculated.

3. The court of prior instance determined as summarized below based on the aforementioned facts, and ruled that the calculation by the mayor mentioned in 2.(5) above contains no error and determined that all the appellant's claims should be dismissed.

If money is collected by a disposition of delinquency based on a decision of assessment of a local tax and a decision of reduced assessment is made in relation to the local tax after the collected money is appropriated to the local tax, part of the collected money exceeding the amount of tax pertaining to the decision of reduced assessment is considered to have lacked the legal cause at the time of the collection. Therefore, the aforementioned part of the collected money should be refunded as the amount of overpayment as it is. Even if there is another tax in arrears at the time of the collection, there is no legal ground for calculating a delinquent charge, etc. while deeming that the aforementioned part of the collected money was appropriated to said other tax in arrears.

4. However, the aforementioned determination of the court of prior instance cannot be upheld for the following reasons.

(1) Where a decision of assessment was made in relation to an individual's municipal inhabitants tax and prefectural inhabitants tax subject to general collection (hereinafter referred to as "individual's inhabitants taxes") and a decision of reduced assessment was subsequently made on the grounds that the calculation of the amount of taxes, etc. in the decision of assessment contained an error from the beginning, part of the initial decision of assessment pertaining to the amount of taxes that was reduced by the decision of reduced assessment loses its effect retroactive to the time when the initial decision of assessment was made, and the individual's inhabitant taxes relating to said part are considered not to have existed from the beginning. Therefore, regarding money allotted in a disposition of delinquency wherein the individual's inhabitants taxes based on the initial decision of assessment are local taxes pertaining to seizures, which was appropriated to the individual's inhabitants taxes that are considered not to have existed as a result of the aforementioned decision of reduced assessment, said appropriation is considered not to have effect on the grounds of lack of the subject claim.

Incidentally, in a disposition of delinquency wherein multiple local taxes are local taxes pertaining to seizures, as long as any part of said multiple local taxes is in arrears, money allotted to the local taxes pertaining to seizures should not be considered to have been collected without legal cause but should be appropriated to the relevant taxes in arrears. This idea also applies to allotted money of which the initial appropriation has come to have no effect as in the case mentioned above, taking into account the fact that the purpose of the system of the disposition of delinquency is to eliminate local taxes, etc. in arrears. The allotted money should be appropriated to other local taxes pertaining to seizures that are in arrears at the time of the allotment if any such local tax exists. If the allotted money is immediately refunded as money that falls under the amount of overpayment that was collected without legal cause, the effect of eliminating the local taxes pertaining to seizures in arrears is not produced although part of the local taxes pertaining to seizures was in arrears at the time of the allotment, and delinquent charges also occur based on the local taxes pertaining to seizures in arrears. This result must be considered to go against the aforementioned purpose of the system of the disposition of delinquency. In light of the purport of the establishment of the system of the disposition of delinquency, it should be considered that allotted money of which the initial appropriation has come to have no effect as in the case mentioned above is to be appropriated in accordance with the provisions of Article 489 of the Civil Code (prior to amendment by Act No. 44 of 2017), which provide for the uniform and the fairest and most appropriate appropriation method for the payment of obligations (hereinafter such appropriation is referred to as the "statutory appropriation"), if there are any other local taxes pertaining to seizures to which the allotted money should be appropriated.

For the reasons described above, it should be considered that in a disposition of delinquency wherein an individual's inhabitants taxes for multiple fiscal years are local taxes pertaining to seizures, when money was allotted to local taxes pertaining to seizures and was appropriated to the individual's inhabitants taxes for the fiscal years that are considered not to have existed at the time of the allotment as a result of a subsequent decision of reduced assessment, if the individual's inhabitants taxes for another fiscal year, out of the local taxes pertaining to seizures, existed at the time of the allotment, that money is to be subject to statutory appropriation to said individual's inhabitants taxes for that another fiscal year.

(2) When this determination is applied to this case, in the Dispositions of Delinquency wherein municipal and prefectural inhabitants taxes for multiple fiscal years are local taxes pertaining to seizures, the mayor calculated the amounts of overpayments resulted from the Decisions of Reduced Assessment by not considering that money allotted to the local taxes pertaining to seizures that was appropriated to municipal and prefectural inhabitant taxes for the fiscal years that are considered not to have existed at the time of the allotments as a result of the Decisions of Reduced Assessment was appropriated to municipal and prefectural inhabitants taxes for other fiscal years that existed at the time of the allotments, out of the local taxes pertaining to seizures, but by immediately considering that overpayments arose at the amounts equivalent to those amounts. Therefore, the calculation by the mayor contains an error.

5. The determination of the court of prior instance that differs from the above contains a violation of laws and regulations that has clearly influenced the judgment. The counsel's arguments are well-grounded as arguments to this effect, and the judgment in prior instance should inevitably be quashed. This case is remanded to the court of prior instance to be further examined in relation to the amounts of overpayments to be refunded to the appellant by the appellee, etc.

Accordingly, the Court unanimously decides as set forth in the main text of the judgment.

Justice MIYAZAKI Yuko

Justice TOKURA Saburo

Justice UGA Katsuya

Justice HAYASHI Michiharu

Justice NAGAMINE Yasumasa