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It is generally agreed that tax avoidance should be restricted. However, a variety of views and opinions exist with respect to how tax avoidance should be restricted, particularly whether Substance over Form could be applied to tax avoidance cases. The Supreme Court has been passive in applying Substance over Form to tax avoidance cases particularly involving step transactions. The point of view of the Supreme Court is that Substance over Form cannot be applied to tax avoidance cases unless such cases involve sham transaction or there is a specific provision under which tax avoidance could be addressed. Such point of view is based on the premise that Substance over Form should yield to the Principle of Taxation by Law. However, such approach raises several questions and issues. One of the questions addressed in this article is whether sham transaction approach is sufficient or necessary for taxing according to the substance of facts. Another question is whether ‘specific provision’ approach, which was adopted mainly for addressing ‘Denial of Unfair Transaction and Calculation’ cases, is appropriate for addressing tax avoidance cases. Another issue is whether Substance over Form and Principle of Taxation by Law conflict against each other at all. The most important problem of the approach taken by the Supreme Court is that, according to such approach, Substance over Form would be applied so rarely that it would almost become meaningless in tax law. However, the Principle of Taxation by Law should not be used to exclude the application of Substance over Form itself, but could be used to decide whether a relevant statute could be applied to the substance of the facts of a case. Now, the approach of the Supreme Court needs to be changed. Section 14(3) of the General National Tax Act has been enacted, which justifies such change. Also, the Supreme Court has recently shifted its position with respect to the relation of Substance over Form and Principle of Taxation by Law in the case(2008du8499) decided on January 19, 2012. In this article, a new approach is proposed where Substance over Form and Principle of Taxation by Law are applied in each different stage for resolving cases. Such approach bases itself on the statutory interpretation of Section 14(2)(3) of the General National Tax Act. Now is the time to change the current approach of the Supreme Court and to adopt the new approach which would make it possible for Substance over Form and Principle of Taxation by Law to coexist. In future, the efforts are needed to establish the factors for moderately applying Substance over Form to tax avoidance cases.