The Supreme Court reiterated in the retrial that this type of reconsideration cannot be the defendant in administrative litigation
Time:
2022-02-09
Author:
Yu Kun
Source:
Visits:
17
Tax Analysis Based on Cases
Analysis of Tax Administrative Disputes II: Special Rules for Litigation Participants in Tax Administrative Litigation.
Foreword
In the previous issue, we analyzed the situation where an administrative counterpart who is dissatisfied with the tax treatment and punishment made after the trial procedure of major tax cases should apply for reconsideration across two administrative levels. The tax authority where the review committee is located is the implementer of the specific administrative act and serves as the respondent for the review, while the inspection bureau that made the tax treatment and punishment decision only acts in the name of the specific administrative act and is not the respondent for the review. However, when entering the administrative litigation procedure, who should be the defendant, that is, whether to sue the unit that actually made the specific tax administrative act, or to sue the unit that nominally made it, through this retrial case of the Supreme Court, combined with the Administrative Litigation Law and relevant judicial interpretations, we will explore it.
Case Analysis
Xinlong Company signed a sales contract for commercial housing with the plaintiff Chen Mouwei and the outsider Lin Mouqin in this case for a total price of 55 million yuan. The contract stipulated that the seller Xinlong Company shall bear the liability for breach of contract for late delivery. One year later, Xinlong Company applied to the Quanzhou Arbitration Commission for arbitration on the grounds that the sales contract for commercial housing could not be fulfilled, requesting to terminate the sales contract for commercial housing and pay liquidated damages. In addition to recovering the 55 million yuan paid at the time of signing the contract, Chen Mouwei and Lin Mou received 33.28 million yuan in the name of liquidated damages. The incident was triggered by the Putian Municipal Commission for Discipline Inspection receiving a report and transferring the issue to the Putian Municipal Local Taxation Bureau. The tax authorities believe that the transaction between Chen Mouwei, Lin Mou, and Xinlong Company is nominally a house sale but actually a loan. Chen Mouwei, etc., should pay business tax and individual income tax on the loan interest income of 33.28 million yuan. On April 30, 2015, after review by the Putian Municipal Local Taxation Bureau's Major Case Hearing Committee, the Putian Municipal Local Taxation Bureau Inspection Bureau prepared a tax treatment decision letter in accordance with the hearing opinions of major tax cases, affixed with the seal of the Inspection Bureau, and issued the Putian Local Taxation Inspection and Punishment [2015] No. 7 'Tax Treatment Decision Letter' (hereinafter referred to as the tax treatment decision). Chen Mouwei refused to accept it, and after providing real estate guarantees, applied to the Fujian Provincial Local Taxation Bureau for administrative reconsideration with the Putian Municipal Local Taxation Bureau Inspection Bureau as the applicant. The Fujian Provincial Local Taxation Bureau required Chen Mouwei to change the Putian Municipal Local Taxation Bureau as the applicant, and issued the Fujian Local Taxation Reconsideration Decision [2015] No. 4 'Tax Administrative Reconsideration Decision Letter' (hereinafter referred to as the administrative reconsideration decision) on October 23, 2015, maintaining the tax treatment decision being sued. Chen Mouwei filed an administrative lawsuit against the reconsideration decision, naming the Putian Municipal Local Taxation Bureau Inspection Bureau, the Putian Municipal Local Taxation Bureau, and the Fujian Provincial Local Taxation Bureau as joint defendants. In addition to disputes over the nature of the income involved and whether it falls within the scope of business tax levy, he also argued in the administrative procedure that the Putian Municipal Local Taxation Bureau Inspection Bureau had no right or exceeded its authority to make the treatment decision, and that the reconsideration agency, the reconsideration applicant, and the reconsideration procedure after the treatment decision was made in its name were all incorrect, requesting the revocation of the tax treatment decision and the administrative reconsideration decision.
Judicial Opinion
The court of first instance held that: The Putian Municipal Local Taxation Bureau Inspection Bureau has the right to inspect Chen Mouwei's tax-related matters and make a treatment decision. The Putian Municipal Local Taxation Bureau's application for reconsideration complies with the regulations. The facts of the tax treatment decision being sued are clear, the procedure is proper, the application of laws and regulations is correct, and the reasons asserted by the plaintiff are not tenable. Therefore, the judgment is as follows: 1. Reject Chen Mouwei's claim to revoke the Putian Local Taxation Inspection and Punishment [2015] No. 7 'Tax Treatment Decision Letter' made by the Putian Municipal Local Taxation Bureau and the Putian Municipal Local Taxation Bureau Inspection Bureau; 2. Reject Chen Mouwei's claim to revoke the Fujian Local Taxation Reconsideration Decision [2015] No. 4 'Tax Administrative Reconsideration Decision Letter' made by the Fujian Provincial Local Taxation Bureau. Chen Mouwei refused to accept the judgment of the Putian Intermediate People's Court and appealed to the Fujian Provincial Higher People's Court.
The court of second instance held that: The first-instance judgment's determination of the relevant facts is not improper, but the Putian Municipal Local Taxation Bureau should not be listed as a defendant. Therefore, the administrative judgment (2016) Min Xing Zhong 896 was made, upholding the second item of the first-instance administrative judgment, revoking the first item of the first-instance administrative judgment, and rejecting Chen Mouwei's claim to revoke the Putian Local Taxation Inspection and Punishment [2015] No. 7 'Tax Treatment Decision Letter' made by the Putian Municipal Local Taxation Bureau Inspection Bureau. Chen Mouwei still refused to accept it and applied to the Supreme People's Court for retrial.
The court of retrial held that: In this case, Chen Mouwei filed a lawsuit with the Putian Municipal Local Taxation Bureau as one of the joint defendants. However, after investigation, the Putian Municipal Local Taxation Bureau is not the administrative subject of the tax treatment decision being sued and the administrative reconsideration decision in this case. Therefore, Chen Mouwei's lawsuit against the Putian Municipal Local Taxation Bureau does not comply with the provisions of Article 49, Item 3 of the 'Administrative Litigation Law of the People's Republic of China'. The first-instance court's acceptance of Chen Mouwei's lawsuit against the Putian Municipal Local Taxation Bureau and making a substantive judgment was incorrect. Therefore, the second-instance court's correction of the judgment is affirmed. In summary, Chen Mouwei's application for retrial does not comply with the circumstances stipulated in Article 91 of the 'Administrative Litigation Law of the People's Republic of China', and the ruling rejects the application for retrial.
Tax Lawyer Analysis
In the previous article 'Case Retrieval of Tax-Related Disputes in Private Lending, Just Find This Supreme People's Court Case', the author summarized and sorted out the Supreme Court's judicial opinions on the universality of tax-related disputes in the legal relationship of private lending between natural persons based on the same content of the judgment document of another party in this case. In this issue, we will study and discuss with you the procedural issues reflected in this case.
1. Under normal circumstances, the applicant for administrative reconsideration can become a qualified defendant in administrative litigation
Both administrative reconsideration and administrative litigation are important legal systems in which citizens, legal persons, or other organizations believe that specific administrative actions infringe upon their legitimate rights and interests, and apply to the competent administrative agency or judicial department for relief in accordance with the law. This type of procedure, commonly known as suing the government, involves the question of who to sue. This object is called the applicant in administrative reconsideration and the defendant in administrative litigation.
Articles 12, 13, 14, and 15 of the 'Administrative Reconsideration Law', although not expressing who is the applicant for reconsideration, its content shows that the subject that makes the specific administrative act is the object of the application for reconsideration. Article 11 of the 'Regulations on the Implementation of the Administrative Reconsideration Law' further clarifies that: If an application for administrative reconsideration is made against a specific administrative act of an administrative agency, the administrative agency that made the specific administrative act shall be the applicant. Let's look at the regulations on litigation participants in the administrative litigation procedure. Article 26 of the 'Administrative Litigation Law' stipulates that in eight different circumstances, the administrative agency that made the administrative act, the reconsideration agency, or the entrusted administrative agency may become the defendant. It can be seen from the above laws and administrative regulations that the scope of defendants in administrative litigation procedures is wider than that of applicants in administrative reconsideration procedures. In addition to the administrative agency that made the specific administrative act, it also includes the reconsideration agency and the entrusted agency. That is to say, the defendant in administrative litigation is not necessarily the applicant in administrative reconsideration, but under normal circumstances, the applicant in administrative reconsideration and the defendant in administrative litigation are the same subject.
2. Different Identification Principles for Reconsideration Applicants and Litigation Defendants in Special Circumstances
As mentioned earlier, the administrative agency that makes a specific administrative act can be both the respondent in the administrative reconsideration and the defendant in the administrative litigation, and the two tend to be consistent. However, when the specific administrative act is further subdivided into being made with approval, the administrative reconsideration and administrative litigation diverge in the identification of the corresponding subject qualifications.
Article 13 of the "Regulations for the Implementation of the Administrative Reconsideration Law" stipulates that if a lower-level administrative agency makes a specific administrative act with the approval of a higher-level administrative agency in accordance with laws, regulations, and rules, the approving agency shall be the respondent. Article 19 of the "Interpretation of the Supreme People's Court on the Application of the 'Administrative Procedure Law of the People's Republic of China'" (Fa Shi [2018] No. 1) stipulates that if a party is dissatisfied with an administrative act approved by a higher-level administrative agency and files a lawsuit in the people's court, the agency whose name is signed on the document that has legal effect externally shall be the defendant. The former emphasizes maintaining substantive justice in accordance with the principle of substance over form to prevent self-supervision, while the latter follows the principle of procedural justice and emphasizes the necessary form to reflect the fairness and universal applicability of the law. That is to say, if the people want to sue an object, they should look for the 'official' who is really in charge in the reconsideration procedure, and the 'official' who signed and sealed the document in the litigation procedure.
3. This case reflects special rules for tax administrative reconsideration and litigation
In this case, after being reviewed by the Major Case Review Committee of the Putian Municipal Local Taxation Bureau, the Putian Municipal Taxation Bureau Inspection Bureau prepared a tax treatment decision letter in accordance with the review opinions of major tax cases, affixed the seal of the Inspection Bureau, and served it for execution. The Putian Municipal Taxation Bureau Inspection Bureau only nominally made the tax treatment decision, and the Putian Municipal Local Taxation Bureau where the Review Committee is located was the substantive decision-making and approving authority for the tax treatment decision. According to the administrative reconsideration procedure, the superior Putian Local Taxation Bureau of the Putian Municipal Taxation Bureau Inspection Bureau should be the respondent for reconsideration, and its superior Fujian Provincial Local Taxation Bureau should be the reconsideration acceptance agency. The reconsideration agency upheld the tax treatment decision. According to the administrative litigation procedure, the counterparty of the administrative act may file a lawsuit in the people's court with the agency that made the treatment decision and the reconsideration upholding agency as joint defendants. The reconsideration upholding agency is undoubtedly the Fujian Provincial Local Taxation Bureau, and the agency that made the treatment decision, according to the aforementioned judicial interpretation, is the agency that nominally made the administrative act, that is, the Putian Municipal Taxation Bureau Inspection Bureau is the qualified defendant in the administrative litigation procedure, and its superior Putian Municipal Local Taxation Bureau cannot become a litigation participant.
Generally speaking, the subject that makes a specific administrative act should fulfill the responsibility in the name of exercising power, and be consistent inside and out. However, tax-specific administrative acts that have undergone major tax case review procedures are more special, and the substantive decision-making agency and the nominal decision-making agency are inconsistent, and the name does not match the reality. In this special case, the nominal decision-making agency has nothing to do with the administrative reconsideration, and its superior, that is, the unit where the review committee is located, should be the respondent, and its superior should perform the reconsideration review duties; once the administrative litigation procedure is entered, it has nothing to do with its superior, either the reconsideration is upheld by the nominal decision-making agency and its superior as joint defendants, or the reconsideration changes the result and the superior reconsideration agency participates in the litigation as the sole defendant. As a result, there is a special situation where the administrative reconsideration applicant who has undergone the major tax case review procedure cannot become the defendant in the administrative litigation.
Reference case
Chen Jianwei, Fujian Provincial Local Taxation Bureau Tax Administration (Taxation) Retrial Review and Trial Supervision Administrative Ruling (2018) Supreme Court Xing Shen No. 209
