Attention! Objections to this type of tax dispute must be appealed through a higher-level review process.
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2022-01-29
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Tax Analysis by Case
Analysis of Tax Administrative Disputes I: Special jurisdictional provisions for tax administrative reconsideration.
Foreword
The "Administrative Penalty Law of the People's Republic of China" was revised and adopted at the 25th meeting of the Standing Committee of the 13th National People's Congress and came into effect on July 15, 2021. This is an important law regulating government behavior. To this end, the State Council has issued a special notice requiring staff members of administrative organs at all levels, especially leading cadres, to take the lead in studying and deeply understand its spirit and internal requirements, so as to administer according to law and consciously accept supervision. Taking this opportunity, the author has collected and sorted out some representative tax administrative dispute cases in recent years, and uses the cases to explain the law, so as to more intuitively interpret the procedures and norms of relevant tax administrative processing and punishment. Through this form of publicity, we strive to enhance taxpayers' awareness of the rule of law and improve their awareness of paying taxes in accordance with the law, and also play a role in supervising tax authorities to administer according to law and safeguarding the legitimate rights and interests of administrative counterparts.
I. Case Brief
Yueda Carter Company is a new energy production enterprise. On September 3, 2014, the former Changzhou National Taxation Bureau Inspection Bureau (hereinafter referred to as the former Changzhou National Taxation Bureau Inspection Bureau) determined Yueda Carter Company as the object to be investigated and filed a case for inspection of the company. After investigation, the former Changzhou National Taxation Bureau Inspection Bureau sent a tax notice to Yueda Carter Company, requiring it to make statements and defenses. Yueda Carter Company submitted a written statement and defense opinion to the former Changzhou National Taxation Bureau Inspection Bureau within the prescribed time limit. On August 7, 2015, the former Changzhou National Taxation Bureau Inspection Bureau issued the Changguo Tax Inspection and Punishment [2015] No. 80 "Tax Treatment Decision" (hereinafter referred to as the No. 80 Tax Treatment Decision), requiring the company to pay a supplementary consumption tax of more than 11.99 million yuan at the consumption tax rate for fuel oil. Yueda Carter Company refused to accept it and applied for administrative reconsideration. On November 10, 2015, the former Changzhou National Taxation Bureau of Jiangsu Province (hereinafter referred to as the former Changzhou National Taxation Bureau) issued the Changguo Tax Reconsideration Decision [2015] No. 3 "Administrative Reconsideration Decision" (hereinafter referred to as the No. 3 Reconsideration Decision), which upheld the tax treatment decision of the former Changzhou National Taxation Bureau Inspection Bureau. Yueda Carter Company still refused to accept it and filed a lawsuit with the court, requesting the revocation of the processing content of consumption tax collection in the No. 80 Tax Treatment Decision and the revocation of the No. 3 Reconsideration Decision.
The first instance of the Xinbei District Court of Changzhou City, Jiangsu Province, held that the tax treatment decision made by the former Changzhou National Taxation Bureau Inspection Bureau was legal in procedure, clear in facts, and correct in the application of law. The procedure for the former Changzhou National Taxation Bureau to make an administrative reconsideration decision was legal. The court rejected Yueda Carter Company's claim. Yueda Carter Company refused to accept the first-instance judgment and appealed to the Intermediate People's Court of Changzhou City, Jiangsu Province (hereinafter referred to as the Changzhou Intermediate Court). The facts of the case ascertained by the Changzhou Intermediate Court were consistent with the facts ascertained by the first-instance court. The court held that the former Changzhou National Taxation Bureau Inspection Bureau's collection of consumption tax on the biological heavy oil involved in the case sold by Yueda Carter Company at the tax rate of fuel oil was correct in the application of law, and the court rejected the appeal and upheld the original judgment.
Yueda Carter Company applied for retrial, claiming that the No. 80 Tax Treatment Decision made by the former Changzhou National Taxation Bureau Inspection Bureau was illegal; and that the former Changzhou National Taxation Bureau accepted the applicant's reconsideration application and made the No. 3 Reconsideration Decision, which was illegal in procedure.
The respondent, Changzhou Taxation Bureau Inspection Bureau, argued that, according to relevant laws and administrative regulations, the former Changzhou National Taxation Bureau Inspection Bureau has the qualification of an independent law enforcement entity. After filing a case for inspection of the applicant's tax-related behavior, it prepared the "Tax-related Case Trial Report" and the "Major Tax Case Trial Request" and submitted them to the former Changzhou National Taxation Bureau for collective deliberation. After collective deliberation by the Major Tax Case Trial Committee of the former Changzhou National Taxation Bureau, the No. 80 Tax Treatment Decision was issued based on the "Trial Opinion of the Major Tax Case Trial Committee of the former Changzhou National Taxation Bureau", and the right to relief was informed in accordance with relevant laws and served on the applicant in accordance with the law, which was legal in procedure.
The respondent, Changzhou Taxation Bureau, argued that the former Changzhou National Taxation Bureau Inspection Bureau's informing the applicant in the No. 80 Tax Treatment Decision to apply for administrative reconsideration to the former Changzhou National Taxation Bureau complies with the provisions of Article 15 (3) of the "Administrative Reconsideration Law of the People's Republic of China" (hereinafter referred to as the Administrative Reconsideration Law), which is legal in procedure. Because the "Relevant Provisions of the Major Tax Trial Measures" were revised in 2015, and the provisions of Article 29 of the "Tax Administrative Reconsideration Rules" have not been revised accordingly, this provision conflicts with the provisions of the Administrative Reconsideration Law. In this case, the provisions of the Administrative Reconsideration Law should be given priority, and the former Changzhou National Taxation Bureau is a qualified reconsideration agency.
II. Judicial Ruling Opinions
The court of retrial held that: The Major Tax Case Trial Committee of the former Changzhou National Taxation Bureau made the Changguo Tax Heavy Trial Decision [2015] No. 09 "Trial Opinion of the Major Tax Case Trial Committee" on the case of Yueda Carter Company submitted by the former Changzhou National Taxation Bureau Inspection Bureau, requiring it to prepare corresponding legal documents in accordance with the opinions of the Trial Committee and serve them for execution. Later, the former Changzhou National Taxation Bureau Inspection Bureau made the No. 80 Tax Treatment Decision on the applicant in accordance with the opinions of the above-mentioned opinion letter. The applicant, Yueda Carter Company, refused to accept the No. 80 Tax Treatment Decision made through the major tax case trial procedure, and should have applied for administrative reconsideration to the former Jiangsu Provincial National Taxation Bureau (now the Jiangsu Provincial Taxation Bureau of the State Administration of Taxation, hereinafter referred to as the Jiangsu Provincial Taxation Bureau), the tax authority at the next higher level of the former Changzhou National Taxation Bureau, with the former Changzhou National Taxation Bureau where the case trial committee is located as the respondent. Because the former Changzhou National Taxation Bureau is not a qualified reconsideration agency for the No. 80 Tax Treatment Decision involved in the case in accordance with the above-mentioned regulations, the former Changzhou National Taxation Bureau Inspection Bureau's informing the applicant in the No. 80 Tax Treatment Decision to apply for administrative reconsideration to the former Changzhou National Taxation Bureau was wrong, and the No. 3 Reconsideration Decision made by the former Changzhou National Taxation Bureau on the No. 80 Tax Treatment Decision without reconsideration authority should be revoked.
The former Changzhou National Taxation Bureau Inspection Bureau wrongly informed the reconsideration agency in the No. 80 Tax Treatment Decision, and the former Changzhou National Taxation Bureau also failed to handle and inform Yueda Carter Company to file an application with the competent reconsideration agency in accordance with the law, but made a reconsideration decision without reconsideration authority. Therefore, the adverse consequences caused by the revocation of the No. 3 Reconsideration Decision should not be borne by Yueda Carter Company, and the Changzhou Taxation Bureau that accepted Yueda Carter Company's application for administrative reconsideration should transfer Yueda Carter Company's reconsideration application to the Jiangsu Provincial Taxation Bureau with reconsideration authority for processing with reference to the provisions of Article 18 of the Administrative Reconsideration Law.
The judgment revoked the administrative judgments of the Intermediate People's Court of Changzhou City, Jiangsu Province and the People's Court of Xinbei District, Changzhou City, Jiangsu Province; revoked the Changguo Tax Reconsideration Decision [2015] No. 3 "Administrative Reconsideration Decision" made by the former Changzhou National Taxation Bureau of Jiangsu Province; and ordered the Changzhou Taxation Bureau of the State Administration of Taxation to transfer the administrative reconsideration application filed by Jiangsu Yueda Carter New Energy Co., Ltd. against the Changguo Tax Inspection and Punishment [2015] No. 80 "Tax Treatment Decision" to the Jiangsu Provincial Taxation Bureau of the State Administration of Taxation for processing within 15 days from the date when this judgment becomes effective.
III. Tax Lawyer Analysis
The focus of the retrial in this case is whether the executive agency and the reconsideration agency of the specific administrative act after the trial of major tax cases are qualified. To accurately grasp the tax administrative reconsideration procedures and rules, in addition to the "Administrative Reconsideration Law" and the "Administrative Reconsideration Implementation Regulations", reference should also be made to the relevant provisions of the two departmental regulations, the "Tax Administrative Reconsideration Rules" and the "Measures for the Trial of Major Tax Cases".
1. General Provisions on the Jurisdiction of Tax Administrative Reconsideration
Article 10, Paragraph 4 of the "Administrative Reconsideration Law" stipulates that: If a citizen, legal person or other organization applies for administrative reconsideration because it is not satisfied with the specific administrative act of the administrative agency, the administrative agency that made the specific administrative act is the respondent; Article 12, Paragraph 2 stipulates that: If you are not satisfied with the specific administrative acts of administrative organs and national security organs that implement vertical leadership such as customs, finance, state taxation, and foreign exchange management, you should apply to the higher-level competent authority for administrative reconsideration; Article 11 of the "Administrative Reconsideration Law Implementation Regulations" stipulates that: If a citizen, legal person or other organization is not satisfied with the specific administrative act of the administrative agency and applies for administrative reconsideration in accordance with the provisions of the Administrative Reconsideration Law and these Regulations, the administrative agency that made the specific administrative act shall be the respondent"; Article 17 of the "Tax Administrative Reconsideration Rules" stipulates that: If you are not satisfied with the specific administrative acts of the tax office (sub-bureau) and the inspection bureaus of tax bureaus at all levels, you should apply to the tax bureau to which they belong for administrative reconsideration.
Based only on the above-mentioned laws, administrative regulations and departmental regulations, it seems that there is nothing wrong with the handling decision in this case being made by the former Changzhou State Taxation Bureau Inspection Bureau, and Yueda Carter Company applying to its affiliated tax bureau, the former Changzhou State Taxation Bureau, for reconsideration with the Inspection Bureau as the respondent. However, this case was decided by the Major Tax Case Trial Committee. According to the principle that special provisions of law take precedence over general provisions, let's take a look at the content of the relevant special provisions.
2. Special Jurisdiction Provisions Applicable to Administrative Reconsideration after Major Tax Case Trial Procedures
The "Administrative Reconsideration Law" only generally stipulates that the respondent is the administrative agency that made the administrative act, and the specific scope is refined and clarified by administrative regulations and rules. Article 13 of the "Administrative Reconsideration Law Implementation Regulations" 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 the provisions of laws, regulations, and rules, the approving agency shall be the respondent; Article 29 of the "Tax Administrative Reconsideration Rules" stipulates that: If a tax authority makes a specific administrative act with the approval of a higher-level tax authority in accordance with the provisions of laws, regulations, and rules, the approving authority shall be the respondent. If the applicant is not satisfied with the decision made after the major tax case trial procedure, the tax authority where the trial committee is located shall be the respondent.
In this case, the Changzhou Taxation Bureau argued that Article 15 (3) of the "Administrative Reconsideration Law" stipulates that: If you are not satisfied with the specific administrative act of an organization authorized by laws and regulations, you should apply to the local people's government, the working department of the local people's government, or the department of the State Council that directly manages the organization for administrative reconsideration. The tax bureau is the direct management department of the affiliated inspection bureau, and the counterparty should apply to the directly managed tax bureau for administrative reconsideration in accordance with this provision if it is not satisfied with the specific administrative act made by the inspection bureau. However, Article 29 of the "Tax Administrative Reconsideration Rules" conflicts with the provisions of the "Administrative Reconsideration Law", and the relevant provisions of the law should be given priority. In fact, this defense opinion erroneously ignores the prerequisite application conditions of Article 15 (3) of the "Administrative Reconsideration Law", that is, it does not include administrative organs and organizations within the provisions of Articles 12, 13, and 14 of the Reconsideration Law, and the tax authority is exactly the administrative organ that implements vertical leadership as stipulated in Article 12, Paragraph 2, and does not apply to the provisions under this article. Therefore, the relevant provisions of the "Tax Administrative Reconsideration Rules" do not conflict with the higher law.
This case was decided by the Major Tax Case Trial Committee, and the tax authority where the trial committee is located is in fact the approving authority. According to the "Tax Administrative Reconsideration Rules", it meets the conditions of the respondent. The tax authority where the Major Trial Committee is located, namely the former Changzhou State Taxation Bureau, should be the respondent for reconsideration, and the reconsideration should be applied to the higher level of the respondent, namely the former Jiangsu Provincial State Taxation Bureau.
3. The trial of major tax cases is an important system in inspection and law enforcement
The major tax case trial procedure is a special internal collective trial procedure in the inspection and law enforcement procedure. According to the newly revised "Measures for the Trial of Major Tax Cases" (Order No. 51 of the State Administration of Taxation of 2021), tax bureaus at all levels below the provincial level shall establish a major tax case trial committee (hereinafter referred to as the trial committee). The director of the trial committee shall be the director of the tax bureau, the deputy director shall be other leaders of the tax bureau, and the member units shall include policy and regulations, tax administration, tax service, collection and management technology, large enterprise tax management, tax inspection, and supervision and internal audit departments. One of the responsibilities of the trial committee is to be responsible for the trial of major tax cases investigated by the tax bureau's inspection bureau.
The scope of major tax cases includes: (1) Major tax administrative penalty cases, the specific standards shall be formulated by the tax bureaus of each province, autonomous region, municipality directly under the Central Government and city under separate state planning according to local conditions, and reported to the State Administration of Taxation for record; (2) Cases supervised by the "Interim Measures for Supervising and Handling Major Tax Violation Cases"; (3) Cases that require opinions from supervision and judicial organs; (4) Cases that are planned to be transferred to public security organs for handling; (5) Cases that the member units of the trial committee believe are major and complex and need to be tried; (6) Other cases that need to be tried by the trial committee. The trial committee shall focus on reviewing whether the facts of the case are clear; whether the evidence is sufficient and conclusive; whether the law enforcement procedures are legal; whether the applicable laws are correct; whether the case is accurately characterized; and whether the proposed handling opinions are legal and appropriate. The trial opinions issued shall explain the reasons in detail and list the legal basis. The relevant documents such as the tax processing and penalty decisions made after the trial of major tax cases submitted by the inspection bureau shall still be made by the inspection bureau and affixed with the seal of the inspection bureau.
In summary, the tax inspection bureau, which makes specific administrative acts to the outside, has launched a major trial procedure according to internal regulations. The tax bureau to which it belongs has in fact become the agency that makes specific administrative acts. According to the relevant provisions of the "Tax Administrative Reconsideration Rules" and the "Measures for the Trial of Major Tax Cases", in order to strengthen internal power constraints, protect the legitimate rights and interests of taxpayers, and avoid the situation where the decision-making and reconsideration agencies are the same agency, there has been a phenomenon of applying for reconsideration across two administrative levels. Upon careful analysis, this phenomenon of cross-level reconsideration does not in essence break through the provisions of the "Administrative Reconsideration Law", that is, if you are not satisfied with the specific administrative act of an administrative agency that implements vertical leadership, you should apply to the higher-level competent authority for reconsideration, and the relevant departmental regulations do not violate the provisions of the higher law. This type of tax dispute is legally based on applying for reconsideration at a higher level.
4. Reference Cases
Jiangsu Yueda Carter New Energy Co., Ltd. v. Inspection Bureau of Changzhou Taxation Bureau of the State Administration of Taxation, Changzhou Taxation Bureau of the State Administration of Taxation Trial Supervision Administrative Judgment (2019) Su Xing Zai No. 7
