Tongwang Sharing | Criminal Liability Evaluation of Falsely Issuing and Illegally Selling Special VAT Invoices
Time:
2022-06-23
Author:
Yu Kun
Source:
Tongwang Tax Law
Visits:
10
Tax Analysis Based on Cases: Analysis of Guilt and Innocence, This Crime and That Crime in Fictitious Issuance Not Aimed at Defrauding Tax Revenue (3)
Foreword
Issuing VAT special invoices without genuine transactions severely disrupts the normal management order of VAT special invoices, constituting an administrative violation. When such behavior reaches a certain level of severity and constitutes a crime, what criminal responsibility should be borne? This case will be discussed with everyone to provide useful ideas for the defense of such fictitious issuance cases in the future.
1. Case Brief
Zhao is the manager of Company A, responsible for self-sourcing business, self-management, and bearing profits and losses. In August 2010, Company A and XX Group signed a project cooperation development agreement, stipulating that each would bear 50% of the development costs and expenses, and each would receive two building blocks, with Company A responsible for construction. To solve the construction funding problem, Zhao negotiated with Company B and decided that Company B would finance Company A through trade. The method was: Company A purchased steel from Company B and issued commercial acceptance bills in the name of payment for goods, using Company B's credit at the bank to discount the bills, and then Company B purchased steel from Company C, which was actually controlled by Zhao, in the name of payment for goods to transfer the discounted funds to Company C. After receiving the funds, Company C transferred them to Company A in the name of other receivables or directly purchased steel and handed it over to Company A for construction. After the bill expired, Company A returned the money due to Company B, and Company B returned it to the bank.
During the above trade financing process, Company C left a corresponding amount of VAT special (output) invoices because it issued more than 120 million yuan of VAT special (input) invoices to Company B, and needed to pay the corresponding VAT. To this end, Zhao found Company T and Company N, whose legal representative was Liu, and Company T issued 103 VAT special (input) invoices to Company C, with a total tax amount of 16.15 million yuan and a total price and tax of 111 million yuan; Company N issued 52 VAT special (input) invoices to Company C, with a total tax amount of 660,000 yuan and a total price and tax of 4.55 million yuan. Company C certified and deducted all the input invoices issued by Company T and Company N. In this process, the funds transferred by Company C to Company T and Company N in the name of payment for goods were returned after deducting the agreed amount, and Company T and Company N obtained a total of 4.75 million yuan in illegal profits in the process of issuing fictitious VAT special (input) invoices to Company C.
2. Judicial Ruling Opinions
The first-instance court held that the defendant units C, T, and N companies and the defendants Zhao and Liu, as directly responsible persons, violated the national tax management system and fictitiously issued VAT special invoices with a huge amount of tax, all constituting the crime of fictitiously issuing VAT special invoices, and sentenced each defendant unit to a fine ranging from 80,000 to 300,000 yuan, and sentenced the two defendants to fixed-term imprisonment of ten years and six months each. The defendant units and defendants appealed against the first-instance judgment, arguing that the subjective purpose was to trade finance in order to obtain money for project construction, without the purpose of defrauding state tax revenue, and objectively did not cause tax losses to the state. Although they violated the corresponding regulations, they should not be punished as crimes.
The second-instance court held that, from the perspective of the cause of Company C's finding Company T and Company N to fictitiously issue VAT special invoices, it was due to the previous trade financing between Company C, Company A, and Company B. From the perspective of the cause of the matter, Company C's finding Company T and Company N to fictitiously issue VAT special invoices was not subjectively for the purpose of defrauding state tax revenue. Although the above-mentioned fictitiously issued VAT special (input) invoices have all been certified and deducted, considering the large number of output invoices left by Company C due to the issuance of VAT special invoices to Company B, this part of the invoices does not have a real commodity circulation, does not generate real commodity value-added, and there is no factual basis for paying VAT. Failure to pay this part of the tax will not cause actual tax losses to the state, and the existing evidence is insufficient to determine that Company C's certification and deduction of the fictitiously issued VAT special (input) invoices caused state tax losses. Zhao, as the person in charge of Company C, sought illegal benefits for the unit and illegally purchased VAT special invoices from others. Company C and Zhao have both constituted the crime of illegally purchasing VAT special invoices; Liu, as the legal representative of Company T and Company N, sought illegal benefits for the unit and illegally sold VAT special invoices to others. Company T, Company N, and Liu have all constituted the crime of illegally selling VAT special invoices, among which Company T and Liu illegally sold a large amount of VAT special invoices. The above-mentioned units and individuals should be punished according to law. The first-instance court's judgment based on the facts, nature, circumstances, and degree of harm to society of the crime was correct in determining the facts and the trial procedure was legal, but the application of the law was wrong, leading to improper sentencing, which this court corrects according to law. Therefore, the first-instance judgment was revoked, and Company C and Zhao were found guilty of illegally purchasing VAT special invoices, and were sentenced to a fine of 150,000 yuan and fixed-term imprisonment of two years and six months respectively; Company T, Company N, and Liu were found guilty of illegally selling VAT special invoices, and were sentenced to a fine of 150,000 yuan, 50,000 yuan, and fixed-term imprisonment of three years respectively, and the illegal income of 4.75 million yuan was confiscated.
3. Tax Lawyer Analysis
In the previous issue of "How to Determine the Objective Element of Causing State Tax Losses in Fictitious Special Invoice Cases", we introduced the four typical ways of fictitious issuance that are illegal under tax law. Although they are all called fictitious issuance, the behavior patterns are different. Even if the circumstances of the fictitious issuance of special invoices are serious and suspected of criminal offenses, it does not necessarily constitute the crime of fictitiously issuing VAT special invoices, which is the most severely punished crime in the order of tax administration, and may also constitute a relatively minor crime, or even a crime with the same penalty as the crime of fictitiously issuing special invoices but with a larger discretion scale. Mastering the principles of the VAT system and the composition of related crimes, sorting out the fictitious issuance behavior patterns and demonstrating the harmful consequences clearly can reflect the principle of adapting guilt to punishment and achieve effective defense.
1. The crime of fictitiously issuing VAT special invoices has evolved from a pure act crime to a dangerous crime.
According to the general theory of criminal law, the establishment of a crime can be divided into act crime, dangerous crime, and result crime, also known as abstract dangerous crime, concrete dangerous crime, and actual harm crime. An act crime (abstract dangerous crime) is established as long as the act is carried out, and there is no distinction between consummation and attempt; the establishment of a dangerous crime (concrete dangerous crime) requires "sufficient to cause serious consequences" or "has not yet produced serious consequences". For dangerous crimes, it is necessary to consider the purpose and harm of the act, and there is still controversy in the theoretical circle as to whether there is an attempted state; the establishment of a result crime (actual harm crime) requires actual harm results, and the evaluation criteria for criminal consummation and attempt are mainly aimed at whether the actual harm results actively pursued by the actor have occurred.
On October 30, 1995, the Sixteenth Meeting of the Standing Committee of the Eighth National People's Congress deliberated and adopted the "Decision of the Standing Committee of the National People's Congress on Punishing Crimes of Falsely Issuing, Forging, and Illegally Selling Special Value-Added Tax Invoices." Item 3 of Article 1 listed the four types of illegal acts of falsely issuing invoices in the "Invoice Management Measures" as crimes of falsely issuing special invoices. In addition, there were no quantitative standards for expressions such as defrauding state tax revenue and causing losses to national interests, which were difficult to distinguish from the results of the listed false issuance acts. This led to the conviction and sentencing being linked only to the amount of tax involved in the false issuance. Therefore, the crime of falsely issuing special value-added tax invoices has long been regarded as a crime of conduct.
With the development of the economy and society, the theoretical community has criticized whether the crime of falsely issuing special value-added tax invoices should be considered solely as a crime of conduct. In June 2015, the Research Office of the Supreme People's Court publicly released a letter to the Economic Investigation Bureau of the Ministry of Public Security (Fa Yan [2015] No. 58), clarifying that the act of issuing invoices through affiliation and the act of issuing invoices based on facts do not constitute the crime of falsely issuing special value-added tax invoices. It proposed that: if there is no subjective intention to defraud tax deductions and no objective loss of state value-added tax, it should not be identified as "falsely issuing special value-added tax invoices" as stipulated in Article 205 of the Criminal Law; if it meets the constituent elements of other crimes such as tax evasion, it can be punished as other crimes. The trend of hearing cases of false issuance crimes began to change, and the nearly twenty-year-old idea of a crime of conduct was re-examined.
On December 4, 2018, the Supreme People's Court announced "Typical Cases of People's Courts Giving Full Play to Their Adjudicative Functions to Protect Property Rights and the Legitimate Rights and Interests of Entrepreneurs (Second Batch)," in which the first case was "Zhang Mouqiang's Case of Falsely Issuing Special Value-Added Tax Invoices." In this case, the Supreme People's Court pointed out: "The defendant, Zhang Mouqiang, signed sales contracts with other units in their names, and the units collected the payment and issued special value-added tax invoices. He did not have the purpose of defrauding state tax revenue and did not cause any loss of state tax revenue. His actions did not constitute the crime of falsely issuing special value-added tax invoices." This means that when determining the crime of falsely issuing special value-added tax invoices, the actor must have the subjective intention of defrauding state tax revenue and objectively cause a loss of state tax revenue. This also marks that in judicial practice, the crime of falsely issuing special value-added tax invoices has completely changed the previous regulations and judicial interpretations that only detailed the act of false issuance when determining the crime, and has achieved a breakthrough in the constituent elements of the crime, and is no longer evaluated as a simple crime of conduct.
The filing standards for the crime of falsely issuing value-added tax invoices, jointly issued by the Supreme People's Procuratorate and the Ministry of Public Security on April 29, 2022, added the standard for the amount of state tax loss in addition to the standard for the amount of falsely issued tax. This also means that after the judicial organs, the investigation and prosecution organs have also abandoned the act of identifying the model of the crime solely based on the amount of false issuance, and incorporated the result of causing state tax losses into the evaluation scope.
The author noticed that in the new filing standards, the tax amount standard for false issuance and the standard for the amount of state tax loss are connected by "or," which means that the crime of falsely issuing special invoices can be established either by determining the tax amount of the false issuance or by determining the consequences of causing losses to state tax revenue. How should we view this evaluation standard that includes both behavior and consequences? The author believes that it should be regarded as a crime of endangerment because, from the perspective of legislative system interpretation, the amount of false issuance and the standard of state tax loss are listed as the criteria for conviction and have equivalent legal interests. We know that the act of false issuance does not necessarily lead to state tax losses, but the result of state tax losses must be caused by the act of false issuance. A state tax loss of 50,000 yuan is equivalent to a false issuance of value-added tax of 100,000 yuan in terms of criminal filing evaluation; however, a false issuance of value-added tax of 100,000 yuan can only be equivalent to a state tax loss of 50,000 yuan as a parallel standard when the act of false issuance is sufficient to cause the danger of state tax loss. If the false issuance tax amount is 100,000 yuan, but it is impossible to cause the consequence of state tax loss, this kind of false issuance act is not as infringing on legal interests as the false issuance act that may lead to state tax loss, and should be evaluated by other charges. After all, falsely issuing special invoices is one of the most severely punished of the 14 tax-related crimes. Therefore, it can also be seen from the changes in the filing standards for the crime of falsely issuing special invoices that the crime has transitioned from a crime of conduct to a crime of endangerment.
This change can also be confirmed from the views of the judicial organs. The Supreme People's Court believes that two elements must be met at the same time to not constitute the crime of falsely issuing special invoices, that is, there is no subjective intention to defraud state tax revenue and there is no objective loss of state tax revenue. However, only possessing one of them still constitutes the crime. For example, the purpose is to sell invoices, but the downstream company did not use them for certification and deduction, and the incident was exposed. Although there was no objective loss of state tax revenue, the actor falsely issued the invoices and did not care whether the downstream company deducted them, putting state tax revenue in a dangerous situation of loss. From the perspective of a crime of endangerment, the seller has already committed the crime of falsely issuing special value-added tax invoices, not to mention that the danger has been transformed into an actual harmful result. No matter how the subjective purpose is defended, according to the legal concept of knowing, which includes the inference of what should be known, the act of falsely issuing invoices that causes value-added tax losses basically cannot escape the evaluation of the crime.
2. The evaluation standard for the crime of illegally selling special invoices is still a simple crime of conduct.
Different from the crime of falsely issuing special value-added tax invoices, which seriously infringes on the order of invoice management and damages the state's tax revenue interests, the crime of illegally selling special value-added tax invoices mainly infringes on the order of invoice management. Once the act causes a loss of state value-added tax or is sufficient to cause a danger of loss, the crime may be transformed into the crime of falsely issuing special invoices.
The Second Instance Court in this case stated: The crime of illegally selling and purchasing special value-added tax invoices infringes on China's strict system for the purchase of special value-added tax invoices. Special value-added tax invoices can only be purchased by general value-added tax payers from designated tax authorities with corresponding vouchers in an "old-for-new" manner. No other units or individuals may engage in the act of buying and selling special value-added tax invoices. The crime of illegally selling and purchasing special value-added tax invoices is a crime of conduct. Subjectively, the actor only needs to be aware of the illegal buying and selling act, without the need to add other subjective purposes; objectively, as long as the illegal buying and selling act is carried out, there is no need to cause certain harmful consequences. Whether the actor profits, for what purpose the buying and selling is carried out, or whether it causes a loss of state tax revenue is not the boundary between guilt and innocence for this crime, but can only be considered as a circumstance when sentencing.
3. Although the penalties for the crimes of falsely issuing and illegally selling special invoices are the same, the sentencing standards are different.
According to Article 205 of the Criminal Law, the crime of issuing false value-added tax (VAT) invoices and Article 207 of the Criminal Law, the crime of illegally selling special VAT invoices, the penalties are divided into three levels. The first is imprisonment of not more than three years or criminal detention, and a fine of not less than 20,000 yuan but not more than 200,000 yuan; the second is a relatively large amount, a relatively large quantity, or other serious circumstances, imprisonment of not less than three years but not more than ten years, and a fine of not less than 50,000 yuan but not more than 500,000 yuan; the third is a huge amount, a huge quantity, or other particularly serious circumstances, imprisonment of not less than ten years or life imprisonment, and a fine of not less than 50,000 yuan but not more than 500,000 yuan or confiscation of property. From the perspective of legislative technique, these two crimes adopt more flexible blank charges. Judging from the articles of the Criminal Law alone, there is no difference in the scale of punishment for the two crimes. However, the characteristic of blank charges is to combine relevant laws, regulations, judicial interpretations, and judicial documents to determine guilt and innocence, conviction and sentencing, in order to distinguish the differences between the two crimes.
At present, there are two main effective judicial interpretation documents for falsely issuing special VAT invoices: one is the \"Notice of the Supreme People's Court on Issues Concerning the Standards for Conviction and Sentencing for Falsely Issuing Special VAT Invoices\" (Fa [2018] No. 226), which came into effect in August 2018, which clearly states that: If the amount of falsely issued tax is more than 500,000 yuan, it shall be recognized as a \"relatively large amount\" as stipulated in Article 205 of the Criminal Law; if the amount of falsely issued tax is more than 2.5 million yuan, it shall be recognized as a \"huge amount\" as stipulated in Article 205 of the Criminal Law. The second is the \"Regulations on the Standards for Filing and Prosecution of Criminal Cases under the Jurisdiction of Public Security Organs (II)\", jointly issued by the Supreme People's Procuratorate and the Ministry of Public Security in April 2022, Article 56 of which stipulates that if a special VAT invoice is falsely issued or other invoices used to defraud export tax rebates or offset tax deductions are falsely issued, and the amount of falsely issued tax is more than 100,000 yuan or the amount of state tax loss caused is more than 50,000 yuan, the case shall be filed for investigation.
Only the judicial interpretation Fa Fa [1996] No. 30 stipulates the corresponding sentencing standards for the crime of illegally selling special VAT invoices, but whether the 26-year-old standard is still applicable is controversial in practice. According to the provisions of the judicial interpretation that year, judging only from the amount, the standards for filing a case, a relatively large amount, and a huge amount for illegally selling special invoices are 10 times, 10 times, and 5 times that of falsely issuing special invoices, respectively; now the amount standard for falsely issuing special invoices has increased by 5-10 times, and the amount stipulated in falsely issuing special invoices is the tax amount, and the amount stipulated in illegally selling special invoices is the face value, that is to say, according to the old standard, the illegal sale of more than 25 copies or a cumulative face value of more than 100,000 yuan shall be convicted and punished; more than 100 copies or a cumulative face value of more than 500,000 yuan shall be deemed a \"relatively large quantity\"; more than 500 copies or a cumulative face value of more than 2.5 million yuan shall be deemed a \"huge quantity\", and the sentencing for illegally selling special invoices is even stricter than that for falsely issuing special invoices.
The \"Telephone Reply from the Research Office of the Supreme People's Court on How to Apply the Amount Standard of Judicial Interpretation Fa Fa [1996] No. 30\" in November 2014 mentioned that: In order to implement the principle of proportionality between crime and punishment, the amount standard for sentencing in cases of falsely issuing special VAT invoices may no longer refer to the \"Interpretation of Several Issues Concerning the Application of the 'Decision of the Standing Committee of the National People's Congress on Punishing the Crime of Falsely Issuing, Forging, and Illegally Selling Special Value-Added Tax Invoices'\" in 1996. The crime of falsely issuing special invoices implements the principle of proportionality between crime and punishment. Should the crime of illegally selling special VAT invoices also equally implement the principle of proportionality between crime and punishment, and no longer refer to the amount standard of judicial interpretation Fa Fa [1996] No. 30?
Although the judicial interpretation Fa Fa [1996] No. 30 has not been explicitly abolished, since it was promulgated before the implementation of the 1997 Criminal Law, according to the provisions of the Supreme People's Court, if the previous judicial interpretation does not substantially change the content of the revised articles of the Criminal Law, the people's court \"may refer to it for execution\" in criminal trials before a new judicial interpretation is issued. Since it is \"may\", the decision-making power on whether to refer to it lies with the trial organ. In the judgment of this case, the people's court obviously did not refer to the amount standard for the crime of illegally selling special VAT invoices in the judicial interpretation Fa Fa [1996] No. 30 in accordance with the principle of proportionality between crime and punishment. T Company and N Company falsely issued 155 special VAT invoices to C Company, with a total tax amount of more than 16.81 million yuan. If converted into the face value, it would have broken through the huge quantity standard of the judicial interpretation Fa Fa [1996] No. 30, and the sentencing would inevitably be above ten years. However, in the end, without surrender or major establishment that could mitigate the punishment, the people's court only considered that the amount of illegal sale was relatively large, and sentenced T Company to a fine of 150,000 yuan, N Company to a fine of 50,000 yuan, and Liu Mouyang to imprisonment for three years.
In summary, the crime of falsely issuing special VAT invoices and the crime of illegally selling special VAT invoices, the former infringes on the dual legal interests of invoice management order and state tax, and the latter infringes on the invoice management order; the crime of falsely issuing special invoices is a dangerous crime, and the crime of illegally selling special invoices is an act crime; although the penalty levels of the two crimes are set the same, the crime of falsely issuing special invoices stipulates a clear sentencing standard, and although the judicial interpretation of illegally selling special invoices has not been abolished, it can no longer reflect the principle of proportionality between crime and punishment, and the trial organ can decide whether to apply it, so it has a wider range of discretion.
IV. Reference Cases
Hehui Weiye Trading (Beijing) Co., Ltd. et al. Falsely Issuing Special Value-Added Tax Invoices for Export Tax Refund, Second Instance Criminal Judgment for Invoices for Tax Deduction (2019) Jing 02 Criminal Final 113