Jin min Co. v. Shanghai Municipal Local Taxation Bureau Zhabei District branch

Questions:

1To others, purchase invoices for tax is a tax?

2On the basis of the public security organ, the tax authority commissioned intermediaries to make tax identification of the conclusions made the decision on punishment is legal?

The case:2003Years6Month, Jin min company and Nanjing new fan of transport and Trading Company Limited(Hereinafter referred to as the Nanjing new fan company)Signed a transport agent cooperation agreement, to pay invoices Jin min companies agreed1%Agent transport invoices issued by Nanjing new fan company acquisition costs of. Shanghai Gongxin Zhongnan Union Alpha Cpa Ltd by the Shanghai Public Security Bureau Zhabei branch(Hereinafter referred to as the Zhabei Public Security Bureau)Entrusted to2006Years1Month11Japan issued audit reports, conclusions:2003Years6January2004Years10Month, Jin min's acceptance of Shanghai commercial group of supply and Marketing Corporation six companies shipping unit shipping agency business, to the units issued by Shanghai waterway cargo transportation services uniform invoice(Or the national transportation industry freight invoice)The amount of RMB(The following are the renminbi currency13342353.66Yuan; as of2005Years12Month31Day, Jin min, reflected, the banks have to pay the freight9571433.06Element;2003Years6January2004Years10Month, Jin min company in name of cooperation directly to the Nanjing new fan company to pay the freight invoice amount1%The agency fee, from Jiangsu province transportation agent industry professional invoice Nanjing new fan company Pukou branch, Gaochun Branch issued263Copies of invoice, total12882423.10Element, as freight disbursement directly offset in Jin min company tax; business tax deduction effect644121.16Yuan, urban construction tax45088.48Yuan, to levy income tax515296.92Yuan, to levy personal income tax103059.38Yuan, total revenue1307565.94Element. Shanghai Gongxin Zhongnan Union Alpha Cpa Ltd2006Years10Month24Issued on the settlement, conclusion is comprehensive reflection of transcripts provided according to Jin min book records and public security,331Million by the shipper and carrier self clearing.

2005Years4Month, audit bureau of Nanjing city tax to audit bureau of Shanghai City Local Taxation Bureau, request investigation Nanjing new fan company Pukou branch to open invoice drawee party about the situation. The same year9Month7Day, the Shanghai Local Taxation Bureau Zhabei District branch(Hereinafter referred to as the Zhabei Tax Bureau)Service audit notice to Jin min company, in the same month14Day of Jin min company on file for inspection.2007Years5Month10Day, Zhabei tax bureau of Fujian company made of gold2005.Zha tax elevenENo.59Tax treatment decisions and No.2005.Zha tax elevenENo.59.The decision on taxation administrative punishment, apply for reconsideration Jin min company. Shanghai Municipal Bureau of Local Taxation reconsideration decision by Zhabei tax bureau of applicable laws have improper, revoke the decision, ordered the Zhabei tax bureau of the illegal acts of Jin min company made from re processing, the decision of punishment according to law.2007Years9Month11Day, Zhabei tax bureau was informed second penalties on Jin min, protested case told Jin min, a written application for hearing within three days of the rights in the Jin min company. Zhabei Tax Bureau in the same year9Month18Day,19Again for a review, on the9Month19To Shanghai local gate a penalty[2007]1101Determine the number of tax administrative punishment, according to the "PRC tax collection and management law"(Hereinafter referred to as "tax administration law")Sixty-third, the Jin min company should fill the business tax, urban construction tax, corporate income tax, personal income tax penalties apply1095972.15Element. Against the Jin min company, filed the application for reconsideration. The Local Taxation Bureau of Shanghai city in2007Years11Month26To maintain the reconsideration decision. Jin min is still not satisfied with the company, to2007Years12Month3Bring a lawsuit to the court, the request shall be revoked.

The court held that: firstly, Jin min company contact transportation business, and the carrier to settlement of freight, Nanjing new fan company according to Jin min company requirements issued agent invoice, no freight payment accounts and Nanjing new fan company exchanges, the Nanjing new fan company and Jin min company does not exist transport agency business of real the two stage, does not constitute the agency relationship. Secondly, according to the finance and taxation2003 16Article, "deduct fees paid in the territory, the deductible item payment vouchers must be invoices or other valid certificates" provisions, Jin min, although in the tax return provides issued Nanjing new fan company formal invoice, the invoice behavior is the agreement the two sides agreed by Nanjing new fan company Jin min company to demand and receive the invoice amount1%Cost and open, and Jin min company and Nanjing new fan company actual no transportation business, the Nanjing new fan company issued Jin min company1288Wan Yuyuan is falsely making out invoice. Invoice management measures of the people's Republic of China does not comply with the "Xukai invoice"(The measures for the administration of hereinafter referred to as the "invoice")Article third "said invoice of the measures, refers to the buying and selling goods, provide or accept services and in other business activities, the issuance, received proof of payment" and "the people's Republic of invoice management implementation details" thirty-third "to fill open invoices units and individuals must be confirmed after the occurrence of business management business income issue invoice" provisions, so it does not belong to the tax2003 16Referred to in the net project invoices, Jin min company will be obtained from the new company in Nanjing1288Wan Yuyuan invoices offset the cost, as the company shall be based on the reporting of business tax income, false declaration, the1288Wan Yuyuan can not be deductible item invoice document. According to the "law on the administration of tax collection" sixty-third,"...... Non payment or pay less tax payable, provision of tax evasion ", Jin min's behavior belongs to pay less tax payable, Zhabei tax bureau to assume that the Jin min company acts constitute tax according to law. According to the "law on the administration of tax collection" sixty-third,"...... For taxpayers to evade tax, the tax authorities shall pursue the non payment or pay less taxes, fines, above and fails to pay or underpays fifty percent to five times the fine; constitutes a crime, shall be investigated for criminal responsibility according to law. ". Zhabei Tax Bureau on Jin min, impose a fine109Million yuan, in the legal range, there is no improper. And the Zhabei Tax Bureau on Jin min company punishment system to make decision for handling the tax situation redoing, does not belong to according to the same fact, reason has made the specific administrative act and the original specific administrative acts of the same or similar. Zhabei Tax Bureau identified Jin min company based in Nanjing, the new company Xukai1288Wan Yuyuan invoice as the cost to offset the revenue income, the tax declaration is false declaration, according to the "tax administration law" provisions of article sixty-third, make clear in fact finding the punishment decision, the applicable law is correct, and the penalties were informed in advance, to listen to the statement and defense, in Jin min, waive the hearing condition, make the tax penalty legal procedures. Decision: to maintain the Zhabei tax bureau for2007Years9Month19Make the numbers for Shanghai local gate a penalty[2007]1101The specific administrative act, the administrative punishment decision of tax. After the verdict against the company, Jin min, appeal.

The appellant Jin min appeal company said: the appellant system transportation agency unit, collection and payment of freight, freight paid all the owner, the appellant did not receive any freight freight, not the taxpayer. Secondly, the appellant and the new Nanjing sail through written agreement to determine the two level proxy relation, namely the appellant acceptance of consignment customers after the notice of Nanjing new fan co relation ship carrier. Because the person is located in Shanghai, is looking for the ship, to find the ship, by the appellant will be on the name of goods, quantity, ship to freight to inform Nanjing new fan company, agreed on after picking. The loading and unloading of cargo in Shanghai, by the Nanjing new fan company freight collection inconvenience, so both sides agreed by the appellant will pay the freight to the owner, the owner is mostly the self-employed do not invoice, the appellant and the Nanjing new fan companies agreed on the invoice is issued by Nanjing new fan company, appeal people to pay1%Cost. Nanjing new fan company and Department of transportation agency appeal per unit, the generation of owners to invoice the appellant system irregularities, but not negate between it and the appellant's two level proxy relation. Third, the appellant did not collect freight, only after payment collection owner, issued by the freight invoice does not have the obligation to issue invoice, agency fees according to the fee charged by the agent. Issued by the Nanjing new fan invoice, the appellant without deduction into account, the people do not understand the tax laws, the operation is not standard caused by, not tax evasion. Even if the appellee will freight revenue as the amount of tax evasion, as well as transportation freight rates3.5%So, according to the intermediary rate10.5%So, based on the lack of. The facts are in error, error in judgment, request cassation.

By arguing that the appellant Zhabei tax bureau: the appellant in the absence of actual transportation business and Nanjing new fan company, by falsely making out invoice to offset the cost, the tax basis as its companies reporting business tax revenue, is a false tax return. The appellant as transport Proxy Companies, the agency fee deduction must have real business invoices, the appellant to buy the false invoices, in violation of the "invoice management measures" and "tax administration law", constitute the tax evasion behavior. If the legal representative of the appellant shall be investigated for criminal responsibility in the administrative punishment and the case is different legal relations. Decided by the tax penalty appeal to the appellant in violation of "invoice management measures" and "tax administration law" and other provisions of the law, the original judgment was correct, request to maintain.

Trial court that: the focus of controversy in this case mainly focus on, the appellee that the appellant to others buy invoices taxable constitute the tax evasion is correct; the appellee on the appellant levied tax impose fines is legitimate, whether injustice.

First of all, on whether to constitute the tax evasion problem. The appellant and the Nanjing new fan, agreed to by a written agreement, by the Nanjing new fan company appealed to the people of the invoice, the appellant to pay1%Cost.2003Years6January2004Years10Month, Jin min company to pay the freight invoice amount to Nanjing new fan company1%Agent fee, from Jiangsu province transportation agent industry professional invoice Nanjing new fan company Pukou branch, Gaochun Branch issued263Copies of invoice, total12882423.10Element. In fact, the Appellant had no objection, but think it as the freight transportation Proxy Companies will pay to the owner, because the owner did not invoice, the appellant payment1%Cost from Nanjing new sail to the appellant shall issue the corresponding invoice, the appellant and the Nanjing new fan company department two level of agency relationship. In this regard, only from the appellant the presentation of the situation, to between two agents, instead of just that the appellant for Nanjing new fan invoice, not because of the Nanjing with the new sail, resulted in real business, the appellant system through the payment of the invoice amount1%Price, receive the invoice. Therefore, the appellant have the invoice is not in the buying and selling goods, providing or receiving services and engage in other business activities, the issuance, received proof of payment, nor the appellant and the Nanjing new fan company confirmed after the occurrence of business management business income invoices. The appellee that this invoice is not in conformity with the "invoice management measures" article third, "the people's Republic of invoice management regulations" the provisions of article thirty-third, does not belong to the tax2003 16The deductible item in, the applicable law is correct. Due to the appellant the not legally acquired the invoice as disburses direct deduction in tax declaration, the impact of the tax, the appellee that the appellant the violation of the "tax collection and management law" in article sixty-third, belongs to the tax evasion behavior, there is no improper. The people think there is no tax evasion behavior can not be established in the grounds, the court shall not accept.

Secondly, because of the purchase invoice should not be used to offset the amount of tax payable vouchers, the appellee according to the law on the administration of tax collection "sixty-third""...... For taxpayers to evade tax, the tax authorities shall pursue the payment of the taxes unpaid or underpaid, late fees, above and fails to pay or underpays fifty percent five times the fine ", decided on the appellant shall pay less tax penalty, impose business tax644121.16Yuan, urban construction tax45088.48Yuan, the enterprise income tax515296.92Yuan concurrently85%Fine, impose individual income tax103059.38Yuan concurrently70%Fine. The appellee punishments in the discretion of the statutory range, the amount of the fine accurate calculation. The appellee before imposing an administrative penalty on the appellant to administrative penalty notice, listen to the statements of the Appellants representations, the appellant did not put forward to hearing the case of application, make the decision on administrative penalty tax, administrative legal procedure. To sum up, the appellant the lack of factual evidence and legal basis for the trial court decision, maintenance, administrative punishment by the appellant to inappropriate, shall be maintained.

Therefore, on the basis of "administrative procedure law of the people's Republic of China" sixty-first article(A)The provisions of item, the decision as follows: rejecting the appeal, upheld the.

Case analysis:

        Both sides in the case of the basic facts are not in dispute, the focus of the controversy focused on the fact that whether accurate qualitative and punishment is justice.

       One, the plaintiff will be to buy the others invoice as whether tax deduction voucher?

The plaintiff as a transportation Proxy Companies, business tax shall be construed in accordance with, according to "service industry -- agency" tax levy. "Notice of the State Administration of Taxation on Several Issues concerning the business tax" (Guo Shui Fa (1995) No. 076) the provisions of article fourth "agent industry turnover taxpayers engaged in agency business to the client the actual charges paid." Because the plaintiff's principal transport shipowners are mostly self-employed, did not have the invoice in the payment of transportation costs. In order to in the tax will pay transportation costs from the current taxable turnover deduction, the plaintiff from the hands of a transportation company to invoice amount 1% as a fee has been used for transportation invoices for tax deduction. The plaintiff argued that its collecting freight has been paid to the owners, but because the offer as proof that no evidence but not adopted by the court. The plaintiff argues that has been associated with the new sail through agreement established two level proxy relation, but only depends on the contract does not prove the existence of transaction. If you want to prove their case, true to the principal-agent relationship between the plaintiff must prove that both sides. But if the agency relationship is established, the new sail company should write to pay agency fees invoice amount. But the actual situation is the plaintiff to pay 1% of the amount of the invoice issued in 100%, is clearly in violation of the relevant provisions of measures on invoice management payment amount must be consistent with the invoice amount. Therefore, the plaintiff made business transaction in fact, taxes will have no real transaction on the basis of the invoice to offset the current turnover, resulting in less tax consequences, according to the provisions of article sixty-three of the tax administration law, should be in the nature of tax evasion.

Objection the court and that the tax authorities on tax amount. AlthoughBetween the plaintiff made with new sails company two level agency relationship, but whether it should be obtained from the defendant the plaintiff's invoice full tax rates applicable tax evasion amount? According to the audit report issued by intermediary institutions entrusted by the defendant, the plaintiff received13342353.66Yuan agency fees, the bank has paid the ship freight 9571433.06 yuan. The author thinks, if the original certificate of the plaintiff is reflected in the bank has paid the ship freight 9571433.06 yuan payment record, the defendant to offset the tax 12882423.1 yuan in 9571433.06 yuan is the true costs. But the cost could not obtain invoices from the ship, which was purchased from other units of the invoices offset. To this kind of behavior should not be treated as tax evasion. Because the objective is not to "out of thin air more expenditure", the subjective nor the fictional facts to deliberately evade taxes, it can not be identified as false declaration. Notably, the court did not specify the behavior which meet the requirements of the characteristics of tax evasion. Of course, this kind of behavior is not legitimate, not only should be in accordance with the provisions of tax (2003) of Article 16, are not allowed as deductions in turnover deduction, but according to the "Regulations of the people's Republic of invoice management measures" in article thirty-sixth, punish them according to "fails to obtain invoices" behavior.

     Two, the tax authorities tax appraisal report quoted agency properly?

At present, in the investigation of tax evasion cases, public security, tax authorities require administrative resources sometimes to avoid, often will be involved in the enterprise's accounting books, vouchers and other documents authorize intermediary agencies to identify. Issue an appraisal report on the intermediary institutions, agencies often be identified as the facts and the basis for administrative penalty. The author thinks, this approach is not appropriate. The reasons are as follows:

1Tax identification, cannot explain the application of law.Appraisal conclusion is the discriminant analysis, and judge identification on the basis of scientific knowledge about the specific issues of the case made, on the basic meaning of the appraisal conclusion, it is stated judgment rather than a statement of fact situation. The appraisal conclusion is just on special issues in the case: judgment, rather than solving legal problems[1]. Therefore, identification of human identification cannot tax matters in cases involving violation of tax law is published qualitative opinion. In this case, the audit report issued by an accounting firm is, to a great extent have been related to the fact of the case (as in the331That million payment, intermediary is according to the company's book records and public security provide transcripts) and Law (the tax amount effect "), it has gone beyond the general appraisal conclusion.

2Many tax identification, intermediary agencies engaged in the lack of legal support. The current tax appraisal content, procedure is chaotic, the lack of standard and unified format, identification of the subject does not have the statutory qualifications. From the existing legal provisions of CPA practice range, tax identification does not belong to the audit business[2]But the present legislation, proof that the audit report; even certified tax agents engaged in tax identification, the current legislation that was limited to small range. "Interim Measures" management registration tax provisions of article twenty-third, "the CTA can undertake the following a tax assurance: (a) the enterprise income tax declaration verification; (two) pre tax losses and property loss of verification; (three) other tax related authentication service provisions of State Administration of Taxation and tax bureau the." That is to say, the current intermediary agencies issued by tax appraisal report authority most does not have the legal approval. Professional identification of natural science, objectivity and accuracy of appraisal standard of appraisal conclusion in the social sciences and the method used to be inferior to a lot of subjective judgment, which inevitably mixed will make the appraisal conclusion has certain error, then directly as the basis for administrative penalty according to comprehensive, objective, justice can not guarantee.

3The tax authorities, tax identification can not be entrusted to the. If the public security organ for professional limits using intermediary professional knowledge is as excusable, then the tax authorities, tax account books vouchers to check and analyze the data processing belongs to the tax authorities the legal authority scope, but also in line with the professional background. The audit report intermediary directly used as treatment decisions, not only means the right to tax inspection agency to exercise the tax authorities in the agent, but also violated the "preferential certificate award, punishment principle", apparently suspected of violating the law.

Notes1Cai Xiaoxue:: "administrative litigation evidence rules and use", the people's Court of agency2006Year edition, No.69Page.

Notes2Chinese: CPA Association: "audit" (2007Unified national examination for certified public accountants coachs teaching material), Economic Science Press2007Year edition, No.12-15Page.