Editor's note: The Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases Endangering Tax Collection and Administration (Fa Shi [2024] No. 4) clarifies that false billing that does not have the purpose of defrauding taxes and does not cause tax fraud losses due to deductions does not constitute the crime of false issuance. Based on this, it can be seen that the legal benefit of false criminal protection specifically refers to the value-added tax collected and managed by deduction, and this conclusion is not created by the judicial interpretations of the Supreme People's Court and the Supreme People's Court, but the original meaning of the Criminal Law, which was also applicable before the implementation of the judicial interpretations of the Supreme People's Court and the Supreme People's Court. However, in the past trial of petrochemical tax-related cases, many courts did not make a proper interpretation of the purpose of the criminal law and did not accurately identify the tax interests infringed by petrochemical tax-related cases, resulting in a large number of such cases being sentenced to constitute the crime of false opening. We believe that there are problems such as errors in the determination of facts and application of law in cases that have been falsely opened in the petrochemical industry, and we can still actively file appeals.
I. Analysis of the Clauses on the Crime of Falsely Issuing Special VAT Invoices in the Judicial Interpretations of the Supreme People's Court and the Supreme People's Court
The second paragraph of Article 10 of the judicial interpretations of the Supreme People's Court and the Supreme People's Court stipulates that "if the purpose is not to defraud the tax for the purpose of inflating performance, financing, loans, etc., and there is no tax fraud loss caused by the deduction, it shall not be punished as this crime, and if other crimes are constituted, criminal responsibility shall be investigated for other crimes in accordance with the law." This clause is an exculpatory clause, which gives the parties the opportunity to prove their guilt and is of great significance. In the author's opinion, two conclusions can be drawn from the exculpation clause:
(1) The legal interest of false opening criminal protection is the value-added tax for tax collection and administration in the form of deduction
The use of the expressions "fraudulent deduction" and "tax deception loss due to deduction" in the criminal clause indicates that the crime of false billing is mainly aimed at fraudulent deductions, and "deduction" has a stable and clear meaning in tax collection and management, specifically referring to the tax collection and management method of "input tax deduction" adopted by the general VAT calculation method.
For example, the concept of "verified deduction of input tax" also exists in the field of value-added tax on agricultural products, so "fraudulent deduction" cannot be fully equated with value-added tax, and we believe that this understanding is contrary to the original intent of the value-added tax legislation. The concept of "verified deduction" is only to distinguish it from the collection and management method of input deduction of agricultural product purchase invoices, and Article 2 of the "Pilot Implementation Measures for the Verification and Deduction of Input VAT on Agricultural Products" also clearly stipulates that "these measures shall apply to the pilot taxpayers who purchase agricultural products to deduct the input VAT input tax" It is also sufficient to show that the approved deduction is a special form of input VAT deduction for agricultural products, and it is still a subordinate concept of VAT input deduction, not a concept on the same level as input deduction.
There is also an opposing view that there is also the concept of "deduction" in the fields of enterprise income tax and consumption tax, so it is not possible to fully equate "fraudulent deduction" with value-added tax, and we believe that this understanding is also inappropriate. First of all, Article 8 of the Enterprise Income Tax Law clarifies that expenses such as costs and expenses shall be deducted in the calculation of taxable income by means of "deduction", which is the concept of "pre-tax deduction" as we usually understand it. Although the State Administration of Taxation Announcement No. 81 of 2015 and other documents adopt the expression of "deduction" of taxable income from the investment amount, the deduction here still belongs to the subordinate concept of pre-tax deduction and is a special form of pre-tax deduction, which does not mean that there are two ways to calculate the taxable income of enterprise income tax: "pre-tax deduction" and "deduction". The "deduction" in the field of consumption tax mainly appears in the second paragraph of Article 4 of the Provisional Regulations on Consumption Tax, which states that "if the entrusting party uses the taxable consumer goods for continuous production of taxable consumer goods for the continuous production of taxable consumer goods, the tax paid shall be allowed to be deducted according to the regulations", but the "deduction" here is not a strict tax law concept, and does not constitute the collection and management system of the so-called "consumption tax deduction", which only means that the continuous production of taxable consumer goods by taxable consumer goods can "deduct" and "deduct" the consumption tax paid. This can be supported by other consumption tax policies, such as Cai Fa [2012] No. 8, which stipulates that "taxable consumer goods to be recovered by the entrusting party...... ...... sold at a taxable price higher than that of the trustee The concept of "deduction" is used when deducting the consumption tax that has been collected and paid by the trustee in the calculation of tax". Another example is the announcement of the State Administration of Taxation [2018] No. 1, Article 2 stipulates that "the purchased, imported, and commissioned processing of recovered gasoline, diesel, naphtha, fuel oil, and lubricating oil for the continuous production of taxable refined oil...... Calculate and deduct the consumption tax paid according to the regulations", and the concept of "deduction" is also used. Therefore, "deduction" in the field of consumption tax is an unstable term that has not formed a unified concept, and obviously cannot be used as the basis for interpreting the concept of "fraudulent credit" in the judicial interpretations of the Supreme People's Court and the Supreme People's Court, nor can it be used as the object of "fraudulent deduction" in the judicial interpretations of the Supreme People's Court and the Supreme People's Court.
(2) The implementation of false billing does not mean that there is a purpose and danger of "defrauding the deduction of VAT".
According to the legislative logic of the judicial interpretations of the Supreme People's Court and the Supreme People's Court, the first paragraph of Article 10 stipulates the criminal act of false opening, and the second paragraph stipulates the exoneration clause, which means that the first paragraph is the basis of the second paragraph. This means that there is no necessary connection between false billing and "fraudulent deduction of VAT". In the author's opinion, the implementation of false billing without the purpose and danger of "defrauding the deduction of VAT" mainly includes the following situations:
1. As a general taxpayer, the actor purchases VAT taxable items, pays the tax-included price, but does not obtain the invoice, and obtains the special VAT invoice from a third party, and the total price and tax does not exceed the purchase price paid. In this case, the actor obtains the right of deduction in the procurement process, and chooses to issue an invoice on behalf of the actor because the right of deduction is not satisfied, because the tax deduction does not exceed the amount of input tax borne by the actor, and its main purpose is to realize the right of deduction, rather than "fraudulently obtaining deduction" without the right of deduction, and its deduction behavior is only limited to the realization of the right of deduction, and does not cause the loss of tax fraud. It should be noted that in this case, only the purchaser (drawee) meets the conditions for the guilt, and for the biller, if it has the indirect intention to allow the drawee to defraud the tax deduction, it can still be considered that it has the purpose of helping others to defraud the tax deduction, and it cannot be automatically convicted. For the seller, although it does not constitute the crime of false issuance, if it fails to declare and pay taxes at the time of sale, it should be investigated for legal responsibility for tax evasion.
2. Carrying out false billing but not using the tax deduction function. Value-added tax is a tax levied on the value-added amount of taxable items, and there are two ways to tax the value-added amount, one is to deduct the purchase amount of taxable items from the sales amount of taxable items, and calculate the value-added tax according to the tax rate, and the second is to calculate the output tax according to the tax rate of the sales amount of taxable items, and then calculate the taxable amount according to the tax rate based on the purchase amount of taxable items, that is, the deduction mode. Therefore, the ultimate purpose of the deduction model is to tax the value-added amount, which is designed to correctly calculate the VAT payable. Using the invoice deduction function to defraud the deduction of value-added tax can embezzle the state's tax interests on a large scale at a very small cost, which is a serious social harm and should be punished as a felony, which is also the legal basis for setting a higher statutory penalty for the crime of false issuance. However, with the development of society, VAT invoices have been endowed with other functions, such as financial accounting functions, pre-tax deduction voucher functions, and consumption tax deduction functions for the continuous production of taxable consumer goods, which have nothing to do with the input deduction function. For those who have carried out false issuance, but have not used the deduction function to defraud the deduction of VAT, there is no purpose and danger of "fraudulently deducting VAT", it is not for the purpose of illegally embezzling the interests of the state's value-added tax, and the social harm is much lower than that of the crime of false opening.
2. The business model of tax-related cases in the petrochemical industry
The main product of the petrochemical industry is refined oil, which is a taxable consumer product subject to consumption tax, and the core purpose of tax-related cases in the petrochemical industry is to evade consumption tax. According to the Provisional Regulations on Consumption Tax, refining and chemical enterprises are required to pay consumption tax in accordance with the law when they purchase non-taxable consumer goods such as crude oil and produce and process them into taxable consumer goods such as fuel oil. Since it is difficult for the tax authorities to supervise the production and processing of refining and chemical enterprises in real time in the process of tax collection and management, the supervision of production behavior is transformed into the supervision of the names of purchase and sales invoices. If a refining or chemical enterprise obtains an invoice for crude oil and issues an invoice for fuel oil and other refined oil products, the tax authorities shall consider that the refining and chemical enterprise has engaged in processing and production and shall declare and pay consumption tax. However, if a refining and chemical enterprise obtains a crude oil invoice for the purchase of crude oil and still issues a crude oil invoice for the external sale of refined oil, or obtains a refined oil invoice for the purchase of crude oil and normally issues a refined oil invoice for the external sale of refined oil, it is reflected in the book as a trade behavior, and even if the processing and production behavior actually occurs, it is difficult for the tax authorities to effectively monitor it, so as to realize the evasion of consumption tax liability.
(1) Traditional tax-related cases in the petrochemical industry
Traditional tax-related cases are mainly manifested in ticket change cases, and there are two main types of ticket change modes:
1. The core of this ticket change model is that the refining and chemical enterprises change the invoice name of the raw material procurement link, that is, to purchase crude oil and obtain crude oil invoices, and change the invoice name to refined oil through the ticket change enterprise, and then open the refined oil invoice back, and at the same time produce crude oil goods into refined oil, sell them normally, and forge the pure trade business of purchasing refined oil and selling refined oil.
2. The change of invoices used in the field of circulation mainly refers to the fact that when refining and chemical enterprises produce refined oil and sell it to the outside world, they still issue crude oil or chemical invoices to avoid tax obligations, and then change the name of the invoice to refined oil through the invoicing enterprises to cooperate with the downward circulation of refined oil goods.
(2) New tax-related cases in the petrochemical industry
In order to fundamentally prevent the ticket change behavior of petrochemical trading enterprises, in January 2018, the State Administration of Taxation issued the Announcement on Issues Concerning the Collection and Administration of Consumption Tax on Refined Oil Products (Announcement No. 1 of 2018 of the State Administration of Taxation), and officially launched the refined oil invoice module system in March 2018. The refined oil invoice module has made significant restrictions and specifications on the use of refined oil invoices by trading enterprises and production enterprises. However, the fundamental problem of monopoly in the refined oil market will exist for a long time, and the need for cost reduction of refining and chemical enterprises will always exist.
In practice, there are various new modes of ticket change, such as using false inventory left over from history to issue invoices, forging refined oil customs import payment certificates to falsely increase inventory invoicing, invoicing tax arrears of affiliated production enterprises, outsourced processing tax arrears invoicing, using the red flush time difference of refined oil invoices to issue external invoices, using hacking technology to tamper with system violent invoicing, and obtaining invoices from gas stations and other refined oil retail enterprises. But the core purpose of these cases is still the evasion of consumption tax.
3. Legal analysis of tax-related cases in the petrochemical industry
Combined with the provisions of the judicial interpretations of the Supreme People's Court and the Supreme People's Court, the legal interests infringed by tax-related cases in the petrochemical industry are fundamentally different from the general crime of false opening, and the acts of the petrochemical industry for the purpose of evading consumption tax, without the purpose of defrauding VAT and without causing the risk of VAT loss, should be excluded from the crime of false billing. Specifically:
(1) The motive for the petrochemical ticket change is the evasion of consumption tax and the infringement of the interests of the state's consumption tax
For the purpose of evading consumption tax, refining and chemical enterprises should transfer the change of invoice name to the upstream or downstream enterprises in the purchase and sales chain while actually using crude oil to process and produce refined oil such as fuel oil, or require suppliers to issue invoices (or third-party enterprises on behalf of them) when purchasing raw materials for non-taxable consumer goods, so as to illegally make consumption tax deductions and take advantage of loopholes in tax collection and management to evade their own consumption tax obligations. These acts are in line with the purpose of evading consumption tax and infringe on the interests of the state.
(2) There is no purpose of defrauding value-added tax (VAT) and there is no danger of defrauding VAT benefits
In practice, in addition to the participation of refining and chemical enterprises and ticket-changing enterprises, in tax-related cases in the petrochemical industry, in order to make the behavior more hidden, the transaction chain is usually lengthened and multiple ticket transfer links are designed, but no matter how many ticket transfer links are added, each transaction entity in the chain issues invoices according to the actual quantity and amount of oil products, recognizes the output tax amount according to the tax amount recorded in the actual invoice, and confirms the input tax amount according to the tax amount recorded in the actual invoice, and truthfully declares and pays VAT. Moreover, the VAT rates of crude oil, chemical raw materials and refined oil products are the same, and the change of product name does not affect the VAT tax liability. The act of changing bills does not have the subjective purpose and objective danger of defrauding VAT, and there is no possibility of infringing on the interests of national VAT.
To sum up, the criminal act cracked down on by the crime of false issuance is the act of using special VAT invoices to defraud the state of tax revenue, and the core is "fraud"; the criminal act cracked down on by the crime of tax evasion is the act of maliciously evading tax obligations through various means, and the core is "evasion." If the act of changing the ticket only uses the ticket function to make a false consumption tax declaration and evades the payment of consumption tax, does not cause a loss of national value-added tax, and does not infringe on the legal interests of the protection of the crime of false issuance, it is not appropriate to find that the crime of false issuance of special VAT invoices is constituted. Judicial organs cannot arbitrarily cross the boundary between the two crimes on the basis of the amount of tax losses, and in particular, they cannot arbitrarily expand the application of false opening crimes. Otherwise, it will seriously violate the basic principle of proportionality of criminal responsibility and punishment in the criminal law, and seriously violate the fairness and justice of the criminal law.
IV. Analysis of the Temporal Effect of the Judicial Interpretations of the Supreme People's Court and the Supreme People's Court
(1) The judicial interpretations of the Supreme People's Court and the Supreme People's Court are a restoration of the original intent of the Criminal Law
According to the principle of legality of crimes, the basic issues of criminalization and exculpation, such as the constitutive elements of a crime and the provisions on exculpation, can only be stipulated by the criminal law. Judicial interpretations can only interpret the Criminal Law and clarify the legal application of the Criminal Law, and cannot go beyond the Criminal Law to set up separate provisions on exculpation and criminalization. Therefore, the provisions of the judicial interpretations of the Supreme People's Court and the Supreme People's Court on "fraudulent tax deduction" are not a new legal provision, but a restoration of the original intent of the Criminal Law. The determination of crime and non-crime is stable, and it is not possible to reach an unreasonable understanding that an act constituted a crime before the promulgation of the judicial interpretations of the Supreme People's Court and the Supreme People's Court did not constitute a crime after the promulgation, but it should be considered that the conclusions on whether the conduct was criminalized before and after the promulgation of the judicial interpretations of the Supreme People's Court and the Supreme People's Court were consistent, and that the criminal law and judicial interpretations did not provide for it in the past, which is a technical issue of legislation.
Therefore, for petrochemical tax-related cases tried before the implementation of the judicial interpretations of the Supreme People's Court and the Supreme People's Court, the judicial authorities should adopt the principle of purpose interpretation and restore the criterion for culpability omitted by the Criminal Law and the old judicial interpretations, that is, if the purpose is not to defraud the tax and the loss of tax is not defrauded due to the deduction, it does not constitute the crime of false invoicing. If the judicial organ fails to make a determination of the loss of VAT tax and does not consider the criterion for the crime of false opening and sentences the crime is obviously an error in the determination of facts and the application of law.
(2) The judicial interpretations of the Supreme People's Court and the Supreme People's Court are applicable to all settled and pending petrochemical tax-related cases
The judicial interpretations of the Supreme People's Court and the Supreme People's Procuratorate will come into force on March 20, 2024, and in accordance with the relevant provisions of the Criminal Procedure Law and the Provisions of the Supreme People's Court and the Supreme People's Procuratorate on Issues Concerning the Temporal Effect of the Application of Criminal Judicial Interpretations (Gao Jian Fa Shi Zi [2001] No. 5), the temporal effect of the judicial interpretations of the Supreme People's Court and the Supreme People's Procuratorate is judged in four situations:
1. Where the criminal conduct occurred after March 20, 2024, the new judicial interpretation will of course apply.
2. Where the criminal conduct occurred before March 20, 2024, but was a pending case at the time the judicial interpretations of the Supreme People's Court and the Supreme People's Court took effect, the provisions of the old law shall apply in principle, but where the judicial interpretations of the Supreme People's Court and the Supreme People's Court are more beneficial to the parties, the judicial interpretations of the Supreme People's Court and the Supreme People's Court shall be applied.
3. Where the criminal conduct occurred before March 20, 2024, and was a decided case when the judicial interpretations of the Supreme People's Court and the Supreme People's Court came into effect, if the facts are ascertained and the law is correctly applied in accordance with the provisions of the old law, it will not be changed.
4. Where the criminal conduct occurred before March 20, 2024, and was a decided case when the judicial interpretations of the Supreme People's Court and the Supreme People's Court took effect, if the facts were ascertained or the law was erroneously applied in accordance with the provisions of the old law, the trial supervision procedures shall be initiated.
Therefore, for the pending petrochemical tax-related cases, of course, the provisions of the judicial interpretations of the two supreme courts shall apply, and the application of the exculpatory clause may be actively asserted, and for the judgment of the parties to the judgment of the two supreme people's courts, if the court does not consider whether the parties have the purpose of defrauding the value-added tax and whether it has caused the loss of value-added tax fraud, and the sentence constitutes the crime of false opening, the original legislative intent of the criminal law as specified in the judicial interpretations of the two supreme courts shall be applied and the trial supervision procedure shall be initiated.
5. Suggestion: The petrochemical industry should be actively appealed for the case of being sentenced to false opening for consumption tax evasion
Tax-related criminal litigation is a relatively professional and delicate field in criminal litigation, and petrochemical ticket conversion cases are particularly difficult. In practice, if a set of appropriate defense strategies cannot be formed, and the motivations, subjective purposes, and social harmfulness of petrification cannot be accurately explained and reasoned in detail, it will be difficult to guide the judicial organs to investigate the facts of the case that affect the conviction and sentencing, resulting in judges making judgments that deviate from fairness based on established erroneous perceptions. The appeal defense strategy of the petrochemical ticket change case should focus on the following three points:
1. VAT chain status
First of all, it is necessary to examine whether each invoicing party in the chain has paid tax in full on the invoice, and whether the tax deduction obtained by the invoice recipient is limited to the output tax generated by the external invoice in this business. If the invoice recipient obtains the invoice not only to deduct the invoice issued in this business, but also to deduct the output tax generated by other business, there is an act of obtaining false invoices, and it needs to be investigated for the legal responsibility of false invoicing.
2. The principle of consumption tax loss
The subjective purpose of the perpetrator of the petrochemical ticket change and the objective result of his actions are all consumption tax evasion. Moreover, the enterprises that carry out the ticket change behavior only obtain the benefits of the ticket change fee, and in the whole chain, the refining and chemical enterprises are the biggest beneficiaries, and the income of the whole chain also comes from the consumption tax evaded by the refining and chemical enterprises.
3. The application of the law to the crime of false opening and tax evasion
After clarifying the principle of consumption tax loss, it is necessary to further combine the actual requirements of the crime of false issuance of special VAT invoices with the intention of defrauding VAT and the result of causing national VAT losses, and demonstrate that petrochemical ticket change does not constitute the crime of false issuance, but is an act of tax evasion. At the same time, it actively advocates the application of pre-administrative procedures, and evades criminal penalties by paying back taxes, late fees, and fines.