Editor's Note: The essence of the act of changing petrochemical invoices is to help the enterprises using the invoices to evade the consumption tax rather than to cheat the VAT. In the case of petrochemical invoicing, although some judicial authorities can recognize the problem of tax evasion, they may be hesitant to impose the crime of tax evasion due to the fact that the case does not satisfy the pre-conditions for administrative penalties. In this article, we will take a petrochemical bill change case represented by China Tax Lawyer as a reference to analyze that the administrative penalty imposed by the tax authority is not a pre-condition for pursuing the criminal responsibility of tax evasion, and combine the specific circumstances of objective inability and legal impossibility to explain that even if the tax authority has not imposed administrative penalty, it is not a violation of Article 201 of the Criminal Law that the perpetrator of the petrochemical bill change is subject to the criminal responsibility of tax evasion.

01 Case Sharing

Company A was established in May 2014, with its registered office located in City W, and its main business is fruit wholesaling, and Jia Mou is the actual controller of the company.In 2017, Jia Mou fell into financial difficulties, and after being introduced by others, he began to participate in the business of purchasing and selling of oil products in 2018 after changing the business scope of Company A.During the period of February to April 2018, under the domination and arrangement of others, Jia Mou utilized Company A under his control to obtain oil products first from three upstream oil trading companies to obtain input VAT special invoices with the name of crude oil, and then issued VAT special invoices with the name of fuel oil to seven designated downstream trading companies. Upon investigation by the judicial authorities in this case, part of the VAT invoices for fuel oil involved in the case went to local refineries in Shandong, while the final flow of the remaining part could not be ascertained.

In the above transaction chain, the tonnage of goods corresponding to each invoice issuing link did not change, only the name of goods changed in the link of Company A. Company A obtained VAT invoices with the name of crude oil with the total price and tax of RMB 2.48 billion, and issued VAT invoices with the name of fuel oil with the total price and tax of RMB 2.49 billion, which involved the output tax amount of RMB 260 million. According to the tonnage recorded in the invoices and the consumption tax rate of fuel oil, the consumption tax involved was RMB779 million.

The case was discovered due to the verification of consumption tax risky taxpayers in the tax system. Company A was included in the list of risky enterprises due to the behavior of changing consumption tax non-taxable goods to consumption tax taxable goods for invoicing, and the case was handed over to the Inspection Bureau of W Municipal Taxation Bureau for investigation and handling. After investigation, the Inspection Bureau considered that the behavior involved in the case was suspected to be a crime and referred the case to the public security authorities. The public security authorities and the procuratorate charged Jia with the crime of false VAT invoicing, and because Jia refused to plead guilty, the procuratorate made a recommendation to the court to impose a sentence of thirteen years' imprisonment. The court rendered a judgment after trial, finding that Jia constituted the crime of tax evasion and sentenced him to six years' imprisonment.

The reasons for the court's decision are as follows:

Firstly, this case is a typical act of variable invoice sales in the petrochemical industry, i.e., in order to evade the consumption tax, the refined oil production enterprise changed the consumption tax non-taxable goods such as chemical raw materials to consumption tax tax taxable goods such as refined oil and issued VAT special invoices to the refined oil production enterprise through various trading companies without the real purchase and sale of goods, which is essentially a kind of consumption tax evasion behavior.

Secondly, the crime of false VAT invoice should be based on the subjective purpose of the perpetrator to cheat against the state tax, which is essentially the perpetrator's use of the function of VAT invoice to offset the tax to seize the state tax. In this case, although Jia and others violated the invoice management order by falsely issuing VAT invoices through layers of fictitious transactions, the companies in each transaction declared and paid taxes in accordance with the tax amount recorded in the invoices, and the act of offsetting taxes did not actually cause the loss of national taxes by deception, but caused the loss of national consumption tax, and it is more in line with the principle of the appropriateness of punishment and crime that Jia is sentenced according to the crime of evasion of taxes.

Thirdly, Jia Mou assisted the oil production enterprise to evade payment of consumption tax by means of false VAT invoices, which should constitute an accessory to the crime of tax evasion. Although the procuratorate in this case did not charge the production enterprise with the crime of evading consumption tax, it did not affect the determination of Jia's behavior and status.

Fourthly, the existing evidence in this case can not determine the specific tax evasion of petroleum refining enterprises, the objective tax authorities can not carry out administrative penalties, is the objective administrative penalties can not, and the "Criminal Law" Article 210, paragraph 4 of the provisions of the penalties belong to the reasons for the blocking, rather than tax evasion of the crime of the constitutive elements, does not affect the establishment of the crime itself. The behavior of Jia Mou caused the tax evasion amount to reach the criminal standard, which can constitute the crime of tax evasion and be punished.

This case is a typical case of petrochemical trading company selling false invoices under a different name represented by HuaShui lawyers. The court fully adopted the lawyers' opinions and corrected the crime of false invoicing charged by the procuratorate, and the responsible person for the implementation of the change of invoices was convicted and held liable in accordance with the crime of tax evasion, which was a relatively successful result of the defense of the case. On the petrochemical change behavior does not constitute the false invoicing crime of the argument will not be discussed in detail, another highlight of the decision in this case is that the court in the tax authorities due to the objective can not be made in the case of administrative penalties, according to the law of tax evasion of criminal responsibility, rather than the mechanical application of the "no administrative penalties shall not be investigated for the crime of evasion of tax" of the faulty logic. Then, how to understand the provisions of Paragraph 4 of Article 201 of the Criminal Law, the following will be analyzed in detail.

02 The absence of administrative punishment by the tax bureau does not affect the establishment of the crime of tax evasion itself.

From the analysis of criminal law provisions, Paragraph 1 of Article 201 of the Criminal Law stipulates, "If a taxpayer adopts deception or concealment means to make false tax declaration or fails to declare, and evades payment of tax in a larger amount and accounting for more than ten percent of the taxable amount, he shall be sentenced to fixed-term imprisonment of not more than three years or detention, and shall be punished by a fine; if the amount is huge and accounts for more than thirty percent of the taxable amount, he shall be sentenced to fixed-term imprisonment of not less than three years and not more than seven years, and shall be punished by a fine. shall be sentenced to fixed-term imprisonment of not less than three years and not more than seven years, and shall be fined." It can be seen that the constitutive element of the crime of tax evasion lies in the taxpayer's false tax declaration or non-declaration by means of deception or concealment, and the amount of tax evaded and the proportion of tax evaded reaches the legal standard, and the form of responsibility is intentional, i.e., knowing that the act will lead to tax evasion and holding a hopeful or permissive attitude.

Paragraph 4 of Article 201 of the Criminal Law stipulates that "if a person commits an act under paragraph 1, and after the tax authorities have issued a notice of recovery in accordance with the law, he or she pays the tax due, pays the late fee, and has already been subjected to administrative penalties, he or she shall not be held criminally liable; however, if he or she has been subjected to criminal penalties or has been subjected to administrative penalties more than two times by the tax authorities for evading the payment of tax within five years, he or she shall not be held criminally liable. " This provision is a new addition after the amendment of the Criminal Law Amendment (VII), and the purpose of this amendment is, on the one hand, to protect the order of tax collection and management and to facilitate the tax authorities in recovering taxes, and, on the other hand, to give the taxpayers the opportunity to rectify their tax payment behaviors, which has a positive effect on the maintenance of the normal operation and development of the enterprises. The content of this paragraph before the proviso, in the theory of criminal law belongs to the tax evasion crime of punishment blocking reasons, that is, although the behavior has met the tax evasion crime constitutive elements, but because of the reasons stipulated in this paragraph and not to be held criminally liable. The proviso of the fourth paragraph also stipulates the situation of "except for punishment obstruction".

In the theory of criminal law, the cause of punishment obstruction refers to the situation that although the behavior has already constituted a crime, the law stipulates that no punishment shall be imposed due to the existence of specific reasons. Its core feature is "the crime is established but exempt from punishment", need to be distinguished from the direct blocking of the establishment of the crime "crime blocking reasons" (such as self-defense, lack of responsibility). Under the characterization of the reason for punishment, the normative logic of Article 201 of the Criminal Law lies in the following: the act of meeting the constitutive elements of the tax evasion crime in the first paragraph is the establishment of the tax evasion crime, and the fourth paragraph is only for the special circumstance of no longer pursuing the criminal responsibility, and not denying the establishment of the tax evasion crime.

In practice, the judicial authorities do not dare to sentence the tax evasion crime in the case of petrochemical ticket change because the tax bureau has not imposed administrative punishment, the root cause of which is that paragraph 4 of Article 201 of the Criminal Law is wrongly interpreted as a pre-condition for the tax evasion crime, i.e., it is believed that the tax evasion crime cannot be sentenced unless administrative punishment is imposed. However, according to the normative analysis, as long as the behavior meets the provisions of the first paragraph, that is, to meet the constitutive elements of the crime of tax evasion and the establishment of the crime, the administrative punishment of the tax authorities is not a prerequisite for the establishment of the crime must be met. Many jurisprudence has been clearly explained:

(2016) Gan 0503 criminal judgment No.168 pointed out that "the tax evasion crime stipulated in Article 201 of the Criminal Law of China, its constitutive elements are not based on the administrative treatment and administrative punishment of the tax authorities as a precondition, that is, as long as there is the fact of tax evasion and reaches the corresponding amount and proportion, it constitutes a crime and shall be held criminally liable. In addition, the provisions of the fourth paragraph of this article are special provisions for the first-time offenders who have already constituted the crime of tax evasion to be treated leniently under the objective conditions stipulated in this paragraph, rather than preventing the pursuit of criminal responsibility. In summary, China's criminal law does not expressly provide that tax evasion cases should be preceded by administrative penalties by the tax authorities."

(2018) Yu 1327 Criminal Judgment No.320 also made it clear that "the defendant unit used deceptive means to make false tax declarations, which amounted to a huge amount and accounted for more than thirty percent of the taxable amount, and its tax evasion behaviors were in line with China's criminal law on the crime of tax evasion, which has constituted the crime of tax evasion, and the provisions of Paragraph 4 of Article 201 of the Criminal Law positively made up for the payment of taxes, paid the late payment fees, and administrative penalties have been imposed, provisions have been made not to pursue criminal liability, and administrative penalties have not been taken as a precursor to pursuing criminal liability."

(2020) Yu09 Criminal Judgment No.234 similarly pointed out that "according to the provisions of Paragraph 1 of Article 201 of the Criminal Law, the constitutive element of the crime of tax evasion does not take the administrative treatment and administrative punishment of the tax authorities as a precondition, i.e., as long as there is a criminal fact of tax evasion and it reaches the corresponding amount and proportion, it constitutes a crime that should be investigated for criminal responsibility. The provision of paragraph 4 of Article 201 is intended to take into account that the main purpose of punishing tax evasion crimes is to maintain the tax administration system and ensure the national tax revenue; it is a special provision for the first-time offenders who have already constituted the crime of tax evasion to be dealt with leniently under the fulfillment of the objective conditions stipulated in the paragraph, and it is not a provision to block the pursuit of criminal responsibility, and the administrative penalties shall not be ipso facto construed as the pursuit of the criminal responsibility of the perpetrators of tax evasion. antecedent program."

It can be seen from the above jurisprudence that the courts do not take whether the tax authorities have imposed administrative penalties as a precondition for the establishment of the crime of tax evasion, but recognize the administrative penalties imposed as a reason for blocking penalties rather than a constituent element or a precondition for the crime of tax evasion, which confirms that even if the tax authorities have not imposed administrative penalties, it still does not affect the pursuit of the criminal liability for the crime of tax evasion. Specifically, if the circumstances in paragraph 4 of Article 201 of the Criminal Law are satisfied, the pursuit of criminal liability for the crime of tax evasion can be blocked; if the circumstances in paragraph 4 are not satisfied, it does not affect the establishment of the crime of tax evasion, and the criminal law does not exempt such circumstances from criminal liability. To further summarize, paragraph 4 of Article 201 of the Criminal Law is the reason for blocking liability under specific conditions, rather than the basis for exemption from criminal liability in all cases where no administrative penalty has been imposed.

Paragraph 1 of Article 3 of the Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases of Endangering Tax Collection and Administration (Legal Interpretation [2024] No. 4), which came into effect on March 20, 2024, stipulates: "A taxpayer who has committed the act of evading payment of tax as stipulated in Paragraph 1 of Article 201 of the Criminal Law shall be exempted from criminal responsibility before the public security organs file a case, after the tax authorities have issued a notice of recovery according to law, and within the specified If the taxpayer pays the full amount of tax due, pays the late payment fee and fulfills all the administrative penalty decisions made by the tax authorities before the public security authorities open a case, he/she shall not be held criminally liable." This article clearly limits the time nodes for the perpetrator to fulfill the payment of tax, late payment fee and administrative penalty to the time before the public security authorities open a case. "This means that, if the public security authorities only identify the tax evasion offense after the case is filed, the court may not apply the provisions of Paragraph 4 of Article 201 of the Criminal Law and directly sentence the tax evasion offense.

03 The tax authority's failure to impose administrative penalties encompasses the situation of objective inability and legal inability

So, what are the circumstances included in the tax authorities' failure to impose administrative penalties after the public security authorities have filed a case? To summarize, it mainly includes the following two categories:

Firstly, the objective can not. Judicial organs have identified tax evasion to help behavior and objective tax evasion results, but due to tax evasion subject involved in cross-regional, beyond the disposal authority of the tax authorities, or the specific tax evasion subject has not yet been identified and other reasons, resulting in the tax authorities objectively unable to make administrative penalties. For example, in this case, due to the inability to determine the specific tax evasion refining enterprises, the tax authorities into the procedural implementation of the objective obstacles at the level.

Secondly, the law cannot. According to the Notice of the General Office of the CPC Central Committee and the General Office of the State Council Transmitting the Opinions of the Legislative Affairs Office of the State Council and Other Departments <Opinions on Strengthening the Convergence of Administrative Law Enforcement and Criminal Justice> (No. 8 of the Central Committee's Office [2011]), "administrative law enforcement authorities transfer suspected criminal cases to public security authorities, ... . without a decision on administrative penalties, the decision on whether to impose administrative penalties shall, in principle, be made after the public security organ has decided not to open a case or to withdraw the case, the people's procuratorate has made a decision not to prosecute, and the people's court has made a judgment of acquittal or has exempted the case from criminal penalties." If the case is initiated by the false opening procedure, and it is finally determined that it constitutes the crime of tax evasion but not the crime of false invoicing, at this time, the administrative law enforcement authorities need to decide whether or not to impose administrative penalties after the criminal procedure has been completed, and this kind of situation belongs to the legal inability to impose penalties.

In the above two cases, although the tax authorities did not impose administrative penalties, they did not affect the determination of the crime of tax evasion. Taking the aforementioned case as an example, Company A and Jia Mou concealed the real production process of the refining enterprise by changing the invoice name and illegally reduced the consumption tax to be declared and paid, resulting in the loss of national tax revenue, and the essence of their behaviors belongs to tax evasion. According to the taxation principle of non-transferable consumption tax, taxpayers need to independently and truthfully declare and pay the tax, and the subject's behavior of changing the invoices led to the loss of national consumption tax, and should be investigated for tax evasion according to the law. The existing evidence in this case can not determine the specific tax evasion refining enterprises, resulting in the tax authorities objectively unable to implement administrative penalties, which belongs to the procedural implementation of the level of objective can not, does not affect the composition of the crime of tax evasion. In view of the fact that the behavior of Company A and Jia has reached the standard of the amount and proportion of the penalty for the crime of tax evasion, which meets the elements of the crime, the conviction and sentence for the crime of tax evasion is in line with the principle of the law of criminal law and the principle of appropriateness of punishment and crime and responsibility.

04 Conclusion

In the case of petrochemical bill change, facing the situation that the tax authority did not impose administrative punishment due to objective inability or legal inability, the judicial authority should not be afraid to convict due to the concern of "prior procedure". Accurately understand the normative nature of Paragraph 4 of Article 201 of the Criminal Law, as a reason for penalty blocking, it only affects the application of penalties, rather than a precondition for the establishment of the crime of tax evasion. The only way to realize the value orientation of the criminal law in similar cases is to break the mechanical cognition of "no tax evasion crime shall be pursued without administrative punishment". In general, the administrative punishment of the tax authorities is not a precondition for the criminal responsibility of tax evasion that some judicial authorities are concerned about, as long as the act of petrochemical cheque alteration conforms to the constitutive elements of Paragraph 1 of Article 201 of the Criminal Law, the crime of tax evasion can be recognized; the provisions of Paragraph 4 are only for the special circumstances that no further criminal responsibility is to be pursued, and do not deny the establishment of the crime of tax evasion per se.