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  • Interpretation
  • No.754【Filing one import declaration form and the combined penalties for tax evasions】
  • Date
  • 2017/10/20
  • Issue
    •        Does filing one import declaration form to evade import duty, commodity tax, and business tax constitute one single conduct or multiple conducts? Do the combined penalties for the tax evasions violate the principle of double jeopardy embraced by a rule-of-law nation?
  • Holding
    •        The second Joint Meeting of the Supreme Administrative Court in May 2011 passed the following resolution (the “Resolution”): “When filing an import declaration, the importer needs to fill in the matters concerning import duty, commodity tax and business tax and submit the form to the customs to complete the declaration of import duty, commodity tax and business tax. Therefore, there are in fact three conducts of declaration rather than one single conduct. If the importer fails to declare truthfully such that there are evasions of import tax, commodity tax and/or business tax, and such failure to declare truthfully falls within the meaning of Subparagraph 4 of Paragraph 1 of Article 37 of the Customs Anti-Smuggling Act, Subparagraph 10 of Article 32 of the Commodity Tax Act and Subparagraph 7 of Paragraph 1 of Article 51 of the Value-added and Non-Value-added Business Tax Act, the penalties should be combined. It will not raise concerns about double jeopardy.” The Resolution is consistent with the principle of double jeopardy embraced by a rule-of-law nation.
  • Reasoning
    •        The petitioner Zhu, Tian-Jiang, who was the owner of the Yi-Lu Firm, filed a declaration with the Kaohsiung Directorate of Customs, Ministry of Finance (now reorganized as Kaohsiung Customs, Customs Administration, Ministry of Finance, which is the agency which made the administrative decision, hereinafter the “Agency”) in 2008 for import of goods. After an audit by the Agency, the actual transaction value was found to be inconsistent with the declared amount. The Agency found that the importer submitted forged invoices, declared a false value of the cargos, and committed tax evasion. In addition to taxing the evaded import duty and the evaded business tax, the Agency also imposed a fine equivalent to two times the amount of the import duty evaded, which amounted to NT$ 3,281,708 according to Subparagraph 2 of Paragraph 1 of Article 37 of the Customs Anti-Smuggling Act, and a fine equivalent to 1.5 times of the amount of the business tax evaded, which amounted to NT$ 738,380 according to Article 51 of the Value-added and Non-Value-added Business Tax Act (hereinafter the “Business Tax Act”). The petitioner brought an administrative action against the foregoing administrative decision. The petitioner’s action was dismissed by the Kaohsiung High Administrative Court Judgment 101 Su-Zi No. 148 (2012). The petitioner appealed to the Supreme Administrative Court, but the appeal was again dismissed by Supreme Administrative Court Judgment 101 Pan-Zi No. 1037 (2012) (hereinafter the “Final Judgment”) because of a lack of legal grounds. As to the part relating to the fine, the Final Judgment cited the following passage of the Resolution as the basis of its decision: “Customs duty is an import duty imposed on cargos imported from abroad. Commodity tax is a tax imposed on commodities manufactured domestically or imported from abroad when they leave the factory or are imported. Business tax is a tax imposed on domestic goods or services or imported commodities. The three have different legislative purposes. According to Paragraph 1 of Article 16 of the Customs Act, Paragraph 2 of Article 23 of the Commodity Tax Act, and Article 41 of the Business Tax Act, import duty, commodity tax and business tax are levied based on the importer’s declaration. The amount of business tax and commodity tax payable when goods are imported shall be levied by the customs. Although, for the convenience of taxation, the importer shall make a single import declaration for the customs to levy the import duty, commodity tax and business tax together, the importer shall fill in matters concerning import duty, commodity tax and business tax when filing the import declaration form and shall submit the form to the customs to complete the declaration of import duty, commodity tax and business tax. Therefore, there are in fact three conducts of declaration rather than one single conduct. If the importer fails to declare truthfully such that there are evasions of import tax, commodity tax and/or business tax, and such failure to declare truthfully falls within the meaning of Subparagraph 4 of Paragraph 1 of Article 37 of the Customs Anti-Smuggling Act, Subparagraph 10 of Article 32 of the Commodity Tax Act and Subparagraph 7 of Article 51 of the Business Tax Act, the penalties should be combined. It will not raise concerns about double jeopardy.” The Resolution is consistent with the principle of double jeopardy embraced by a nation of rule-of-law.” (Subparagraph 7 of Article 51 of the Business Tax Act was moved to Subparagraph 7 of Paragraph 1 of Article 51 in the amendment dated 26 January 2011.). The petitioner argued that the Resolution, which forcibly severs one untruthful declaration into three declaration conducts and imposes multiple penalties, constitutes excessive punishment in violation of the principle of proportionality provided for in Article 23 of the Constitution, the property rights protected by Article 15 of the Constitution, and the principle of double jeopardy affirmed in Judicial Yuan Interpretations No. 503 and No. 604. The petitioner therefore petitioned for an interpretation by the Honorable Justices. 
      
    •        According to Subparagraph 2 of Paragraph 1 of Article 5 of the Constitutional Interpretation Procedure Act, when an individual, a legal entity, or a political party, whose constitutional right was infringed upon and remedies provided by law for such infringement had been exhausted, has questions on the constitutionality of the statute or regulation relied thereupon by the court of last resort in its final judgment, a petition for interpretation of the Constitution may be made. And a resolution of the Supreme Administrative Court, if and when cited by a judge in rendering a judgment, should be regarded as equivalent to an order, and thus qualifies as a subject of constitutional interpretation (see J.Y. Interpretations Nos. 374, 516, 620 and 622). Since the Final Judgement in the present case cited the Resolution and dismissed the petitioner’s appeal because of a lack of legal grounds, the subject of this petition for constitutional interpretation shall be the Resolution. Hence, the petitioner’s petition for interpretation of the Constitution concerning the Resolution complies with the requirements under Subparagraph 2 of Paragraph 1 of Article 5 of the Constitutional Interpretation Procedure Act, and the petition shall be granted. Therefore, this interpretation is made and the reasoning is as follows.
      
    •        When acts against tax obligations involve several penal statutory provisions, they could be sanctioned separately if there are substantially multiple conducts. To ascertain the number of conducts, factors such as the constituent elements of the laws and regulations, the legal interests to be protected, and the purposes of the sanction shall be taken into consideration as a whole. Import duty is a tax imposed on goods imported from abroad. Commodity tax is a tax imposed on commodities manufactured domestically or imported from abroad when they leave the factory or are imported. Business tax is a tax imposed on domestic goods or services or imported commodities. Hence, imported goods may simultaneously involve levy of import duty, commodity tax and business tax. To ensure that the competent authority can levy taxes correctly, and considering that the facts and information relevant to levy of taxes are mostly held in the hands of the duty-payers, the legislators so enacted Paragraph 1 of Article 17 of the Customs Act, Paragraph 2 of Article 23 of the Commodity Tax Act and Article 41 of the Business Tax Act to expressly require that people who import goods  declare relevant taxes truthfully according to the laws. Paragraph 1 of Article 17 of the Customs Act provides: “Upon declaration of importation, an import declaration form shall be filled out and submitted along with a bill of invoice, packing list and relevant documents required for importation.” Paragraph 2 of Article 23 of the Commodity Tax Act provides: “For imported taxable commodities, taxpayers should file with the custom offices, and the commodity tax shall be collected by the custom office together with the custom duties.” Article 41 of the Business Tax Act provides: “The amount of business tax payable on imported goods shall be levied by customs. With respect to the collection procedures and administrative relief of business tax, the provisions of the Customs Act and the Customs Anti-Smuggling Act shall apply mutatis mutandis.” If the duty-payer fails to declare truthfully, thereby violating the obligations under such tax laws and leading to evasion of import duty, commodity tax or business tax, such an untruthful declaration shall trigger the penalties under Subparagraph 4 of Paragraph 1 of Article 37 of the Customs Anti-Smuggling Act, Subparagraph 10 of Article 32 of the Commodity Tax Act and Subparagraph 7 of Paragraph 1 of Article 51 of the Business Tax Act; the duty-payer shall be sanctioned based on the evaded amount. The constituent elements of the three tax-evasion conducts are different, and these conducts are specifically regulated by different tax regulations for which the purposes of sanction, legislative fields, and protected interests vary. These conducts essentially could be sanctioned separately. Only for simplifying the procedure of taxation and saving the cost thereof, not only is import duty levied by the customs (see Article 4 of the Customs Act), but the commodity tax and business tax of imported goods are also levied by the customs. In addition, the duty-payer may fill out only one single declaration form to declare three taxes. However, this does not change the fact that there are three declaration conducts. An untruthful declaration shall be of multiple conducts in nature. 
      
    •        In this connection, the Resolution states: “When filing the import declaration, the importer needs to fill in matters concerning import duty, commodity tax and business tax and submit the form to the customs to complete the declaration of import duty, commodity tax and business tax. Therefore, there are in fact three conducts of declaration rather than one single conduct. If the importer fails to declare truthfully such that there are evasions of import tax, commodity tax and/or business tax, and such failure to declare truthfully falls within the meaning of Subparagraph 4 of Paragraph 1 of Article 37 of the Customs Anti-Smuggling Act, Subparagraph 10 of Article 32 of the Commodity Tax Act and Subparagraph 7 of Article 51 of the Business Tax Act, the penalties should be combined. It will not raise concerns about double jeopardy.” In light of the above, the foregoing part of the Resolution does not contradict the principle of double jeopardy embraced by a rule-of-law nation (see J.Y. Interpretation No. 604).
      
    •        To serve different purposes of regulation of tax, the state has the power to enact different laws and regulations to levy import duty, commodity tax and business tax, and sanction an individual according to the laws in a combined fashion if the individual fails to process the declaration truthfully when importing goods. However, the combination of penalties in any specific case shall not pose excessive burdens on the person being sanctioned so as to comply with the principle of proportionality provided for in Article 23 of the Constitution.
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