Editor's Note: After the introduction of the new judicial interpretation of the Supreme Law and the Supreme Prosecutor's Office (Legal Interpretation [2024] No. 4), there are cases in judicial practice in which the crime of falsely issuing special invoices has been reclassified as the crime of illegal sale, which in turn triggered a heated discussion on the application of the crime of illegal sale of special invoices for value-added tax (VAT). In the author's opinion, from the perspective of the historical origin and legislative background of the crime of illegal sale of VAT invoices, the object of the crime only includes blank VAT invoices, and the legal interest infringed by the crime is the franchise of invoices, which cannot be simply understood as illegal sale of false invoices by charging the invoicing fee, and the undue enlargement of the application of the crime should be guarded against, or it will be contrary to the spirit of the Supreme Court and Supreme Prosecutor's restriction of the circle of crimes, and will cause confusion in the criminal law system.

01 Trend towards wider application of the offence of illegal sale of special value-added tax invoices

Recently, there is a new trend in judicial trial practice that the crime of false invoicing is reclassified as the crime of illegal sale of VAT invoices, and the reasons behind and the controversy caused by it are thought-provoking. In the first half of this year, the main data of the Supreme Court's judicial trial work, the crime of illegal sale of VAT invoices cases of first instance respectively increased by 190% year-on-year, which can be seen in the rapid growth of the application of the crime. Since the introduction of the new judicial interpretation of the Supreme Court and the Supreme Prosecutor's Office on March 20, 2024, I have learned that the second trial of the Zhejiang Shen's Provincial Logistics case and the second trial of the case of false VAT issuance of a network freight platform in Sichuan have been reclassified as the crime of illegally selling VAT invoices, and the main culprits have been sentenced to 10 years and above. From the point of view of public cases, the crime of illegal sale of VAT invoices is geared towards an expanding trend of the turning point in time is also the Supreme Court, the Supreme Prosecutor's judicial interpretation of the introduction of the occasion. The author has selected two cases sentenced in April and June this year as follows:

Case 1: (2024) Anhui 0826 Criminal Investigation No. 92

From September 2019 to October 2020, the wood company operated by Defendant Fu Moumou falsely issued sales VAT invoices to the carpet company operated by Wang Moumou, with the face amount amount amounting to 2.89 million yuan, of which the tax amount accumulated 330,000 yuan. Wang Moumou according to the invoice amount of 4% of the payment of benefits, Fu Moumou from which the illegal profit of 110,000 yuan. It was found that the defendant Fu Moumou on Wang Mou whether the invoices will be false to deduct tax without knowing. Wang Moumou after learning that the public security investigation of the wood company will offset the tax to the tax authorities to declare the VAT invoices input tax transfer, and paid the offset tax.2024 April 25, Su Song County People's Court of Anhui Province made a judgment that the defendant Fu Moumou constitute the crime of unlawful sale of VAT invoices, and sentenced to imprisonment for ten months.

Case 2: (2024) Hunan 1226 Criminal Investigation No. 38

During the period from July 13, 2020 to September 2020, Wu served as the legal person of Shichuang Company, he purchased cheap electronic components with the purchase price of RMB0.175 to RMB0.23 per unit, and after false secondary processing, he raised the selling price to RMB169.5 per unit, and sold them to downstream companies under the name of software chips. Siltronic issued a total of 59,325,000 yuan of VAT invoices and 6,825,000 yuan of taxes to Fenghua and received a 5% benefit fee of the invoice amount.2024 On June 3, 2024, the People's Court of Miaomiao Autonomous County, Hunan Province, rendered a judgment holding that the defendant, Wu Zhiqiang, had violated the national invoice management regulations and constituted the crime of illegally selling VAT invoices, and was ultimately sentenced to a ten years' imprisonment.

As can be seen from the above two cases, the scope of application of the crime of illegal sale of VAT invoices is expanding, and the court in the case sentenced the act of charging invoicing fees for false invoicing to the crime of illegal sale of VAT invoices, which triggered the thought of whether such a decision is in line with the legislative intent and purpose of the crime of illegal sale of VAT invoices?

02 Legislative background of the crime of illegal sale of VAT invoices in the light of official notification cases in the 1990s

In 1994, the State Council promulgated the Provisional Regulations on Value-added Tax (VAT), thus establishing the VAT system in China. After the implementation of VAT, as the VAT special invoices were issued manually at that time, compared with the invoicing by tax-control machines after the implementation of the Golden Tax Project, there was a lack of effective means to supervise the issuance of special invoices and the offsetting of such invoices. As a result, some unscrupulous elements found business opportunities in it and sought unlawful interests by buying and selling VAT invoices. From the cases disclosed in the official circulars in the 1990s, the typical manifestation of illegal sale of VAT invoices is the internal and external collusion between the staff of tax authorities and the external unlawful elements, who take advantage of the loopholes in the printing, management and transportation of blank invoices, and steal the blank invoices for external resale. Take a look at three cases notified by the General Administration of Taxation:

Circular of the State Administration of Taxation on the Case of Stealing and Selling Special VAT Invoices in Hohhot (1995-09-26)

Recently, a major criminal case of selling 107 special invoices (of which 48 are million-dollar versions and 59 are ten thousand-dollar versions) occurred in the Yuquan District Branch of the State Taxation Bureau of Hohhot City in the Inner Mongolia Autonomous Region, in which a VAT special invoice counter ticketing clerk colluded with a foreign outlaw both internally and externally. At present, Li Yunyan and Wang Jinlong, the main culprits in this case, have been detained by the inspection authorities.

It was found that the occurrence of this case of theft and sale of special invoices was directly related to the lax management of the special invoice warehouse by the local tax authorities, which was mainly manifested in the following aspects: firstly, the management of special invoices was not emphasized, and there were great loopholes in the management. Yuquan district branch office hired temporary staff Li Yunyan, and will be special invoices of the receipt, ticketing, bookkeeping, collection and other items of work to let a person responsible for, and Li Yunyan is to take advantage of the convenience of this condition, in June 1995 to August, with Zhejiang Wenzhou to Hohhot Wang Jinlong and other people collusion, the use of impostor, false list of enterprises to purchase tickets and other illegal means of selling special invoices. Secondly, there was no post responsibility system and necessary supervision and control mechanism to match the management of special invoices, and the managers' sense of responsibility was not strong. Li Yunyan is in charge of the ticketing work of 164 general taxpayers, most of which are small-scaled enterprises run by the district, but they have been selling special invoices of large denomination for a long time, of which only two times in July, they have purchased 78, without arousing suspicion of the relevant management staff, and without carrying out checking and inspection according to the laws and regulations. Thirdly, the special invoices were not regularly inventoried and checked.

Circular of the State Administration of Taxation on the Extraordinary Case of Fraudulent Purchase, Stealing and Selling of Special VAT Invoices by Yao Qiang and Liu Min, Tax Cadres of Shanghai (1995-11-14)

Recently, the State Taxation Bureau of Huangpu District, Shanghai, uncovered a mega-case in which a cadre of the Taxation Bureau had committed a crime by utilizing VAT special invoices. Yao Qiang and Liu Minli, special supervisors of the seventh tax office of the Bureau, took advantage of their work to fraudulently purchase, steal and sell 23 VAT invoices, obtaining an illegal windfall of 253,000 yuan. At present, Yao Qiang and Liu Min have surrendered to the procuratorial authorities and have been placed in criminal detention.

Between the second half of 1994 and April 1995, Yao and Liu took advantage of their work to obtain the special invoice purchase book submitted by the defunct Southland Electrical and Mechanical Services Company and, by privately engraving the company's official seal, fraudulently purchased 20 special invoices from the tax authorities on four successive occasions. According to the perpetrators, they have been 15 of them sold to the Zhejiang Wenzhou lawless elements Hu Licheng, illegal profit of 195,000 yuan; in April 1995, in the tax authorities of the million-dollar version of special invoices on the occasion of the change of version, according to the provisions of the special invoices of the large-denomination version of the sale must be more than two people to supervise the sale of the special invoices, but Yao, Liu, two criminals collude, the destruction of the special invoices of the million-dollar version of the eight stolen, and then sold twice! To zhejiang wenzhou lawbreakers zhao pingli, illegal profit 58,000 yuan. In the course of the above crimes, Yao received 165,500 yuan of the stolen money and Liu received 87,500 yuan.

Circular of the State Administration of Taxation on the Mega Case of Nanjing VAT Special Invoice (1995-06-02)

At present, illegal and criminal activities using VAT invoices are becoming more and more rampant, and VAT invoices are lost and dispersed seriously, especially when a very few tax cadres collude with unlawful elements internally and externally to fraudulently obtain VAT invoices, which is even worse. A few days ago, two mega cases of fraudulent purchase of VAT invoices occurred in Nanjing, which once again sounded the alarm for us.

On the morning of February 24, 1995, the Baixia Taxation Branch of the Nanjing State Taxation Bureau received a telephone call from the Qinhuai Taxation Branch of the city, reflecting that one of the households was using the special invoices of the Baixia Taxation Branch. Following this clue, Baixia Taxation Branch immediately verified internally and found that Xiao Li, a tax administrator of the Bureau, colluded with Wei Zili, an unlawful businessman, and imitated the handwriting and signature of Cui Ping, another tax administrator of the Bureau, and fraudulently claimed 101 VAT invoices in the name of Jiangsu Provincial Culture Department Hospitality Center and Jiangsu Zhongtong Information Industrial Company of Jiangsu Province Transportation Newspaper Company in nine times from March 8, 1994 to January 24, 1995, including 100 ten thousand yuan version and one million yuan version. (of which 100 million yuan version, one million yuan version, the word track number is attached), and then by Wei Zili and others false opening, opening, selling out. Now the invoices are mainly scattered in Nanjing, Changchun, Taiyuan, Beijing (Fengtai), Huainan, Wuhan, Shanghai (Jiading), Maanshan and other places. Currently, the main culprit Xiao Li is in custody and Wei Zili is on the run (a native of Nan'an, Fujian Province, who is wanted).

In order to combat unlawful elements' use of invoices for illegal profits, the Standing Committee of the National People's Congress promulgated the Decision on Punishing Crimes of Falsely Issuing, Counterfeiting and Illegally Selling Value-added Tax Invoices in 1995, which formally stipulates the crimes of falsely issuing special invoices, counterfeiting or selling counterfeited special invoices, illegally selling special invoices, illegally purchasing special invoices or purchasing counterfeited special invoices, falsely issuing other invoices, falsely and without authorization manufacturing or selling counterfeited or unauthorized manufacturing other invoices, and stealing invoices. manufacture or sale of forged or unauthorized invoices, and theft of invoices. Looking back at the situations in the above three notified cases, what crimes in the 1995 Decision should be applied? Through the exclusion method, it can be found that the above situations are obviously not false invoicing, forgery (the notified cases are real invoices rather than fake invoices), illegal purchase (selling invoices rather than buying invoices), etc., which may be related to theft, but the most consistent is the crime of illegal sale of VAT special invoices.

Only less than two years after the promulgation of the 1995 Decision of the National People's Congress, the 1997 revision of the Criminal Law coincided with the incorporation of the contents of the separate criminal law, including the provisions of the Decision on the crime of illegally selling special invoices for value-added tax (VAT), which resulted in the provisions of article 207 of the revised Criminal Law. Combined with the fact that the crime is described as "illegally selling special VAT invoices", although it adopts a simple crime description, combined with the background of the legislation of the time, the official notification of cases and the application of the separate criminal law as analyzed in the preceding paragraphs, it can be concluded that in the background of the legislation of the time, the crime of illegally selling special VAT invoices was committed with the purpose of cracking down on the staff of tax authorities. The purpose of the legislation was to combat the behavior of the staff of tax authorities colluding with external wrongdoers to steal blank VAT invoices and make profits from them. Despite the simple description of the crime, it was not difficult to understand the above legislative purpose of the crime under the legislative environment at that time.

03 The object of the crime of illegal sale of VAT invoices no longer exists in the era of digital invoices, and the crime should be limited in its application

In fact, the legislative purpose and intention of the Standing Committee of the National People's Congress (NPCSC) in establishing the crime of illegal sale of VAT invoices in the separate criminal law on invoice crimes in 1995 was indeed to crack down on the activities of staff members of the tax authorities and outsiders colluding within and outside the tax authorities to steal and sell blank VAT invoices. The article "Introduction to the Decision on Punishing the Crimes of False Opening, Counterfeiting and Illegal Sale of VAT Invoices" published in the Journal of NPC Work Newsletter (later renamed as "China NPC Magazine") on December 1, 1995, authoritatively interpreted the crime of illegal sale of VAT invoices and pointed out that "The crime of illegal sale of VAT invoices as stipulated in article 3 of the Decision mainly refers to the illegal sale of VAT invoices by staff members of tax authorities and the illegal sale of VAT invoices legally owned by general taxpayers."

So far, according to the legislative intent, legislative background and legislative purpose, the criminal composition of the crime of illegal sale of VAT special invoices can be analyzed and summarized: 1. The subject of the crime: in accordance with the usual practice, it is the combination of the staff of the tax authority and the external unlawful elements. Because only this combination can steal the blank invoices from the tax bureau, if there is no help from the staff of the tax bureau, it can only be forged fake invoices, and the VAT special invoices sold here are real invoices.2. Object of crime: undoubtedly, it is the blank VAT special invoices, and the usual manifestation is the cost and sets.3. Infringement of legal interests: invoice franchising, that is to say, the State Administration of Taxation specializes in the printing and selling of VAT special invoices, and it can be analyzed and summarized. special invoices printing and selling. After summarizing the criminal composition of the crime, look back and analyze the two cases at the very beginning of this article, which obviously do not meet the constitutive elements of the crime. The types involved in these two cases are false invoicing behaviors by paying invoicing fees, which can be defined as the crime of false invoicing of special invoices; however, if it is not possible to judge its subjective purpose of tax cheating and the loss of the tax cheated, it can be defined as the crime of false invoicing, but because of the fact that it is obviously not in line with the crime of illegally selling VAT However, since it obviously does not meet the constituent elements of the crime of illegal sale of special invoices for value-added tax, it cannot be punished as the crime of illegal sale of special invoices for value-added tax.

The question arises again, whether the object of the crime still exists in the context of the current escalation of levy control methods? According to the Announcement of the State Administration of Taxation on Matters Relating to the Implementation of Electronic VAT Special Invoice among New Taxpayers (Announcement of the State Administration of Taxation No. 22 of 2020), starting from December 21, 2020, the pilot electronic invoice will be rolled out to newly established and registered taxpayers nationwide. Recently, the State Administration of Taxation (SAT) issued the Announcement on Promoting the Application of Comprehensively Digitized Electronic Invoices (SAT Announcement No. 11 of 2024), which promotes the application of "digital invoices" nationwide from December 1, 2024 onwards. It can be seen that the pilot project of electronic invoices will start in December 2020, and the national promotion and application of digital and electronic invoices will start in December this year. In the current era, there is no longer a market for paper invoices or hand-copied invoices, and the crime of illegally selling VAT invoices has no object of crime, so how can we talk about expanding the application of the crime?

Therefore, in the case that the historical background of the application of the crime has already changed, the new judicial interpretations of the Supreme Law and the Supreme Prosecutor could have frozen the application of the crime or made no further interpretation of it. However, the existing situation is that the judicial interpretation of the Supreme Law and the Supreme Prosecutor further triggered the discussion on the imaginary competition between the crime of false invoicing and the crime of illegal sale of VAT invoices, and did not play a role in limiting the role of the crime of illegal sale of VAT invoices, which, in the author's opinion, is the regret of the judicial interpretation of the Supreme Law and the Supreme Prosecutor.

04 Conclusion

The crime of illegal sale of VAT invoices has its specific historical background, and the application of this crime should be frozen in the case that the current criminal law cannot be amended. However, in judicial practice, there exists the phenomenon of expanding the application of the crime of illegal sale of VAT invoices, which is obviously against the legislative intent, and this phenomenon should be stopped as soon as possible in order to stop the trend of expanding the application of the crime of illegal sale of VAT invoices. For the party convicted of the crime of illegal sale of VAT invoices, if the situation does not meet the constitutive elements of the crime, it should actively rely on the professional power of tax lawyers to make an effective defense on the application of the crime and effectively safeguard the legitimate rights and interests of the party.