In the second part of the transcript of a Taiwanese program, a lawyer explains the mistakes made by the Taichung judges in their controversial decision.
by Bitter Winter
Article 2 of 5. Read article 1.
Host: Thank you, Helen [Tai Ji Men dizi, see first installment of this series]. We can truly feel that when more people—those who have suffered human rights violations and become tax victims—stand up courageously, our system has a chance to continuously improve and reform. As Helen mentioned, an important aspect of administrative remedies is that they must be effective. However, instead of experiencing effective relief, people often feel as if they are falling into another abyss. So, next, we would like to invite lawyer Tsai Fu-Chiang, a volunteer defense lawyer for the Tai Ji Men case, to provide a more detailed explanation of the August 2nd ruling that Helen mentioned, which was Judgment No. 122 of 2022 issued by the Taichung High Administrative Court. Did the judge really follow the evidence to make a lawful and fair judgment? Or did he fail to consider the evidence, leading to an incorrect ruling? Could this possibly violate Article 124 of the Criminal Code regarding unjust judgments? Let’s now hear from lawyer Tsai Fu-Chiang.
Tsai Fu-Chiang: Yes, unfortunately, as the host mentioned, the Taichung High Administrative Court’s Judgment No. 122 of 2022 disregarded many of the favorable facts and evidence presented by the plaintiff in this case. In fact, the judge interpreted and applied the law in a way that added limitations not found in the statute.
Whether before or after its amendment, Article 28 of the Tax Collection Act does not include such restrictions. He said, “If a tax disposition has been substantively ruled on by the administrative court, the taxpayer is no longer allowed to request a refund under that article.” This is what was written in the reasons of the judgment. But is that really the case? Is it really like that? Article 28 of the Tax Collection Act, along with the Ministry of Finance’s letter No. 09804505760 issued on February 10, 2009, states that as long as the administrative decision occurred before the amendment, the second clause applies, meaning that any overpayment caused by an error in the applicable law, a calculation mistake, or other reasons can be refunded. This clearly shows that the claim in the press release—that taxpayers cannot request refunds if the case was substantively ruled on by the administrative court, whether before or after the amendment of Article 28—is not accurate.
It is clear that the judgment imposed restrictions not present in the law. This indicates that the judge made a significant error and acted unlawfully in applying this legal provision. Additionally, the judgment claimed that the illegal tax assessment for the year 1992 was different from other years and could not be evaluated based on the reconciliations of other years. This clearly deviates from the facts and evidence. The Supreme Administrative Court’s Judgment No. 422 of 2018 already confirmed that Tai Ji Men is a Qigong and martial arts menpai, and Tai Ji Men has been established for 58 years since 1966. The nature of the Shifu-dizi [Grand Master-disciples] transmission has never changed. Why is Tai Ji Men recognized as a cram school only for the year 1992? This is a clear violation of the rules of evidence and principles of experience.
A martial arts group, which was regarded as such for all the other years, suddenly became a cram school in 1992. It wasn’t a cram school before, and it wasn’t a tutoring center after. This is just baffling! The judge, in making this ruling and determination, stated that the facts differ from year to year. But let’s look at the National Taxation Bureau of the Central Area. On July 26, 2010, they issued a letter to the Administrative Enforcement Agency. What did they say? They stated that for the six years from 1991 to 1996, the tax assessments were made based on the same facts. The National Taxation Bureau admitted that their tax assessments were based on the same facts, but what did the court’s ruling say? It said that different years involved different taxation facts.
However, the issuing authority, the National Taxation Bureau, stated that they issued tax bills for six years based on the same facts. Clearly, the court’s ruling is in direct conflict with the evidence provided in the letter from the National Taxation Bureau of the Central Area. So why did the National Taxation Bureau of the Central Area issue this letter? They explained that the final judgment for the year 1992 was rendered because the other five years were still in the appeals review process. If in the future the appeals decision or court ruling would present new evidence inconsistent with the judgment for the year 1992, they, the National Taxation Bureau of the Central Area, would handle the matter in accordance with Article 117 of the Administrative Procedure Act. What does Article 117 of the Administrative Procedure Act stipulate? It states that regarding illegal administrative actions, the original issuing authority or its superior authority may correct or revoke them on their own initiative.
So, the National Taxation Bureau of the Central Area has made it very clear: if, in the future, the appeal decisions or court rulings for the other five years (other than 1992) would identify new facts or new evidence, they will, based on this new evidence, revoke the illegal ruling for the year 1992. Then, on July 26, 2010, the Central District National Taxation Bureau also sent a letter to the Hsinchu Branch of the Administrative Enforcement Agency. They stated that the tax assessments for the years 1991 to 1996 were based on the same fundamental facts, and if there were differing opinions, it would greatly affect the rights of the taxpayer. Therefore, they requested that the Hsinchu Branch suspend enforcement in accordance with the provision of Article 9, Paragraph 3 of the Administrative Execution Act.
None of these factual pieces of evidence were considered or reviewed in this judgment. I believe the judge should pay attention to both favorable and unfavorable evidence for the parties involved. However, in my view, this judge had already reached a conclusion beforehand, and he wanted to rule in that way. So, any evidence favorable to the plaintiff that might contradict the judgment he intended to make was completely ignored, as if he didn’t see it. I think this violates the basic principles of a fair trial in court. I believe the judge should thoroughly consider all the evidence in the case files. Only by reviewing all the evidence can a view be established, which would then lead to a fair judgment. It shouldn’t be that the judge forms a conclusion first and then writes the reasons to fit that conclusion, ignoring any evidence favorable to a party that contradicts it. I feel that this kind of judgment is unjust. When you say it’s a wrongful judgment, based on my understanding of the law, I believe this is indeed a wrongful judgment.
It shouldn’t be judged this way. Article 28 of the Tax Collection Act doesn’t say that just because a case has already reached a final judgment, the taxpayer can’t request a refund under Article 28 of the Tax Collection Act. So why add this restriction that doesn’t exist in the law? And then you claim that each year involves different facts, so Article 28 can’t be applied? Is that the case? Clearly not. Even the original issuing authority believes the tax bill for all the years were based on the same facts, so how can you say they are different facts? The administrative court is the ruling authority, not the one issuing the tax assessments, so why are they interpreting them? I find this quite ridiculous.
Furthermore, why the new facts and evidence in this case can’t be applied? Are they blocked by the binding force of the judgment? Then why was Chen Chang-Wen’s case allowed to use Article 28 of the Tax Collection Act for a tax refund? Isn’t that a contradiction? It was also mentioned that the decisions on the other five years were based on the Supreme Administrative Court’s 2018 Judgment No. 422. Then, in the administrative enforcement case under the Taipei High Administrative Court’s 2019 Judgment No. 1406, the court twice sent letters to the National Taxation Bureau of the Central Area, requesting them to reexamine the tax bill for 1992 based on the same standard for the years 1991 and 1993 to 1995 and then withdraw the enforcement. Yet, despite this favorable evidence, the judge claimed that such a thing never happened. He stated that the letter cannot confirm any error in the application of laws by the tax authority. However, the two letters from the Taipei High Administrative Court clearly cited the Supreme Administrative Court’s 2018 Judgment No. 422. It was very clear. In the letter sent to the National Taxation Bureau of the Central Area on May 5, 2020, they requested the tax authority’s opinion on whether Article 40 of the Tax Collection Act could be applied to withdraw enforcement in the case of the taxpayer’s 1992 comprehensive income tax and the remanded case. Furthermore, in the fifth point, it was explicitly stated that the Decision No. 422 of the Supreme Administrative Court in 2018 had clearly indicated in its ruling, as we just mentioned, that Tai Ji Men is a Qigong and martial arts organization, not a cram school.
The court also did not review the new facts and evidence from the criminal court’s ruling, which recognized the monetary contributions given from dizi to Shifu as a form of gift, nor did it consider the new facts and evidence from the 2011 administrative court decision based on the results of an investigation, coordinated by the Executive Yuan, stating that all 7,401 monetary contributions given by disciples to Master were considered as gifts. Additionally, in 2012 and 2013, both the National Taxation Bureau of Taipei and the National Taxation Bureau of the Central Area acknowledged that Tai Ji Men was not a cram school. So why, for the year 1992, did they use the cram school argument as the basis for taxation when issuing tax bills to Tai Ji Men? And why did they use the cost ratio of a cram school to arrive at a final ruling against Tai Ji Men?
I think it’s very clear that this tax bill is wrong and illegal. If the case of 1992 would have been handled the same way as the others, it would have better aligned with the intentions of the Supreme Administrative Court. The court clearly stated that the facts were incorrectly determined—Tai Ji Men is not a cram school, yet this tax bill was issued based on the cram school classification. If the facts were incorrectly determined, then the application of the law must also be wrong, isn’t that so?
On July 23, 2020, another official notice was issued, reiterating that the comprehensive income tax for 1991 and 1993 to 1995 had already been corrected to zero. The notice requested that the same standard be used to recalculate and explain the results. It was clearly stated. The second point mentioned that the ruling from the Supreme Administrative Court explicitly pointed out the errors, and the bureau was instructed to re-investigate based on that ruling. They were also asked to reference transfer pricing audit methods and use expenditure data from similar non-profit organizations to estimate, leading to the taxpayer’s income being adjusted to zero. Regarding the similar tax case from 1992, even though the bureau did not reach a settlement with the taxpayer, the tax authority’s 1992 tax decision for the taxpayer involved new facts and evidence that had not been fully reviewed previously. Therefore, the bureau was asked to apply the same standard used to correct the comprehensive income tax for 1991 and the 1993–1995 cases to zero and recalculate accordingly, providing an explanation of the results.
In point 7, it becomes even clearer. It states that although you responded by saying you would respect the binding effect of the Supreme Administrative Court’s 2006 Judgment No. 2066, the Supreme Administrative Court’s 2018 Judgment No. 422 also stated that it is not bound by the Decision No. 2066 of the Supreme Administrative Court in 2006, even if the same parties and dispute points are involved. This is because the latter case involved new facts and evidence that were not discussed in the previous case. Therefore, the recalculations and calculations conducted by the bureau are also unrelated, and not subject to, res judicata.
This has been clearly outlined, yet in your reasoning, you claim that the tax authorities did not make any legal errors. However, it is explicitly stated that you made factual errors, and that new facts and evidence prove your mistake. You were required to recalculate using the same standard and method. How, then, could there be no legal misapplication? Isn’t this just turning a blind eye to the truth? If this isn’t a case of wrongful judgment, then what is?
When it comes to the facts and evidence that are favorable to the plaintiff, you completely turn a deaf ear and a blind eye. How can we, the people, trust that the courts are fair, just, and trustworthy? What disappoints me most about this ruling is that the facts are already so clear, including the tax authority itself admitting that Tai Ji Men is not a cram school. The tax bills issued based on the cram school classification, and the illegal taxation that followed, are clearly unjust. If this doesn’t qualify as undue enrichment under public law, then what does? Isn’t Article 28 of the Tax Collection Act designed to address situations like this? We find this very regrettable. That concludes my explanation—thank you.
