OneBackground of the case
On January 10, 2012, Company F and Company B signed the Purchase Contract, stipulating that Company F would purchase clothes from Company B with a total contract value of RMB 1,431,850. Later, the purchased clothes were exported and sold abroad, and the export tax rebate was applied accordingly. On June 4, 2015, Company F received the Tax Treatment Decision from the Tax Inspection Bureau, and the Tax Bureau demanded the recovery of the refunded tax of 195,80853 yuan, and required Company F to treat this batch of goods as domestic sales and pay the relevant taxes.
In 2019, Company F filed a lawsuit against Company B in court, seeking compensation of 427,025 for losses caused by export tax rebates$28 plus interest. In the end, the court ruled that Company B was required to compensate Company F for the loss of export tax rebate in the amount of 399,575$26 plus interest.
IICase analysis
As the subject of tax refund, why does Company F have the right to claim the seller Company B to compensate for the loss of export tax rebate caused by the bill of lading?
As the subject of the application for export tax rebate, Company F needs to be responsible for the authenticity and legitimacy of the filing documents submitted, including the bill of lading. Since the bill of lading used by Company F for filing was not issued by the carrier, and it was unable to re-provide the legal and valid bill of lading to the tax inspection bureau within the prescribed time limit, Company F was required by the tax bureau to recover the returned export tax rebate.
Since Company F needs to be responsible for the filing documents submitted by itself, why can it find the seller to compensate for the loss of export tax rebates?
According to Article 5 of the Procurement Contract signed between Company F and Company B, "Company B guarantees to operate legally, pay taxes in accordance with the law, and guarantees to provide Company F with valid documents such as VAT invoices for export tax rebates within 70 days after delivery." If Company F is unable to refund the tax due to Company B's tax matters or other reasons, Company B shall bear all responsibilities and losses. According to the agreement between the parties, if the tax refund cannot be refunded due to the reasons of Company B, Company B shall bear the loss of Company F for the inability to refund the tax, which is why Company F can claim compensation from Company B.
Through the contract signed by both parties, it can be seen that although Company F exports in its own name and is the main body of export tax rebates, the relevant documents for handling export tax rebates are provided by Company B, indicating that the two parties are ostensibly a buying and selling relationship, but in fact they are ** relationship, that is, the specific meaning and consequences of the so-called "fake self-operated real **" and "fake self-operated true **" can refer to the "Tax Rebate Risk of Export Enterprises under the False Self-operated True ** Model".
The export tax rebate was 190,000 yuan, why did Company F claim compensation of 420,000 yuan from Company B?
For the exported goods, Company F was recovered by the tax bureau in the amount of 195,80853 yuan, why did the claimed loss amount to 420,000 yuan?
Because the bill of lading provided by Company F is false, in addition to being pursued by the tax bureau for the tax refund, it must also be treated as a deemed sale. Company F was required to pay the output tax of 181,93458 yuan, 50,811 additional taxes, late fees, etc31 yuan. In the end, Company F paid a total of 420,000 yuan in taxes and late fees to the tax bureau.
Who should bear the late fees incurred by failing to pay taxes in time?
On June 4, 2015, the Tax Inspection Bureau issued the Tax Treatment Decision, but Company F was dissatisfied with the decision and applied to the Tax Bureau for administrative reconsideration on February 15, 2016, resulting in a late payment penalty of 27,45905 yuan.
If Company F fails to pay the tax in time, can Company F claim compensation for the loss?
According to the judge, the late payment penalty was caused by Company F's failure to pay the export tax rebate in time, and the fault lay with Company F, and Company F should bear the losses by itself, and had nothing to do with Company B.
Note: In principle, the Tax Treatment Decision will require Company F to pay the tax or provide a guarantee within 15 days, and only after paying the tax or providing a guarantee can Company F have the right to apply to the relevant department for administrative reconsideration. However, due to the limited disclosure in the judgment, it is not possible to further confirm the reason for the late payment penalty incurred by Company F due to the non-payment of taxes.
IIILawyer advice
1.In the case of deemed domestic sales, the input tax can be deducted if the conditions are met.
In this case, Company F was not only recovered by the tax bureau for the refunded export tax rebate, but also paid the output VAT as deemed domestic sales, so can the input VAT paid by Company F be deducted?
Due to the limited content of the judgment and the failure to disclose this part, it can be inferred that the input VAT paid by Company F was not deducted based on the tax paid by Company F to the tax bureau of more than 400,000 yuan.
However, if Company F can obtain the Certificate of Transfer of Export Goods to Domestic Sales issued by the Tax Bureau, the input VAT paid before can be deducted, which can recover the loss of nearly 190,000 yuan of tax for Company F.
2.If the defendant does not attend the civil litigation case**, it is not conducive to the trial of the facts of the case.
In this case, Company B, as the defendant, did not appear in court to participate in the litigation, and the court finally tried in absentia. As analyzed in the second point (1) above, whether the two parties are in a buyer's or seller's relationship or a ** relationship, the judge did not analyze this fact in the judgment.
If the relationship between the two parties is one of sale and purchase, and Company B can provide relevant documentary evidence to support it, Company B may still have room for defense, and the final judgment may be different.
Therefore, in civil litigation cases, it is recommended that the parties themselves or entrust a lawyer to attend the case**, so as to clarify the facts of the case and more comprehensively protect the rights and interests of the parties.
3.It is advisable to specify in the contract the scope of compensation for losses, in particular late fees for non-timely payment of taxes.
Whether the late payment penalty arising from the failure to pay the tax in time is within the scope of compensation for the loss is the focus of the dispute in this case.
If the amount of back tax is large, the party concerned cannot raise funds to pay the tax in a short period of time, and needs to bear an additional loss of 5/10,000 per day of late payment.
It is advisable to specify in the contract the scope of compensation for losses, in particular late fees for non-timely payment of taxes. For example, it is stipulated in the contract that the losses to be compensated include late fees, attorney fees and other losses arising from legal remedies such as administrative reconsideration.
Note: The content of the article is only one statement, and it is time-sensitive, so it should not be used as legal advice.
Author: Wu Wuling, a lawyer at Shanghai Landing (Shenzhen) Law Firm, the founder of Landing Tax Lawyer Team, has three certificates as a lawyer, a note and a tax agent, and his practice areas include tax consulting, tax dispute resolution, export tax rebates, equity transactions and other legal and tax services.
Lawyer Xie Xiaojing, a lawyer at Shanghai Landing (Shenzhen) Law Firm, and the founder of Landing Tax Lawyer Team, has the title of certified tax agent, intermediate accountant, senior corporate compliance officer and ** practitioner qualifications, providing legal and financial services such as export tax rebates, tax inspections, domestic and foreign company laws, and tax law compliance for many enterprises.