3 February 2021
The Supreme Administrative Court rendered the 109-Pan-459-Zi Decision of September 3, 2020 (hereinafter, the “Decision”), holding that a tax agency has discretionary authority over, and is not bound by, the evidentiary weight of a certificate evidencing agricultural use of an agricultural land. Therefore, the tax assessment period for supplemental land value increment taxes shall be governed by Article 21, Paragraph 1 of the Tax Collection Law.
According to the facts underlying this Decision, the Appellee filed the transfer of the land at issue, which had been given by A, his father and not a party to this lawsuit, and applied to Appellant (the Local Tax Bureau of Hsinchu County) for an exemption of the land value increment tax in accordance with Article 39-2, Paragraph 1 of the Land Tax Law by attaching a certificate evidencing agricultural use of an agricultural land from X Township Office. After the review, it was determined that the application materials were in order, and the application to exempt the land value increment tax was approved. X Township Office subsequently cancelled the certificate evidencing agricultural use of an agricultural land for the land at issue. Therefore, the Appellant levied a supplemental land value increment tax on the Appellee (hereinafter, the “Original Disposition”). The Appellee further applied to the Appellant to correct the assessed land value increment tax on the ground of cancellation registration. However, since the land registration transcript showing the cancellation registration by the land agency was not attached, the Appellant rejected the application. The Appellee also applied to the Appellant for an extension of the payment period. The Appellant subsequently delivered the payment form for the land value increment tax for the approved extension and granted the extension. Dissatisfied, the Appellee brought an administrative action to set aside the administrative appeal decision and the Original Disposition (including the recheck decision). The original trial court handed down a decision to set aside the administrative appeal decision and the Original Disposition (including the recheck decision). Dissatisfied, the Appellant appealed.
According to the Decision, an observation of Article 39-2, Paragraph 1 of the Land Tax Law, Article 39 of the Statute for Agricultural Development and Article 58 of the Enforcement Rules of the Land Tax Law shows that application to exempt the land value increment tax shall be filed with the competent tax authority along with a certificate evidencing agricultural use of an agricultural land from the agricultural authority. The certificate evidencing the agricultural use of an agricultural land required under the law is a means of substantiation specifically stipulated by lawmakers and is also a criterion for approving an application. As for the substantive evidentiary weight of a certificate evidencing the agricultural use of an agricultural land for the facts to be substantiated, a tax agency has the authority to consider relevant tax law provisions. In addition, Article 21 and Article 22, Subparagraphs 1 and 2 of the Tax Collection Law suggest that the tax assessment period shall commence on the day the tax assessment authority is established. For a tax which should be filed and paid by the taxpayer pursuant to law, and which has been filed during the required period, the tax assessment period shall commence on the filing day; and for a tax which the taxpayer is required by law to file and pay but is not paid within the required period, the tax assessment period shall commence on the day after the expiration of the filing period. If the tax assessment period is over, no supplemental tax may be imposed pursuant to Article 21, Paragraph 2 of the Tax Collection Law. As previously stated, the tax authority has discretionary authority over the evidentiary weight of a certificate evidencing the agricultural use of an agricultural land with respect to the facts to be substantiated and is not bound by the certificate. Therefore, it is not true that the tax authority cannot supplement the land value increment tax until the agricultural authority cancels the originally issued certificate evidencing the agricultural use of an agricultural land. The exercise of the tax assessment authority has nothing to do with the timeframe when the agricultural authority notifies the tax authority that the previously issued the certificate evidencing the agricultural use of an agricultural land is canceled.
It was further indicated in this Decision that there are five tombs on the land at issue with one existing before the land use delineation by Hsinchu County Government and the remaining four existing after the land use delineation. The remainder of the land is a mixed forest. Although the Appellee stated that the tombs had existed on the land at issue for many years, still the Appellee never concealed this fact. The tombs are quite conspicuous and visible when the official-in-charge from X Township Office inspects the site. The Appellee never evaded taxes by way of fraud or other improper means. However, whether any tombs exist on the land at issue and the timing of their existence are evidentiary materials controlled by the Appellee, and since the official-in-charge of the township office that issued the certificate evidencing the agricultural use of an agricultural land did not directly participate in the life activities of the Appellee, such official cannot control as much information as the Appellee. However, the overall status of the land at issue used for agricultural purposes is an important matter for granting the certificate evidencing the agricultural use of an agricultural land. The Appellee or his father A failed to honestly communicate the existence of the tombs after the land use delineation before obtaining the certificate evidencing the agricultural use of an agricultural land. The Appellee further presented the certificate to apply for an exemption of the land value increment tax, but the Appellant believed that the Appellee had done so through improper means. Whether the Appellee employed any improper means to evade taxes is closely linked with whether the seven-year period under Article 21, Paragraph 1, Subparagraph 3 of the Tax Collection Law applies to the tax assessment period. The tax assessment period should commence on the day the Appellee filed the transfer of the land at issue as given. It has been over five years but not over seven years since the Appellant levied the supplemental land value increment tax on the Appellee by way of the Original Disposition. If the tax assessment period was over, the supplemental tax should not have been imposed. However, if the tax assessment period had not expired when the Appellant found that four illegal tombs had existed after the land use delineation, and the certificate evidencing the agricultural use of an agricultural land had been canceled and become retroactively invalid, the original trial court should have ex officio investigated the facts. However, it failed to conduct the ex officio investigation and exploration and to clarify the reason why the land at issue still enjoyed the exemption of land value increment tax in the absence of the legally required certificate evidencing the agricultural use of an agricultural land as required under Article 39-2, Paragraph 1of the Land Tax Law. In addition, the fact that land value increment tax is not levied is determined based on the usage status of the entire agricultural land and the requirement that the tombs on the land should have existed before the land use delineation. The original trial court elected to determine that the principle of using agricultural land for agricultural purposes was satisfied and rendered a decision in favor of the Appellee based on the ratio of the tomb area to the total land area and on the principle of proportionality. Therefore, the original decision was unlawful for improper application of laws and regulations, failure to apply laws and regulations and insufficiency of grounds.
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