The Administrative Interpretation of the Ministry of Finance, Tai-Cai-Shui-Tze No. 910453902 (June 21, 2002) stated that a business entity is the seller of the goods when it sells the goods and collects the proceeds by itself. And, the Resolution of the First Joint Meeting of Chief Judges and Judges of the Administrative Court (now reorganized as the Supreme Administrative Court) in July, 1998, in the relevant part, stating that, regardless of whether the opposite party of a transaction files a tax return in accordance with the amount of the invoices issued, the obligation of providing a make-up payment for the business entity, which sells goods or services, remains unaffected. These rulings are both consistent with the legislative intent of the Value-Added and Non-Value-Added Business Tax Act (the Business Tax Act was renamed as the Value-Added and Non-Value-Added Business Tax Act on July 9, 2001,　hereinafter referred to as the Business Tax Act.) Article 2, Subparagraph 1; Article 3, Paragraph 1, and the first half of Article 32, Paragraph 1 of the Business Tax Act and are not in contravention of the principle of taxation by law under Article 19 of the Constitution.

　　Article 44 of the Tax Levy Act, as amended on January 24, 1990, imposes an administrative fine of five percent of the verified sum of the total amount of sales which should have been made with invoices when no invoice was given to, or obtained from, the for-profit enterprise, which should by law have given an invoice to, or should have obtained an invoice from the opposite party of the transaction and yet has failed to do so. The administrative fine thus imposed contains no ceiling of a reasonable maximum amount and hence renders statutory taxpayers in individual cases liable to suffer evident harshness of administrative punishments. The administrative fines imposed under Article 44 of the Tax Levy Act exceed the degree of necessity of administrative fines and are therefore in contravention of the principle of proportionality under Article 23 of the Constitution and of the constitutional guarantee of people’s property rights under Article 15 of the Constitution and shall no longer be applicable.

　　I.　The Administrative Interpretation of the Ministry of Finance, Tai- Cai-Shui-Tze No. 910453902 (June 21, 2002) and the resolution of the First Joint Meeting of Chief Judges and Judges of the Administrative Court in July, 1998, in the relevant part, stated that regardless of whether the opposite party of a transaction files a tax return in accordance with the amount of the invoices issued, the obligation of providing a make-up payment for a business entity, which sells goods or services, remains unaffected.

　　Article 19 of the Constitution mandates that nationals have the duty to pay tax in accordance with the law. The constitutional mandate stipulates that when the state imposes the duty to pay tax upon nationals or gives nationals tax benefits, there shall be a statutory basis which prescribes the elements of taxation such as the subject of taxation, the object of taxation, the relationship delineating how the object of taxation belongs to the subject of taxation, the tax basis, the tax rate, the method of levy and the taxable period. However, the agency-in-charge has the power to interpret laws which are within the domain of its legal authority, so long as the interpretation is conducted in accordance with the principles of the Constitution and with the relevant legislative intent and with the general methods of statutory interpretation. Hence the interpretation thus made is not in contravention of the principle of no tax levy in the absence of law. (See Judicial Yuan Interpretations Nos. 607, 625, 635, 660 and 674.) The legal opinions expressed by the Supreme Administrative Court in the form of resolutions are also not in contravention of the principle of no tax levy in the absence of law. (See Judicial Yuan Interpretations Nos. 620 and 622.)

　　With regard to the fulfillment of the duty to pay tax, the subject of taxation, the object of taxation, and the relationship delineating how the object of taxation belongs to the subject of taxation shall be ascertained first before determining whether the statutory taxpayer has paid the tax in accordance the law or has failed to do so. A third party, of course, cannot pay the tax on behalf of, and under the name of, the statutory taxpayer under law. Although, unless it is prohibited by the tax law, it is not illegal to pay the tax on behalf of a statutory taxpayer when the law makes it clear who the statutory taxpayer is, the legal status of the statutory taxpayer shall not be altered by any contract. Thus, if the “tax” was paid by anyone other than the statutory taxpayer, the “tax” so paid will give rise to the issue whether the government shall return the “tax”. Unless the tax law stipulates otherwise, a statutory taxpayer shall not be deemed to have fulfilled his tax obligation and there shall be no exemption for, or relinquishment of, his responsibility to pay the tax merely because a third party paid the “tax” under its own name to the government treasury. In other words, neither the recipient of the government treasury nor the factual consequences of tax collections and make-up payments shall be able to alter the subject of taxation, the object of taxation, and the determinations of the subject of taxation and the object of taxation, all of which are expressly prescribed by the tax law. In order to be consistent with the above-mentioned principle of taxation by law, the question whether the tax obligation is fulfilled in accordance with the law and the Constitution shall be determined by whether, and how, the statutory taxpayer fulfills his tax obligation, and shall not be determined only by the recipient of the tax or by the factual consequences for the government treasury.

　　Article 2, Paragraph 1 of the Business Tax Act prescribes that, the “Statutory taxpayers of the business tax are as follows: 1. Business entities that sell goods or services.” Article 3, Paragraph 1 of the Business Tax Act prescribes that, “The definition of sale of goods is the transfer of ownership of goods to another or others for a consideration.” Article 32, the first half of Paragraph 1 of the Business Tax Act prescribes that, “For the ‘Table of the Time Limits for Issuing Documentary Evidence of Sales’ under this Act, the business entities of a special nature or small business entities may be exempted from issuing uniform invoices, and may, instead, issue ordinary receipts.” Accordingly, when the state imposes tax obligations of the business tax on its nationals, it expressly prescribes in the Business Tax Act the subject of taxation, the object of taxation, the determinations of the object of taxation as contrasted with the subject of taxation, and the duty to cooperate, such as to issue invoices, owed by the statutory taxpayers of the Business Tax (business entities).

　　The Administrative Interpretation of the Ministry of Finance, Tai-Cai-Shui-Tze No. 910453902 (June 21, 2002) stated that, “Although the businesses conducted by X company in its cooperative stores are similar to those conducted in sale units of a department store and although both share the same characteristics, namely that the commissions were stipulated by contracts and were calculated in accordance with a certain portion of the total sales, the proceeds of the sale[s] of goods in cooperative stores were collected by X company, the transactions shall be deemed as the sales of X company, and by law X company shall issue the invoices to the purchasers.” (hereinafter referred to as the Interpretation) The Interpretation made it clear that if the businesses entities themselves sold the goods and the proceeds of the sales were collected by them directly from the purchasers, this arrangement should constitute “the transfer of ownership of goods to another or others for a consideration” and the businesses entities shall be deemed to be the sellers of the goods. The cooperative stores did not participate in the transfer of the ownership of the goods to others conducted by the business entities in order to obtain the consideration and therefore they should not be deemed as the sellers of the goods. Pursuant to Article 2, Paragraph 1; Article 3, Paragraph 1; Article 32, Paragraph 1 of the Business Tax Act, it is the business entities who shall issue invoices to the purchasers for the goods they sold. Under the Administrative Interpretation of the Ministry of Finance, Tai-Cai-Shui-Tze No. 761126555 (April 2, 1988) (abolished on March 19, 2009) [hereinafter referred to as Interpretation No. 761126555], when a department store is run in the business mode of leasing its sale units to leasees, it is the department store not its leasees that shall issue invoices to customers, as it is the former not the later that sells the goods to the purchasers and collects the proceeds and hence falls under the statutory definition of the “transfer of ownership of goods to an other or others for a consideration.” Accordingly, Interpretation No. 761126555 stated that pursuant to the foregoing provisions of the Business Tax Act, the department store shall be deemed a business entity which in turn shall issue invoices to the purchasers. Because of the business modes of department stores and ordinary stores, the determination of who bears the responsibility of issuing invoices may vary. The Interpretations at issue did not impose additional tax obligations without a legal basis and were not in contravention of the principle of taxation by law under Article 19 of the Constitution and of the principle of equality under Article 7 of the Constitution. Moreover, Interpretation No. 761126555 stated that only when the business entities themselves sell goods and collect the proceeds, shall they issue invoices to the purchasers in accordance with laws and regulations. Interpretation No. 761126555 did not restrict the selection of business modes. Therefore, there is no issue of restricting the freedom of business.

　　The value-added business tax is the tax on the difference, i.e., the added value, for the sale of goods or services in manufacturing, furnishing, or distributing stages after costs are deducted. (See Judicial Yuan Interpretation No. 397.) Pursuant to Articles 14, 15, 16, 19, 33 and 35 of the Business Tax Act, the value-added tax is calculated by the difference between the amounts of the periodically filed sales and the costs evidenced by the detailed chart of the uniform invoices as well as other documents. After the calculation, the amount of business tax due or overpaid in the given period is thus determined. (See Judicial Yuan Interpretation No. 660. See also Article 29 of the Implementation Rules of the Value-Added and Non-Value-Added Business Tax Act.) Accordingly, the prevailing value-added business tax is a multi-period sales tax which levies the added value of a selling period. The business entities conducting business transactions in a given selling period are statutory taxpayers. The resolution of the First Joint Meeting of Chief Judges and Judges of the Administrative Court in July, 1998, in the relevant part, stated that, “The prevailing value-added business tax is a multi-period sales tax which levies the added value of a selling period. The business entities conducting business transactions in a given selling period are statutory taxpayers. Therefore, regardless of whether the opposite party of the transaction files the tax return and pays the tax in accordance with the amount of the invoices issued, the obligation of providing a make-up payment of a business entity, which sells goods or services, remains unaffected.” This Resolution was made under the prevailing value-added business tax that treats the business entities conducting business transactions in a given selling period as statutory taxpayers and clarifies that anyone who is not the opposite party of a transaction is not a business entity which sells goods or services and hence by law has no duty to issue an invoice or to file a business tax return. Therefore, regardless of whether the one who files the tax return and pays the tax in accordance with the amount of the invoices issued, the filing of the tax return and the payment of tax only give rise to the issue whether there shall be a claim for the return of the tax so paid. Since the payment of tax can neither be deemed to be the fulfillment of the tax obligation of the statutory taxpayers, nor can give rise to the legal effect of the exemption from, or relinquishment of, the obligation of the statutory taxpayers, the statutory taxpayers’ legal obligations of providing make-up payments of business tax remain unaffected. If the statutory taxpayers have not paid the business tax due, they shall provide make-up payments. This Resolution is not in contravention of Article 2, Subparagraph 1, Article 3, Paragraph 1, and the first half of Article 32, Paragraph 1 of the Business Tax Act, and is in accordance with ordinary methods of statutory interpretation[s], and does not impose tax obligations on nationals without any statutory basis, and is not in contravention of the principle of taxation by law under Article 19 of the Constitution.

　　As to the statutory taxpayers who shall provide make-up payments of business tax by law, it goes without saying that before the competent authority may impose administrative fines in accordance with the Business Tax Act, the illegal actions of the statutory taxpayers shall fall under the statutory elements of the administrative sanction, and whether the statutory taxpayers acted with scienter or with negligence, the competent authority shall meticulously take into account the special circumstances of any given cases, the availability of any privileges, exemptions, and either complete or partial immunities.

　　II.　Article 44 of the Tax Levy Act, as amended on January 24, 1990 prescribes the administrative fine of five percent of the verified sum of the total amount of sales which should be made with invoices when no invoice was given, or obtained from, the for-profit enterprise which should by law have given an invoice to, or should have obtained an invoice from the opposite party of the transaction and yet has failed to do so.

　　Article 44 of the Tax Levy Act, as amended on January 24, 1990 (hereinafter referred to as the provision at issue) prescribes an administrative fine of five percent of the verified sum of the total amount of sales which should be made with invoices when no invoice was given, or obtained from, the for-profit enterprise which should by law have given an invoice to, or should have obtained an invoice from, the opposite party of the transaction and yet has failed to do so. The provision at issue was enacted with a view to rendering the business entities faithful to giving invoices to, and to obtaining invoices from, the opposite parties in order to establish reliable tax records of business transactions and in order to establish an accurate taxation system based upon tax records. The provision at issue was enacted to implement the constitutional mandate under Article 19 of the Constitution (See Judicial Yuan Interpretations Nos. 252 and 642) and its legislative intent was of course justified.

　　With respect to the content of the administrative sanction stipulated under the provision at issue, the legislative branch enjoyed the discretion after taking into account the punishable degree of the violation of the duty under the administrative law and the necessity and the urgency of maintaining public interests. (See Judicial Yuan Interpretation No. 641.) The administrative fines under the provision at issue are calculated by a certain percentage of the total verified amount of transactions conducted without invoices and are indeed formulated to reflect the degree of punishment based upon the circumstances of the breach of cooperative duty. However, the stipulated fixed percentage may run afoul of substantive justice in particular cases, especially when administrative fines so imposed contain no ceiling and may possibly attain an unlimited amount and render statutory taxpayers liable to suffer evident harshness of administrative punishment. This may lead to the inappropriate consequence of severe infringement of people’s property rights. Statistics indicate that from 2006 to 2008 the total administrative fines for violating Article 44 of the Tax Levy Act reached over NT$2,480,000,000. More than ninety percent of this sum came from the violators who were fined over NT$1,000,000. (See the Legislative Yuan Gazette, Volume 98, Issue 75, Pages 326-327.) Accordingly, Article 44 of the Tax Levy Act was amended on January 6, 2010 to add Paragraph 2 stipulating that, “The amount of the administrative fine under the preceding paragraph shall not exceed NT$1,000,000.” A ceiling of the maximum administrative fine was enacted. With respect to the provision at issue that prescribed administrative fines without a reasonable ceiling and may result in evident harshness in individual cases, the provision at issue exceeds the degree of necessity of administrative fines and is therefore in contravention of the principle of proportionality under Article 23 of the Constitution and of the constitutional guarantee of people’s property rights under Article 15 of the Constitution and shall no longer be applicable.

　　III. Denied Petitions

　　In the present case, all three petitioners claimed that the Administrative Interpretation of the Taxation Agency of the Ministry of Finance (The Supreme Administrative Court Decision [1997] Pan-Tze No. 851, the Taipei High Administrative Court Decision [1999] Su-Tze No. 138, and the petitions of all three petitioners mistakenly referred to as the Ministry of Finance.), and the Administrative Interpretation of the Taxation Agency of the Ministry of Finance, Tai-Shui-II-Fa-Tze No. 920450761 (June 28, 2003), are in contravention of the Constitution and filed petitions for our interpretation. Petitioners claimed that the Administrative Interpretation was a letter replying to the inquiry of the Taipei National Tax Administration of the Ministry of Finance, and did not fall under the domain of the administrative order under Article 5, Paragraph 1, Subparagraph 2 of the Constitutional Interpretation Procedure Act, and therefore was unsuitable for the petition of interpretation. In addition, all three petitioners also claimed that the rest of the resolution of the First Joint Meeting of Chief Judges and Judges of the Administrative Court in July, 1998, which was not considered by us, was unconstitutional. The remaining part of the resolution of the First Joint Meeting of Chief Judges and Judges of the Administrative Court in July, 1998, which was not considered by us, was not applied by the court in its final and concluding judgments involving the three petitioners and hence is also unsuitable for the petition of interpretation. One petitioner again filed a petition for interpretation of J.Y. Interpretation No. 660. However, the petitioner failed to concretely delineate any ambiguity or incompleteness of the J.Y. Interpretation No. 660 which might warrant additional interpretation. Thus, the petition for additional interpretation was without just reason and the petition is denied. In sum, all the above mentioned petitions are inconsistent with Article 5, Paragraph 1, Subparagraph 2 of the Constitutional Interpretation Procedure Act and hence shall be denied under Article 3 of the Constitutional Interpretation Procedure Act.