That courts can accept the obviously false argument that Tai Ji Men is a cram school was explained in the program of which we publish a transcript with the systemic pro-government bias of Taiwan’s administrative courts.
by Bitter Winter
Article 3 of 5. Read article 1 and article 2.
An article already published in Bitter Winter on October 10th, 2024.
Host: Thank you, lawyer Tsai, for explaining this matter so clearly to our audience [see installment #2 in this series]. I believe that all of our judges, from their time as students, have held certain ideals, aspirations, and visions regarding justice in the legal system. They have also gained extensive legal knowledge through thorough learning, which makes them well aware of these facts. This case has spanned 28 years, with so much evidence presented. Our five administrative branches, the National Taxation Bureau, and the Ministry of Finance have all come forward to explain it. So, why is it that such an unreasonable and unlawful ruling has still occurred?
I think, as lawyer Tsai just mentioned, a key point is that we have reasonable suspicion about whether the judiciary in this matter has essentially drawn the target before shooting the arrow. The judiciary is supposed to be the last line of defense for justice. We hope that all law enforcement personnel understand and follow the law, using it to protect the rights of the people, not to oppress them.
In fact, during the 28-year journey in pursuit of justice, the Tai Ji Men Shifu and dizi have encountered unreasonable and unlawful rulings from the administrative courts more than once. Many Taiwanese citizens share the same experience, feeling that throughout the administrative relief process, they cannot sense how effective this relief really is. This is why Taiwan’s administrative courts are often referred to as “courts where plaintiffs are doomed to fail,” and it is a reputation that has solid grounds. According to the Judicial Yuan’s “Judicial Statistics Yearbook,” from 2013 to 2017, the people’s winning rate in tax-related lawsuits in the High Administrative Court was only 5.24%. That means the winning rate for the people was a mere 0.0524, while the rest were all losses for the people.
According to a report by Associate Professor Huang Shih-Chou from the Department of Public Finance and Tax Administration at the National Taipei University of Business, decisions from the Supreme Administrative Court in tax cases are only favorable to the people 5.94% of the time. Next, we will invite Ms. Zhong, a former auditor at the National Taxation Bureau, to help our audience explore why the administrative courts have come to be known as the “courts where plaintiffs are doomed to fail.”
Ms. Zhong: We all know that Taiwan’s administrative courts have long been called “courts where plaintiffs are doomed to fail” for more than half a century. The administrative courts have taken this label in stride, neither feeling ashamed nor showing any intent to improve. I believe there are several reasons for this. First, they are protected by Articles 80 and 81 of the Constitution. The Constitution states that judges are beyond political parties and should conduct trials independently according to the law, free from any interference. Judges hold lifetime positions and cannot be dismissed unless they face criminal or disciplinary action.
Despite the constitutional protections, even when the Control Yuan completes investigations into judicial misconduct and impeaches negligent judges, once the case reaches the disciplinary court, it is often dismissed due to the five-year statute of limitations. This allows judges to escape punishment easily. This five-year limit is half of the ten-year statute of limitations stipulated by the Public Functionaries Discipline Act. This significant difference makes it even harder to hold judges accountable for misconduct, making it difficult to supervise them and ensure fair judgments.
Secondly, the Judges Academy, or previously the High Administrative Court and the Supreme Administrative Court, have long invited officials from the Ministry of Finance and the National Taxation Bureau to give lectures at the academy. They teach courses on the practical aspects of tax law and enforcement. This can lead to a biased mindset among judges, causing them to often side with the tax authorities in their decisions, rather than examining the actions of the National Taxation Bureau from the perspective of taxpayers’ rights. They fail to assess whether the bureau has illegally infringed on people’s property rights or to scrutinize tax assessments based on principles of evidence law and procedural justice, and they also fail to ensure that the tax authorities have sufficient evidence and that the facts align with the legal provisions.
Judges in administrative courts have long adhered to a treasury-centered mindset. On the surface, they claim to be protecting tax claims in the interest of the public, but in reality, they are sacrificing the property rights of citizens, trampling over the people. We all know that after the Taxpayer Rights Protection Act was implemented in 2017, the administrative courts established tax-specialized courts and appointed tax-specialized judges to handle administrative lawsuits related to tax matters. However, for the sake of convenience at the time, all sitting administrative court judges were awarded professional judge certificates. Has the quality of their rulings improved since then?
Later, the Judicial Yuan also established and announced the regulations for setting up tax-specialized courts and issuing professional judge certificates. However, have they thoroughly reviewed the details of this certification process? If so, why are there still judges with a 100% record of decision against the people? Let’s look at the table we are showing to our audience. This table highlights three judges—Lin Chiu-Hua, Chuang Chin-Chang, and Liu Hsi-Hsien—who, over six years, have decided against the people 100% of the time in cases they were handling. In fact, all we had to do was to use keywords, such as the court’s name, the type of tax, and the year, to search for administrative court decisions by case number. By reviewing the judgments and determining whether the plaintiff (the taxpayer) won or lost, we found that the administrative courts decided against the people in over 90% of cases.
The host just mentioned that experts and scholars have conducted practical investigations, showing that the success rate for plaintiffs is only 5%. More than ten years have passed—do taxpayers feel that the quality of decisions in administrative courts has improved? Has public trust in the judiciary grown? In fact, there are many good judges in administrative courts. Before making their decisions, they hold multiple preparatory hearings, ask the plaintiff (the people) many questions, and investigate the facts thoroughly. According to the Administrative Litigation Act, they have the duty and responsibility to investigate facts and evidence based on the law and their authority.
In the Tai Ji Men case, there was a good judge at the Taipei High Administrative Court. Before making the decisions, she held seven preparatory hearings and one oral argument, ultimately making decisions in favor of Tai Ji Men. The case regarding business tax was also handled by this judge, Lin Yu-Ju, who held five preparatory hearings and one oral argument, again making decisions in favor of Tai Ji Men. However, after the National Taxation Bureau appealed, we faced an unscrupulous judge at the Supreme Administrative Court, which reversed the ruling and decided against Tai Ji Men.
In the table we discussed earlier, one of the judges with a 100% plaintiff loss rate, Judge Chuang Chin-Chang, handled the retrial of Tai Ji Men’s 1992 case. He summoned three Tai Ji Men disciples to testify in court, and during the trial, they explained the fact that the dizi’s gifts to their Shifu were voluntary as part of their respectful offerings. However, the judge did not mention this testimony at all in his decision. He dismissed the testimony of these three disciples without providing any explanation, and ultimately decided against Tai Ji Men.
On the surface, he might claim, “I allowed Tai Ji Men to call witnesses to testify in court.” But in reality, he was merely going through the motions and had no intention of uncovering the truth. In another case at the Supreme Administrative Court, during the trial regarding the case decided in 1996, Judge Huang Ben-Ren handled our Tai Ji Men case. Despite Tai Ji Men submitting three legal briefs, the National Taxation Bureau of the Central Area didn’t even submit a single defense brief. Yet, Judge Huang directly dismissed Tai Ji Men’s appeal, resulting in a confirmed ruling against Tai Ji Men. If the defendant, the National Taxation Bureau, can win without even presenting a defense, then what is the purpose of the Supreme Administrative Court? Where does this leave the people’s right to appeal?
Host: Thank you, Ms. Chung. As we can see, there are many areas within the tax system that need reform. Therefore, we invite our viewers to leave comments and share their thoughts on where our tax and judicial systems can be improved. Let’s also show our support for the good judges, encouraging everyone to act with conscience and truly uphold fairness and justice in making rulings that protect the rights of the people.
Former senior tax auditor at the National Taxation Bureau of Kaohsiung, Mr. Huang Kun-Guang, and former judge and division chief of the Taiwan High Court Taichung Branch, Lawyer Yuan Tsung-Chen, both stated that in the Tai Ji Men case the tax assessments by the National Taxation Bureau should be deemed invalid from the outset according to Article 111 of the Administrative Procedure Act. As we mentioned earlier about the judiciary, when we look back at the Tai Ji Men case, it all started with the prosecutor’s false indictment, leading to a series of erroneous tax bills from the beginning. So, I would like to ask lawyer Tsai Fu-Chiang to explain the details of Article 111 of the Administrative Procedure Act. How did the National Taxation Bureau violate this provision in the Tai Ji Men case? Let’s welcome lawyer Tsai Fu-Chiang.
Tsai Fu-Chiang: Article 111 of the Administrative Procedure Act outlines the circumstances under which an administrative act is considered invalid. It lists seven specific scenarios. Many of these involve significant procedural flaws. If an administrative act falls under any of these seven conditions set forth in Article 111, it is automatically invalid. In the Tai Ji Men case, it should align with what the host mentioned earlier and what experts and scholars have pointed out. The case likely falls under the seventh clause of Article 111, which states that the defect in the administrative act is severe and obvious.
Article 111, Item 7 of the Administrative Procedure Act refers to significant and obvious defects. In legal interpretation, this means an error that is so blatant that anyone looking at it would immediately say, “This is outrageous, this is wrong.” These are defects that are so obvious and serious that no special expert is needed to explain them. Any ordinary person would see it and think it’s extremely unreasonable and absurd. That’s what is meant by “obvious and significant” in this context.
In simpler terms, the defect is like something written on your forehead—everyone can see it. As a comparison, in Japanese law an administrative act must have a significant and obvious illegality for it to be considered invalid. There, “obvious” means that the facts and the illegality are clearly apparent, without needing an expert to provide any special explanation. It’s something that any ordinary person can recognize.
So, let’s look at whether the Tai Ji Men case meets the criteria for a clear and significant defect. First, the National Taxation Bureau didn’t conduct any investigation and simply issued a tax bill based on the prosecutor’s indictment. But can a prosecutor’s indictment be used as the basis for issuing a tax bill? Moreover, Prosecutor Hou Kuan-Jen’s indictment was contradictory and extremely unlawful. On the one hand, he claimed that the monetary contributions from Tai Ji Men dizi to their Shifu were fraudulent income; on the other hand, to achieve his goal, he used both criminal and tax law as a double-edged sword to suppress Tai Ji Men. He fabricated the notion that Tai Ji Men was involved in fraudulent tax evasion and claimed that these were in fact tuition fees for a cram school. The same source of income was, at one point, called illegal fraudulent income, which he demanded the court to confiscate, and at another point, it was called legitimate tuition fees, leading to the National Taxation Bureau issuing a tax bill. This contradiction is glaring.
In such a situation, can the National Taxation Bureau directly issue a tax bill? Of course not. They need to wait until the criminal court has made a substantive judgment on the prosecutor’s indictment and determined the nature of the income before they can proceed with a tax assessment. Therefore, the National Taxation Bureau’s initial failure to investigate is a violation of due legal process. This breaches the constitutional principle of Taxation according to the law. This represents a significant procedural defect.
In the 2009 report by the Control Yuan, it outlined seven major legal violations related to the National Taxation Bureau’s issuance of tax bills. If a single tax bill has seven significant violations, isn’t that a clear and significant defect? For the tax bill of 1992, on what grounds did the National Taxation Bureau issue the tax bill to Tai Ji Men? They claimed Tai Ji Men was a cram school. But is Tai Ji Men actually a cram school? If Tai Ji Men is not a cram school, then issuing a tax bill on the grounds that it is a cram school represents a clear and significant defect, doesn’t it?
The fact that Tai Ji Men is not a cram school is supported by several points. First, according to a letter in 1997 (No. 69135) from the Taiwan Provincial Department of Education, traditional folk arts such as face reading, palm reading, feng shui, Qigong, the “I Ching,” and Zi Wei are not aligned with the purpose of setting up cram schools, and thus such cram schools are not permitted. Tai Ji Men is a Qigong and martial arts practice group; it is a martial arts organization, not a cram school. Moreover, the practice and teaching of Qigong are not permitted to be conducted by cram schools. Therefore, Tai Ji Men could not possibly be a cram school.
The Ministry of Education, as the highest authority overseeing cram schools, issued two official letters in 1997 and 1999 confirming that Tai Ji Men is not a cram school. Furthermore, during a public hearing in the Legislative Yuan in 2000, a representative from the Ministry of Education reiterated that Tai Ji Men is indeed not a cram school. At that time, the Director of the National Taxation Bureau of Taipei, Chang Sheng-Ho, and the Director of National Taxation Bureau of the Central Area, Yang Chung-Hua, were present. Despite being fully aware that Tai Ji Men was not a cram school, they still issued tax bills to Tai Ji Men under the pretext of it being a cram school and proceeded with forced enforcement.
Moreover, in the 2012 and 2013 re-assessment decisions, the National Taxation Bureau itself admitted that Tai Ji Men is not a cram school. With so much evidence, doesn’t it all prove that the initial tax assessment by the National Taxation Bureau, which treated the “gifts” given by disciples of the martial arts organization to their master as cram school tuition fees and issued tax bills, was based on an incorrect understanding of the facts? It’s like mistaking a man for a woman—clearly and fundamentally wrong. Tai Ji Men is not a cram school, so issuing tax bills under that pretext is a significant and obvious error. If this doesn’t qualify as a “manifest and significant defect,” then what does?
We have mentioned the Supreme Administrative Court Judgment No. 422 in 2018, which clearly states that Tai Ji Men is a Qigong and martial arts practice group. Moreover, on July 13, 2007, in Tai Ji Men’s criminal case, the Supreme Criminal Court rendered a final verdict of acquittal, determining that there was no fraud, no tax evasion, and no violation of the Tax Collection Act. The court further affirmed that the monetary contribution given by Tai Ji Men disciples to their master were of a gift nature, qualifying them as tax-exempt income under Article 4, Item 17 of the Income Tax Act. Additionally, the unified purchase of practice uniforms by the disciples was classified as agency services, not for profit sales, unrelated to the master, and therefore not subject to Taxation.
Returning to the core issue: a gift, for the recipient, is classified as tax-exempt income, meaning there is no tax liability. If there is a need to levy a gift tax, it should be imposed on the donor, not the recipient. However, in the Tai Ji Men case, the National Taxation Bureau issued tax bills to the master, who was the recipient of the gifts. Clearly, this means the tax subject was incorrect. Additionally, the classification of Tai Ji Men as a cram school was also incorrect—Tai Ji Men is not a cram school, but they insisted on treating it as one. The object of Taxation for the gifts (gifts to the master) should have been the donors, not the recipient. These are all obvious and significant procedural flaws!
Therefore, as Yuan Tsung-Chen mentioned, along with the other expert scholars referred to by the host, they all agree that the tax decisions on Tai Ji Men indeed contain significant and obvious flaws. These fall under the grounds for invalidity as stipulated in Article 111 of the Administrative Procedure Act. As a result, the tax bills issued to Tai Ji Men should be considered null and void from the outset.