Xinjiang Wood Industry Company Found Guilty of False Transactions, Key Evidence Goes Missing in Second Trial

Xinjiang Wood Industry Company Found Guilty of False Transactions, Key Evidence Goes Missing in Second Trial

A wood industry company in Xinjiang was found guilty of false transactions, with its legal representative, Mr. Liu, sentenced to three years in prison with a five-year reprieve. During the second trial, the defense questioned the whereabouts of key evidence, to which the prosecutor responded that they were unaware of its authenticity.

The Xinjiang wood industry company, hereinafter referred to as "the company," had evidence to prove that all its wood purchases were legitimate and that the transactions were real. However, the tax authorities, public security organs, procuratorate, and court all determined that the company had falsely issued value-added tax invoices. As a result, Mr. Liu, the company's legal representative, was sentenced to three years in prison with a five-year reprieve by the Awati County People's Court on March 18,

1. After the first trial, the defendant company and Mr. Liu appealed.

On August 26, the second trial of the case, which has attracted attention from the local business and legal communities, was held at the Aksu Area Intermediate People's Court. What was unexpected was that due to the bizarre situation that occurred during the trial, the trial was suspended after less than two hours, and the court announced that it would reconvene at a later date.

During the second trial, the defense again asked about the whereabouts of key evidence.

The main entrance of the Aksu Area Intermediate People's Court

On the morning of August 26, the Aksu Area Intermediate People's Court held a public hearing on the case of the wood industry company and Mr. Liu's false issuance of value-added tax invoices. After the trial began, the judge asked questions to both the prosecution and the defense. Mr. Liu stated that he had not cheated the state out of a single penny in taxes and insisted that there was no tax evasion.

The defense stated that the company operated legally, mainly engaging in wood procurement, processing, and sales. For each wood transaction, there was real evidence to prove the transaction, including logging permits, weighbridge tickets, and payment records. The company's use of others' identity information to issue invoices and obtain invoices from other companies was to correspond to real transactions and complete tax deductions in accordance with the law, rather than to fabricate transactions and cheat on taxes.

"Every wood purchase has a corresponding logging permit, and every transaction has objective evidence," the defense said. The first trial court determined that the defendant had criminal intent and committed a crime based on the fact that the invoices issued did not match the actual business operations. However, the defense believed that this was an error in fact-finding.

Then, a bizarre situation occurred. When the defense presented 106 logging permits as evidence to prove the existence of real transactions, the prosecutor stated, "We are not sure about the authenticity of these evidence, and this is the first time we have seen them. Why did the defense present them at this time?" The defense was shocked and immediately stated, "These evidence were obtained by the public security organs during the first trial and were submitted twice. Why did they not appear in the first trial? We submitted them again in the second trial because they were not presented during the first trial."

Based on this, the trial was suspended, and the prosecutor and defense reviewed the key evidence but failed to reach a consensus. The court announced that it would reconvene at a later date.

In the afternoon, the court reconvened but did not proceed with the trial due to the absence of a panel member. The trial was suspended again, and a new date will be set for the next trial.

The defense stated that the company's transactions were real and that the invoices were issued in accordance with the law, which is different from the crime of false invoicing. The company's transactions were legitimate, and the invoices were used to prove the payment of taxes.

The Aksu Area Intermediate People's Court's litigation service center

According to the Awati County People's Court's criminal judgment (2025) Xin 2928 Criminal Initial 186, the Awati County People's Procuratorate accused Mr. Liu, the legal representative of the wood industry company, of issuing 126 false invoices from 2016 to the time of the incident, with a total amount of 947,626.6 yuan and a tax amount of 852,863.99 yuan, resulting in a loss of 37,625.74 yuan in urban maintenance and construction taxes. From August 2022 to January 2023, the company issued six false value-added tax invoices with a total amount of 530,973.48 yuan and a tax amount of 69,026.52 yuan.

The defense argued that the prosecution did not provide evidence of the specific amount of taxes that should be paid and that there was no fact of tax evasion. According to the Supreme People's Court and the Supreme People's Procuratorate's judicial interpretations, only when the amount of false invoicing exceeds the amount of taxes that should be paid can it be considered a crime of false invoicing. In this case, the amount of false invoicing did not exceed the amount of taxes that should be paid, and therefore, it did not constitute a crime.

One of the logging permits

The company retained the logging permits provided by the sellers for each wood purchase. How could these transactions be determined to be false after going through the tax authorities, public security organs, procuratorate, and court? The payment of freight fees further proved the authenticity of the transactions.

The defense further explained that according to the law, the invoices for purchasing agricultural products are exempt from value-added tax, but the buyer still has to pay the tax. The company's transactions were real, and the invoices were issued in accordance with the law. The defense emphasized that the company's actions were not criminal and that the evidence proved the company's innocence.

During the first trial, there were several problems. The Awati County People's Court delayed the trial three times, and the public security organs and procuratorate did not provide the key evidence to the court.

The first trial notice of the Awati County People's Court

The first trial was scheduled for October 15, 2025, but was postponed due to the defense's request to review the case files. The second postponement was due to the change of defense lawyers, and the third postponement was due to the public security organs' failure to provide key evidence.

On December 1, 2025, the company submitted evidence to the public security organs, which proved that the company did not commit a crime. However, this evidence went missing, and the public security organs claimed that they did not have it.

The receipt of key evidence by the Awati County Public Security Bureau on December 1, 2025

The first trial finally took place on December 9, 2025, but the key evidence was not presented in court. The defense argued that the prosecution's evidence was insufficient and that the court's judgment was unfair.

After the first trial, the public security organs continued to collect evidence, which is unusual. On June 12, 2026, the public security organs submitted new evidence to the court, which is not in accordance with the law.

The first trial judgment of the Awati County People's Court

This case has raised several questions: How could the public security organs and procuratorate not provide the key evidence to the court during the first trial? How could the company's real transactions be determined to be false after going through the tax authorities, public security organs, procuratorate, and court? Why did the public security organs continue to collect evidence after the first trial?

The outcome of this case will affect the sanctity and fairness of the law, as well as the business environment in Aksu. We believe that the Aksu Area Intermediate People's Court will make an objective and fair judgment. We will continue to follow this case.