ARIZONA TAX COMMISSION et al.
DAIRY & CONSUMERS COOPERATIVE ASS'N
Fred O. Wilson and Edward Jacobson Asst. Attorneys General, of Phoenix, attorneys for appellants.
Fred V. Moore, of Phoenix, attorney for appellee.
Jennings, Strouss, Salmon & Trask, J. A. Riggins, Jr., Henry S. Stevens, Rex H. Moore, of Phoenix, attorneys amicus curiae.
Robert & Price, of Phoenix, attorneys amicus curiae.
Phelps, Justice. La Prade, C. J., and Udall, Stanford and De Concini, JJ., concur.
[70 Ariz. 10] On November 12, 1948, the State Tax Commission passed a resolution to the effect that "dairies processing milk, whether purchased or produced, when selling for resale, shall be liable for a processing tax of one-fourth per cent. When the milk is sold to ultimate consumers, such sales are taxable as retail sales, and subject to a tax of 2%." This resolution was adopted pursuant to the provisions of sections 73-1303(a) (1) and 73-1306, A.C.A.1939, being a part of the Excise Revenue Act of 1935.
Since the enactment of this law the commission has at all times collected, and still does collect, these taxes without protest, upon milk and milk products processed and sold by dairies which is not produced by their own herds.
The adoption of the above resolution in November, 1948, constituted the first step taken by it at any time to collect a sales tax on milk and milk products sold by dairies where the milk was produced from herds owned by the processing and selling dairies.
The Dairy and Consumers Cooperative Association, a corporation, appellee, hereinafter called plaintiff, forthwith paid the tax levied against it under protest and demanded a hearing before the commission which was granted. Shortly thereafter a hearing was held and the commission being fully advised in the premises, thereafter unanimously voted to make the added levy.
The plaintiff in due time instituted an action in the Superior Court of Maricopa County against the commission asking for a return of the taxes paid and for a declaratory judgment declaring its rights under the provisions of sections 49-1301 and 49-1302 and sections 73-1303(a) (1) and 73-1306 A.C.A.1939.
The commission filed with the court a motion to dismiss plaintiff's complaint upon the ground that it failed to set up a claim upon which relief could be granted. The court, after hearing arguments of counsel and taking the matter under advisement denied the motion. The commission elected to stand on the motion and judgment was entered for plaintiff for the return of taxes paid by it under protest and declaring it to be not liable under the law for the payment of any taxes under the provisions of the Excise Revenue Act of which sections 73-1303(a) (1) and 73-1306, supra, form a part.
The commission appeals to this court and presents two primary questions for our consideration:
1. Is the language of sections 49-1301 and 49-1302, supra, broad enough to [70 Ariz. 11] exempt agricultural products from the operation of an Excise Tax levied by the state or is it intended merely to restrict municipalities in imposing licenses and franchise tax burdens on agricultural products?
2. Are sections 49-1301 and 49-1302, supra, repealed by implication by the Excise Revenue Act of 1935 and particularly by sections 73-1303(a) (1) and 73-1306? In order that we may better understand the questions presented we incorporate herein a rescript of the sections above mentioned, to wit:
"49-1301. Right to sell not to be restricted -- Terms defined. -- The producers of food products on agricultural lands, farms and gardens in this state, shall never under any pretext be denied or restricted in the right to sell and dispose of the same, except in the manner and to the extent herein provided, and subject to inspection by lawful authority, so long as such inspection is uniform as to the same product, and without cost to the producer thereof. 'Producer,' within the meaning hereof shall include the owners, proprietors or tenants of the agricultural lands, orchards, farms and gardens, whereon or whereby such food products are grown, raised, or prepared for market; 'food products,' shall include every product of the soil in its natural or manufactured state, and all swine, fowls, eggs and milk, and all products arising therefrom. The right to sell and dispose of such products shall extend
to the producer in person, members of his family, his agents, and all persons in his service, as long as such products are sold or disposed of on his behalf and ...