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State Tax Commission v. Chevrolet

Supreme Court of Arizona

January 22, 1951

STATE TAX COMMISSION et al.
v.
QUEBEDEAUX CHEVROLET

Judgment reversed.

Fred O. Wilson, Atty. Gen., and Richard C. Briney, Asst. Atty. Gen., for appellant.

Scott & Green, of Phoenix, for appellee.

Udall, Chief Justice. Stanford, Phelps, De Concini and La Prade, JJ., concur.

OPINION

Udall, Chief Justice.

[71 Ariz. 281] The present appeal is from a judgment rendered against the State Tax Commission of Arizona, defendant-appellant (hereafter called the commission), in favor of Quebedeaux Chevrolet, a corporation, plaintiff-appellee (hereafter called the plaintiff), upon an action containing two counts brought in the superior court for the recovery of certain excise taxes amounting in all to $ 244.81, which were paid under protest by plaintiff upon business transacted by it during the months of October and November, 1949.

Page 550

This cause was submitted to the trial court upon a rather lengthy agreed statement of facts which we deem it unnecessary to set out verbatim. These facts establish that plaintiff is, among other things, engaged in the business of selling tangible personal property within the state, under a privilege license issued pursuant to the provisions of Laws 1935, Ch. 77, known as "The Excise Revenue Act of 1935", Secs. 73-1301 to 73-1334, A.C.A. 1939, as amended (hereafter termed the Act).

Plaintiff, as required by Sec. 73-1314, timely filed with the commission its returns showing its "gross proceeds of sales" and "gross income from the business" (hereafter, for the sake of brevity, collectively termed "gross income") for the months of October and November and the amounts of taxes it computed was due thereon. The commission, however, maintained that the figures were incorrect and that the correct amounts were larger than plaintiff reported. The difference between the lesser sums which plaintiff contends is payable and the larger sums which the commission insists is due, amounts to an additional tax of $ 118.65 for business transacted by plaintiff during October, and for November the further sum of $ 126.16, or a total on the two counts of $ 244.81.

[71 Ariz. 282] The principle upon which the parties differ may well be illustrated by the following example:

Plaintiff's contention

Retail sales price of an automobile,

being plaintiff's gross income

therefrom

$ 3,000

2% sales tax collected by plaintiff

on retail sale and tax due under

the Act

$ 60

Commission's contention

Retail sale of automobile

$ 3,000

2% tax passed on to pur-

chaser

60

Plaintiff's gross income

$ 3,060

Tax due under the Act (2% of

$ 3060)

$ 61.20

Or an additional sum due of

$ 1.20

In the course of a year the additional sum which the commission claims is due on plaintiff's business alone would amount to approximately $ 1500, and it is estimated that on the entire annual volume of business done in the State of Arizona (if the commission's contention is sustained) the amount involved equals approximately a quarter of a million dollars.

In order to avoid being subjected to the penalties and sanctions of the Act, plaintiff paid under protest, before the delinquent date, the amount of the additional sums claimed due, at the same time giving written notice to the commission, as required by the Act, that the payments were made under protest and setting forth the grounds and reasons for same. A hearing was subsequently held at which the commission ruled adversely to plaintiff, making final the claimed additional tax liability. Within the time provided by law plaintiff filed an action in the superior court of Maricopa County to recover the amount of taxes paid under protest.

The facts show that plaintiff at all times billed and stated separately to its customers the purchase price of goods sold and the sums collected by it as payment of the tax, and in addition that plaintiff kept separate and apart from all other monies the sums received by it in payment of the tax.

On the stipulated facts before it, the trial court reversed the commission and rendered judgment for plaintiff. From this judgment and the whole thereof this appeal was taken.

From the example set forth, supra, it is readily apparent that the larger figures of the commission are based upon the contention that the gross income from plaintiff's business include all sums received by it during the two months, specifically including those sums received in payment of the 2% tax imposed upon plaintiff by Sec. 73-1303(d) (1), and that the tax for which plaintiff is liable at the rate of 2% must be computed and paid upon such total amount. On the other hand plaintiff contends that no tax is due on the 2% collected by it from its customers in payment of the tax.

[71 Ariz. 283] The sole question presented by this appeal then is: Does the 2% tax imposed upon plaintiff by Sec. 73-1303(d) (1), constitute a ...


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