Ramrod, Inc. v. Wisconsin Dept. of Revenue

• Decision Date: 28 June 1974
• Docket Number: No. 93,93
• Citation: 64 Wis.2d 499,219 N.W.2d 604
• Parties: RAMROD, INC., Appellant, v. WISCONSIN DEPARTMENT OF REVENUE et al., Respondents.
• Court: Wisconsin Supreme Court

Page 604

219 N.W.2d 604

64 Wis.2d 499

RAMROD, INC., Appellant, v. WISCONSIN DEPARTMENT OF REVENUE et al., Respondents.

No. 93.

Supreme Court of Wisconsin.

June 28, 1974.

Ross, Stevens, Pick & Ross, Daniel W. Hildebrand, Madison, for appellant.

Robert W. Warren, Atty. Gen., Allan P. Hubbard, Asst. Atty. Gen., Madison, for respondents.

CONNOR T. HANSEN, Justice.

The issues presented in this case are determined upon stipulated facts.

The taxpayer, a Wisconsin corporation, was engaged in the dry cleaning business until September 12, 1969. A seller's permit had been previously issued to the taxpayer for this business pursuant to sec. 77.52, Stats. On September 12, 1969, the taxpayer 'ceased operation' of this business by the sale of the tangible personal business property to one Harris for $44,388.93. At oral argument, it was acknowledged that Harris continued the operation of the dry cleaning business as the new owner. The taxpayer's sales tax returns did not report the sale of this property. The Department assessed a general sales tax against this sale in the amount of $1,775.56, and this litigation ensued.

ISSUES.

The issues presented are:

1. Was the sale of business assets an exempt 'occasional sale' under sections 77.54(7) and 77.51(10)(a), Stats.?

2. If the sale of business assets was not exempt from sales tax, was appellant denied due process and equal protection of the law and denied uniform and reasonable taxation pursuant to art. VIII, sec. 1, Wisconsin Constitution?

OCCASIONAL SALE.

We would first observe, as did the trial judge, that the Wisconsin sales tax is a tax generally described as a 'privilege' tax. A tax imposed upon the privilege of selling, performing or furnishing services. It is not disputed that it applies to services such as dry cleaning, nor that the taxpayer held a 'seller's permit' at the time of the sale. Sections 77.51 and 77.52, Stats. The point being that the sales tax is not a property tax assessed against personal property.

The taxpayer claims exemption from the general sales tax assessment. It argues that the sale of the personal property was an 'occasional sale,' and therefore exempt from the imposition of a sales tax.

Sec. 77.54, Stats., contains general exemptions from the taxes imposed by ch. 77, subchapter III, and sec. 77.54(7) provides the 'occasional sale' exemption which is the center of this controversy:

'(7) the occasional sales of tangible personal property and services and the storage, use or other consumption in this state of tangible personal property, the transfer of which to the purchaser is an occasional sale, except that the exemption herein provided shall, in the case of motor vehicles, boats or aircraft registered or required to be registered in this state, be limited to motor vehicles, boats or aircraft transferred to the spouse, mother, father or child of the transferor and then only if such motor vehicle, boat or aircraft has been previously registered in this state in the name of the transferor and the person selling is not engaged in the business of selling the type of property for which exemption is claimed.' (Emphasis supplied.)

The appellant has maintained throughout the proceedings below, and also argues in this appeal, that the sale of his dry cleaning equipment was an occasional sale and '(10) 'Occasional sales' includes:

not subject to sales tax. Sec. 77.51(10), Stats., defines 'occasional sales' in a variety of ways, including the following definition:

'(a) Isolated and sporadic sales of tangible personal property or taxable services where the infrequency, in relation to the other circumstances, including the sales price and the gross profit, support the inference that the seller is not pursuing a vocation, occupation or business or a partial vocation or occupation or part-time business as a vendor of personal property or taxable services. No sale of any tangible personal property or taxable service may be deemed an occasional sale if at the time of such sale the seller holds or is required to hold a seller's permit.' (Emphasis supplied.)

It is a long established rule of statutory construction in this state that tax exemptions, deductions and privileges are matters of legislative grace and tax statutes are to be strictly construed against the granting of the same. One who claims such an exemption must point to an express provision granting such exemption and bring himself clearly within the terms of the exemption. Fall River Canning Co. v. Department of Taxation (1958), 3 Wis.2d 632, 637, 89 N.W.2d 203; Comet Co. v. Department of Taxation (1943), 243 Wis. 117, 9 N.W.2d 620. We consider the foregoing recognized rule of statutory construction to be applicable to the factual situation presented in this case.

The taxpayer directs our attention to National Amusement Co. v. Dept. of Revenue (1969), 41 Wis.2d 261, 163 N.W.2d 625. We are of the opinion the rule of statutory construction enunciated in National Amusement Co. is not applicable to one claiming an exemption. Rather the rule therein set forth relates to the taxing authority applying the taxing legislation in the first instance. National Amusement Co., supra, pp. 266, 267, 163 N.W.2d p. 628, holds that:

". . . no judicial rule of construction is permitted, and the court must arrive at the intention of the legislature by giving the language its ordinary and accepted meaning.' . . .

". . . a tax cannot be imposed without clear and express language for that purpose, and where ambiguity and doubt exist, it must be resolved in favor of the person upon whom it is sought to impose the tax.' . . ..'

Furthermore, sec. 77.52(13), Stats., provides:

'(13) For the purpose of the proper administration of this section and to prevent evasion of the sales tax it shall be presumed that all receipts are subject to the tax until the contrary is established. The burden of proving that a sale of tangible personal property or services is not a taxable sale at retail is upon the person who makes the sale unless he takes from the purchaser a certificate to the effect that the property or service is purchased for resale or is otherwise exempt.'

The provisions of sections 77.54(7) and 77.51(10)(a), Stats., are clear and unambiguous.

Both parties to this appeal direct our attention to decisions of the Tax Appeals Commission. The Kroger Co. v. Wisconsin Department of Revenue (October 1, 1970), Docket #S--2736, par. 200--637, CCH Wisconsin Tax Reporter; Shore Club, Inc. v. Wisconsin Department of Revenue (March 30, 1972), Docket #S-- 3355, par. 200--800, CCH; Matuszeski v. Wisconsin Department of Revenue (December 28, 1971), Docket #S--3499, par. 200--755, CCH; Three Lions Supper Club, Ltd. v. Wisconsin Department of Revenue (November 29, 1973), Docket #S--4295, par. 200--960, CCH. We have considered these decisions in arriving at our interpretation In Kroger, supra, the Tax Appeals Commission determined that sale of fixtures or equipment no longer in use and sold during the period of July 1, 1963, through June 30, 1967, were occasional sales not made in the regular course of business, hence not taxable transactions. However, those sales were made under the then existing definition of occasional sales under sec. 77.51(10)(a), Stats.1967. Sec. 228 of ch. 154, Laws of 1969, repealed and recreated sec. 77.51(10)(a), and to sec. 77.51(10)(a), as recreated, was added the following:

of the statutory provisions at issue in this case.

'No sale of any tangible personal property or taxable service may be deemed an occasional sale if at the time of such sale the seller holds or is required to hold a seller's permit.'

Shore Club, Inc., supra; Matuszeski, supra, and Three Lions Supper Club, Ltd., supra, were decided by the Tax Appeals Commission after sec. 77.51(10)(a), Stats., was amended and recreated. Each of the three cases involved the sale of business personal property and the Commission held that the property so sold was not exempt as an occasional sale under the language of the statute as it now exists. The rationale of the Commission in these three cases as it applies to the particular factual situations herein presented commends itself to this court.

The taxpayer also argues that the last sentence of sec. 77.51(10)(a), Stats., is not applicable to it because its permit was issued for the purpose of selling laundry and dry cleaning services, and not for the sale of its personal property assets, and also that once its business operations ceased the permit was cancelled by operation of law.

We quote with approval the following paragraph from the decision of the trial judge:

'Petitioner argues that the seller's permit it held was issued for the sale of dry-cleaning services and was not issued for sale of its machinery and equipment. This argument is apparently grounded upon the fact that in petitioner's application for a seller's permit to the Department dated August 12, 1965, it wrote 'Dry Cleaning' in Item 9 of the application blank, the printed words of which read, 'Kinds of Taxable Merchandise or Service You Intend to Sell (if mixed underline principal kind).' The sellers' permits which the Department issues pursuant to sec. 77.52(9), Stats., are not limited to the particular kinds of described merchandise or services set forth in the application for permit. The Court holds that the seller's permit held by petitioner on September 12, 1969, was not limited to the sale of dry cleaning services but was general in nature. Therefore, petitioner when it made the sale to Harris on September 12, 1969, possessed a 'seller's permit' within the meaning of the last sentence of sec. 77.51(10)(a), Stats., as previously quoted herein. Thus it did not qualify as an occasional sale under secs. 77.54(7) and 77.51(10)(a), Stats.'

We are also of the opinion that the taxpayers argument that this sale was exempt because its seller's permit was cancelled 'by operation of law,' under sec. 77.52(12) and (9),...