Bouchard v. Johnson

• Court: Maine Supreme Court
• Writing for the Court: Before WILLIAMSON; SIDDALL
• Citation: Bouchard v. Johnson, 170 A.2d 372, 157 Me. 41 (Me. 1961)
• Decision Date: 06 February 1961
• Parties: Andrew E. BOUCHARD d/b/a Roland & Andy's Restaurant, v. Ernest H. JOHNSON, State Tax Assessor. Stanley E. SCRIBNER d/b/a Avie's Cafe v. Ernest H. JOHNSON, State Tax Assessor. STATE CAFE, INC. v. Ernest H. JOHNSON, State Tax Assessor.

Page 372

170 A.2d 372

157 Me. 41

Andrew E. BOUCHARD d/b/a Roland & Andy's Restaurant, v. Ernest H. JOHNSON, State Tax Assessor.

Stanley E. SCRIBNER d/b/a Avie's Cafe v. Ernest H. JOHNSON, State Tax Assessor.

STATE CAFE, INC. v. Ernest H. JOHNSON, State Tax Assessor.

Supreme Judicial Court of Maine.

Feb. 6, 1961.

Jacobson & Jacobson, Henry Steinfeld, Portland, for plaintiffs.

Ralph Farris, Richard Foley, Augusta, for defendant.

Before WILLIAMSON, C. J., and WEBBER, TAPLEY, SULLIVAN, DUBORD and SIDDALL, JJ.

SIDDALL, Justice.

Each of these cases involves a deficiency assessment of sales tax, interest and penalties by the State Tax Assessor acting under the provisions of R.S.1954, Chap. 17, Sec. 20, as amended by P.L.1957, Chap. 80. The tax assessed in the State Cafe case covered the period from October 1, 1957, to January 31, 1959, and in the other cases from October 1, 1957, to February 28, 1959. The deficiency assessment against Andrew E. Bouchard amounted to $1,040.40, that against Stanley E. Scribner to $598.29, and that against State Cafe, Inc. to $856.65. In each case the taxpayer sought a reconsideration of the assessment and after reconsideration the original assessment was upheld. An appeal to the Superior Court was made in each case based upon the grounds that the taxpayer was a retailer primarily engaged in making sales for ten cents or less and kept satisfactory records thereof; that the tax assessed covered such sales, and that under the provisions of R.S.1954, Chap. 17, Sec. 3, the tax assessor was without authority to tax these sales. Stipulations were entered into in each case specifying that Ernest H. Johnson during the entire period in question, and at the time of hearing, was the duty appointed and qualified State Tax Assessor, and that he purported to levy the alleged deficiency assessments in the amounts heretofore stated. It was further stipulated that the taxpayer in each case was a retailer of tangible personal property within this state during the period covered by the assessment, and did not have a permanent classified permit issued by the State Tax Assessor during that period. It was also stipulated that all statutory requirements necessary for the perfection of the appeal of the taxpayers had been taken. After hearing, the presiding justice sustained the appeal and ordered the tax abated in each case. The State Tax Collector appealed to this court from the decision and order of the presiding justice.

Although the cases were heard separately in the court below, they come here on one record and were argued together before this court. The same principles of law are involved in all of the cases. There is no conflict in the testimony in any case, although the State Tax Assessor and the taxpayer draw different conclusions therefrom. We are aware of no reason why the issues in all cases cannot be determined in one opinion.

The pertinent portions of the applicable statutes and regulations thereunder are as follows:

'A tax is imposed at the rate of 3% on the value of all tangible personal property, sold at retail in this State on and after July 1, 1957, measured by the sale price, except as in this chapter provided.' R.S.1954, Chap. 17, Sec. 3, as amended by P.L.1957, Chap. 402, Sec. 1.

'No tax shall be imposed upon such property sold at retail for 10cents or less, provided the retailer is primarily engaged in making such sales and keeps records satisfactory to the state tax assessor.' R.S.1954, Chap. 17, Sec. 3. (Emphasis ours.)

'Adding tax to sale price.--Every retailer shall add the sales tax imposed by this chapter, or the average equivalent of said tax, to his sale price, except as otherwise provided, and when added the tax shall constitute a part of the price, shall be a debt of the purchaser to the retailer until paid and shall be recoverable at law in the same manner as the purchase price. When the sale price shall involve a fraction of a dollar the tax shall be added to the sale price upon the following schedules:

'Amount of Sale Price Amount of Tax

$0.01 to $0.14, inclusive 0 cents

.15 to .39, inclusive 1 cents

.40 to .74, inclusive 2 cents

.75 to .99, inclusive 3 cents

'When the sale price exceeds 99cents, the tax to be added to the price shall be 3cents for each whole dollar, plus the amount indicated above for each fractional part of a dollar.

'When several articles are purchased together and at the same time, the tax shall be computed on the total amount of the several items.

'Breakage under this section shall be retained by the retailer as compensation for the collection.' R.S.1954, Chap. 17, Sec. 5, as amended.

'Records of retailers.--Every retailer shall keep records of his sales, the kind and form of which shall be adequate to enable the assessor to determine the tax liability. All such records shall be safely preserved for a period of 3 years in such manner as to insure their security and accessibility for inspection by the assessor or by any of his employees engaged in the administration of this chapter. The assessor may consent to the destruction of any such records at any time within said period.' R.S.1954, Chap. 17, Sec. 29.

'Presumption concerning sales.--The burden of proving that a transaction was not taxable shall be upon the person charged with tax liability.' R.S.1954, Chap. 17, Sec. 9.

'Administration.--The assessor is authorized and empowered to carry into effect the provisions of this chapter and, in pursuance thereof, to make and enforce such reasonable rules and regulations consistent with this chapter as he may deem necessary.' R.S.1954, Chap. 17, Sec. 23.

Pursuant to the foregoing provision the following regulation was issued on June 5, 1951, and was in effect during the period in question:

'Each registered seller, and each retailer as defined in the Sales and Use Tax Law, shall keep adequate and complete records of his business in this State showing:

'(1) The total amount of the sale price of all sales of tangible personal property including both taxable and nontaxable items and any services that are a part of a sale.

* * *

* * *

'There records must include, the normal books of account ordinarily maintained by the average prudent business man engaged in the activity in question, together with all bills, receipts, invoices, cash register tapes, or other documents of original entry supporting the entries in the books of account as well as all schedules or working papers used in connection with the preparation of tax returns.

'All such records must be maintained for State Bureau of Taxation audits for a period of at least three years unless the destruction or other disposal of the same shall be authorized by the State Tax Assessor, or his authorized representative, in writing.' Regulation No. 5 issued by State Tax Assessor.

In construing statutes relating to the assessment of taxes, taxation is the general rule and exemption from taxation is the exception. The burden of proving an exemption rests upon the party claiming it, and he must bring his case clearly within the spirit and intent of the act creating the exception. City of Bangor v. Rising Virtue, etc., Masonic Lodge, 73 Me. 428, 433, 40 Am.Rep. 369. See also Calais Hospital v. City of Calais, 138 Me. 234, 241, 24 A.2d 489; Camp Enoh Associates v. Inhabitants of Lyman, 132 Me. 67, 70, 166 A. 59. The taxpayers in these cases claim that they are not taxable on articles sold for 10cents or less for the reason that they were primarily engaged in such sales and kept records satisfactory to the State Tax Assessor. The rule set forth above applies with no less force to those claiming an exemption from the payment of a sales tax on tangible personal property sold at retail in this state. The burden is upon the taxpayer in each of these cases to clearly show that he was primarily engaged in the retail sales of articles for ten cents or less and that he kept records satisfactory to the State Tax Assessor.

The presiding justice in ordering a tax abatement in each case found that the taxpayer had carried his burden of proof; that he was a retailer primarily engaged in making sales of property at retail for ten cents, and that he kept records satisfactory to the State Tax Assessor within the meaning of R.S.1954, Chap. 17, Sec. 3.

'Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to opportunity of the trial court to judge of the credibility of the witnesses.' Rule 52(a). Maine Rules of Civil Procedure.

See also Harriman v. Spaulding, 156 Me. 440, 443, 165 A.2d 47.

[2, 3] Where only one inference can reasonably be drawn from undisputed facts, the question is one of law and not of fact. Maine Water Company v. Knickerbocker Steam Towage Company, 99 Me. 473, 485, 59 A. 953. Only when a justice finds facts without evidence or contrary to the only conclusion which may be drawn from the evidence is there any error of law. State v. Harnden, Applts., 154 Me. 76, 77, 143 A.2d 750; Dingley et al. v. Dostie, 146 Me. 195, 196, 79 A.2d 169.

We now turn to the question of whether the taxpayer kept requisite records under the provisions of R.S.1954, Chap. 17, Secs. 3 and 29, and under Regulation No. 5. The interpretation of these provisions is a question of law. That portion of Sec. 3 which sets forth that no tax shall be imposed upon property sold at retail for ten cents or less provided the taxpayer keeps records satisfactory to the State Tax Assessor must be considered in conjunction with Sec. 29 which requires retailers to keep records of their sales, the kind and form of which shall be adequate to enable ten assessor to determine the tax liability. These provisions are a part of a revenue act known as the Sales and Use Tax Law, which imposes a tax on the value of all tangible personal property sold at retail in this state, with certain exceptions specified therein. Any person claiming nonliability for the payment of a tax on property sold at retail...