Conn. Light & Power Co. v. Walsh

• Citation: 134 Conn. 295,57 A.2d 128
• Court: Connecticut Supreme Court
• Decision Date: 15 January 1948
• Parties: CONNECTICUT LIGHT & POWER CO. v. WALSH, Tax Commissioner. CONNECTICUT LIGHT & POWER CO. et al. v. SAME. M. J. DALY & SONS, Inc., v. SAME.

134 Conn. 295

57 A.2d 128

CONNECTICUT LIGHT & POWER CO.

v.WALSH, Tax Commissioner.

CONNECTICUT LIGHT & POWER CO. et al.

v.SAME.

M. J. DALY & SONS, Inc.,

v.SAME.

Supreme Court of Errors of Connecticut.

Jan. 15, 1948.

Case Reserved from Superior Court, Hartford County; O'Sullivan, Judge.

Actions by the Connecticut Light & Power Company and by the Connecticut Light & Power Company and another for declaratory judgment as to whether the use tax applies to the plaintiffs and by M. J. Daly & Sons, Inc., for declaratory judgment as to whether the sales tax applies to the plaintiff, against Walter W. Walsh, Tax Commissioner. The actions were brought to the superior court and reserved by the court for the advice of the Supreme Court of Errors.

Order in accordance with opinion.

JENNINGS, J., dissenting in part.

Lawrence A. Howard and Atwood Collins, II, both of Hartford (Charles L. Smiddy, of New London, on the brief), for plaintiffs Connecticut Light & Power Co. and M. J. Daly & Sons, Inc.

Arthur L. Corbin, Jr. and John Lashnits, both of New Haven; (Charles L. Smiddy, of New London, on the brief), for plaintiff Southern New England Telephone Co.

Jack Rubin, Asst. Atty. Gen. (William L. Hadden, Atty. Gen., on the brief), for defendant.

Before MALTBIE, C. J., and BROWN, JENNINGS, ELLS, and DICKENSON, JJ.

MALTBIE, Chief Justice.

These cases present three questions arising under the statute adopted by the last General Assembly imposing a sales and use tax. Public Acts 1947, No. 228. In one, the Southern New England Telephone Company claims to be exempt from the imposition of the use tax; in another, the Connecticut Light and Power Company, a water, gas, electric and power company, claims a like exemption; and in the third, the M. J. Daly & Sons corporation, which sells tangible personal property to gas, water, electric, telephone and telegraph companies, claims that such sales are exempt from the sales tax.

The provisions of the act directly involved in the controversies before us are as follows: ‘Sec. 3. The Sales Tax. (1) Imposition and rate of sales tax. For the privilege of selling tangible personal property at retail a tax is hereby imposed upon all retailers at the rate of three per cent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in this state on or after July 1, 1947, and to and including June 30, 1951. (2) Reimbursement for the tax hereby imposed shall be collected by the retailer from the consumer so far as it can be done and such tax reimbursement, termed ‘tax’ in this and the following subsections, shall be paid by the consumer to the retailer and it shall be the duty of each retailer in this state to collect from the consumer the full amount of the tax imposed by this act or an amount equal as nearly as possible or practicable to the average equivalent thereof; and such tax shall be a debt from the consumer to the retailer, when so added to the original purchase price and shall be recoverable at law in the same manner as other debts. * * * Sec. 6. The Use Tax. (1) Imposition and rate of use tax. An excise tax is hereby imposed on the storage, use or other consumption in this state of tangible personal property purchased from any retailer on or after July 1, 1947, for storage, use or other consumption in this state at the rate of three per cent of the sales price of the property. (2) Liability for tax. Every person storing, using, or otherwise consuming in this state tangible personal property purchased from a retailer is liable for the tax. His liability is not extinguished until the tax has been paid to this state except that a receipt from a retailer maintaining a place of business in this state or from a retailer who is authorized by the commissioner, under such rules and regulations as he may prescribe, to collect the tax and who is, for the purposes of this act relating to the use tax, regarded as a retailer maintaining a place of business in this state, given to the purchaser pursuant to subsection 3 of this section, is sufficient to relieve the purchaser from further liability for the tax to which the receipt refers. (3) Collection by retailer. Every retailer maintaining a place of business in this state and making sales of tangible personal property for storage, use, or other consumption in this state, not exempted under this act, shall, at the time of making the sales or, if the storage, use, or other consumption of the tangible personal property is not then taxable hereunder, at the time the storage, use, or other consumption becomes taxable, collect the use tax from the purchaser and give to the purchaser a receipt therefor in the manner and form prescribed by the commissioner. * * * Sec. 7. Exemptions. Taxes imposed by this act shall not apply to the gross receipts from the sale of and the storage, use or other consumption in this state with respect to the following items: * * * (c) Gas, Water Electricity, Telephone and Telegraph Services. The sales, furnishing, or service of, gas, water, electricity, telephone and telegraph when delivered to consumers through mains, lines or pipes.'

The telephone and power companies claim that the terms of the act themselves evince an intent that the use tax shall not be imposed upon them as regards materials purchased and used or consumed by them in order to enable them to serve their customers; the telephone company also claims exemption by reason of a provision in § 1321 of the General Statutes that a tax upon gross earnings of telephone companies imposed by §§ 1316 and 1317 ‘shall be in lieu of all other taxation’ in this state upon each such company and upon its tangible and intangible personal property, with an added provision that its real estate shall be taxed where it is located. The power company claims a like exemption under a provision in § 1325 of the General Statutes that a tax upon gross earnings imposed by §§ 1322 and 1323 upon companies manufacturing, selling and distributing water, gas or electricity ‘shall be in lieu of all license, corporate excess or income taxes' payable to the state and of all taxes on moneys and credits owned by the companies. The Daly corporation claims that, upon similar grounds, it is not bound to pay the state any tax upon materials sold to the other plaintiffs and similar companies for use or consumption in furnishing service to their customers.

The use tax is doubtless complementary to the sales tax, but its purpose goes beyond protecting sellers within the state from the unfair competition which would result if the purchase of articles outside state bounds was not subject to taxation, and beyond affording a means of preventing the evasion of the sales tax by such purchases. It applies, for example, as regards articles bought outside the state although they are not purchasable within it. By the use tax, a broader basis of taxation is established by the inclusion of purchases made without as well as within the state. Dain Mfg. Co. v. Iowa State Tax Commission, 237 Iowa 531, 534, 22 N.W.2d 786. The two taxes, though imposed by the same act, are distinct. ‘A sales tax and a use tax in many instances may bring about the same result. But they are different in conception, are assessments upon different transactions, and in the interlacings of the two legislative authorities within our federation may have to justify themselves on different constitutional grounds. A sales tax is a tax on the freedom of purchase-a freedom which wartime restrictions serve to emphasize. A use tax is a tax on the enjoyment of that which was purchased.’ McLeod v. Dillworth Co., 322 U.S. 327, 330, 64 S.Ct. 1023, 1025, 88 L.Ed. 1304. Whether or not the two shall have precisely the same scope is for the determination of the legislature. In the act before us, it is unquestionably so that, in the main, articles subject to the use tax would, if bought in this state, be subject, instead, to the sales tax; but as to any particular type of article it may be necessary, as it is in these cases, to search the act to discover whether there is any particular intent as to it.

The terms of the act imposing the use tax are broad enough to include articles stored, used or consumed by the telephone and power companies on the same basis as those stored, used or consumed by others. The only provision of the act which singles out such companies for special treatment is § 7(c), which we have quoted. While the introductory clause of that section refers to exemptions from both the sales tax and the use tax, all of the seventeen subsections deal specifically with exemptions from the former except two, which expressly state exemptions from both the sales tax and use tax as regards returnable containers and motor vehicle fuel. Subsection (c), instead of supporting the companies' claim to exemption from the use tax, pretty thoroughly disproves it. The exemption is of ‘the sales, furnishing, or service of, gas, water, electricity, telephone and telegraph,’ and it is, therefore, an exemption only from the sales tax. It does not, however, exempt such companies generally from that tax but only as regards service delivered to customers ‘through mains, lines or pipes.’ The careful delineation of the bounds of this exemption gives unusual force to the principle that the express mention in a statute of one exemption precludes reading others into it. Hoard v. Sears, Roebuck & Co., 122 Conn. 185, 193, 188 A. 269. The provision unmistakably shows a legislative intent that, as to sales other than those specified, public utility companies should be subject to the sales tax, and shows that there was no intent to exempt them generally from that tax. Still less is there any basis in this provision for a claim of exemption of such companies from the use tax. Had the General Assembly intended such a result, it could easily have broadened the provision to exempt public utility companies from the imposition of the use...