Gray v. Oklahoma Tax Commission

• Decision Date: 05 March 1963
• Docket Number: No. 39211,39211
• Citation: 379 P.2d 843
• Parties: Earl Q. GRAY, Plaintiff in Error, v. OKLAHOMA TAX COMMISSION, Defendant in Error.
• Court: Oklahoma Supreme Court

Page 843

379 P.2d 843

1963 OK 51

Earl Q. GRAY, Plaintiff in Error, v. OKLAHOMA TAX COMMISSION, Defendant in Error.

No. 39211.

Supreme Court of Oklahoma.

March 5, 1963.

Syllabus by the Court

1. Where a use tax is levied upon goods brought into the state to offset the sales tax levied upon such goods if purchased in the state, such use tax is valid and constitutional.

2. Where the sales tax in Oklahoma is repealed upon the goods purchased in the state, such goods when purchased out of the state are no longer subject to use tax inasmuch as such a levy would be unconstitutional as being a levy on interstate commerce in violation of the commerce clause of the Federal Constitution.

3. A state is without power, by taxation, to impose upon the products of other states, brought therein for sale or use, more onerous public burdens than it imposes upon like products of its own territory, or to discriminate, in the matter of trade regulations, in favor of its citizens and against the citizens of other states.

4. The provisions of Sections 1310, 1310a to and including 1310i, 68 O.S.1951, are unconstitutional as being in violation of the commerce clause of the Federal Constitution in so far as such sections attempt to levy such use tax upon any goods brought into the State of Oklahoma, when such goods would not be subject to sales tax if sold within the state.

Appeal from Ruling of the Oklahoma Tax Commission assessing use tax on livestock feed purchased in the State of Texas. Assessment vacated.

Earl Q. Gray, per se, Fischl & Culp, Ardmore, for plaintiff in error.

E. J. Armstrong, Moses Frye, Oklahoma City, for defendant in error.

PER CURIAM.

This is an appeal from a ruling of the Oklahoma Tax Commission assessing a tax of $161.94, together with interest and penalties, for use tax upon a purchase of a livestock feed in the sum of $8,097.40. The purchase was made in the State of Texas, and the feed was shipped to the ranch of plaintiff in Johnston County, Oklahoma.

Prior to 1957, livestock feed was subject to a sales tax of 2% upon such feed purchased in Oklahoma. See 68 O.S.1951 §§ 1251 to 1251n. Feed purchased in other states and shipped into the state for consumption was subject to a use tax of 2%. See 68 O.S.1951 §§ 1310 to 1310i. In 1957 the Legislature of Oklahoma repealed the sales tax on feed purchased in the state. The effect of this repealed, if the contention of the Tax Commission is correct, is that the use tax upon feed purchased in other states is still in effect. The contention of plaintiff is that this 2% levy on out-of-state purchases constitutes a levy on interstate commerce and is therefore unconstitutional.

Use taxes upon interstate shipments have been sustained by the United States Supreme Court where enacted to offset a sales tax within the State, thereby doing away with any differential between out-of-state purchases and those within the State. See Henneford v. Silas Mason Co., 300 U.S. 577, 57 S.Ct. 524, 81 L.Ed. 814.

It is asserted by the Commission that 'the tax upon the use after the property is at rest is not so measured or conditioned as to hamper the transaction of interstate commerce or discriminate against them.'

The fallacy in this contention is readily apparent. If the 'use' tax were equally applied to all like products, there could be little objection urged. But where it is placed upon a product purchased without the state with no equalizing tax upon the same product within the state, it is obvious that the tax is wholly one levied because of the point of origin and for no other reason. We cannot agree with the contention that such a levy is not one burdening interstate commerce.

In the case of Southeastern, Inc. v. Oklahoma Tax Commission, Okl., 351 P.2d 739, this court said in regard to this very use tax:

'The use tax is an excise tax which the State is authorized to exact, in connection with the sales tax, for the primary purpose of raising revenue for state purposes, and is designed to prevent consumers from escaping sales tax by going outside of the state and purchasing property and bringing it into the state for use or consumption.' (Emphasis ours.)

This very language demonstrates that such a use tax is a barrier to bringing in goods from without the State. It can be justified, as held in the Southeastern case, as a means for preventing the escape from a sales tax. But here no sales tax exists, and the reasoning of the Southeastern case ceases to apply. Clearly, the language of the court demonstrates that it is actually a levy on interstate commerce and without the justification existing in that case.

We deem the question conclusively settled by the Supreme Court of the United States in Welton v. State of Missouri, 91 U.S. 275, 23 L.Ed. 347, where the court said in discussing the exclusive power of Congress to regulate interstate commerce:

'That power was...