J. D. Moore, Inc. v. Hardesty

• Decision Date: 26 February 1963
• Docket Number: No. 12186,12186
• Citation: 147 W.Va. 611,129 S.E.2d 722
• Court: West Virginia Supreme Court
• Parties: J. D. MOORE, INC. v. C. Howard HARDESTY, Jr., State Tax Commissioner. STATE ex rel. C. Howard HARDESTY, Jr., State Tax Commissioner, v. J. D. MOORE, INC.

Page 722

129 S.E.2d 722

147 W.Va. 611

J. D. MOORE, INC. v. C. Howard HARDESTY, Jr., State Tax Commissioner.

STATE ex rel. C. Howard HARDESTY, Jr., State Tax Commissioner, v. J. D. MOORE, INC.

No. 12186.

Supreme Court of Appeals of West Virginia.

Submitted Jan. 29, 1963.

Decided Feb. 26, 1963.

Syllabus by the Court.

1. When a statute is clear and unambiguous and the legislative intent is plain the statute should not be interpreted by the court, and in such case it is the duty of the court not to construe but to apply the statute.

2. Under the provisions of the business and occupation tax statute in effect when the taxes involved in these proceedings accrued during the period August 1, 1953, to December 31, 1956, the taxpayer, engaged in an integrated business which is predominantly wholesale in character in which 81.9 percent of its gross income is derived from wholesale sales of motor trucks and equipment, is subject to the tax imposed by Section 2c of that statute at the rate of fifteen one-hundredths of one percent on 81.9 percent of its gross income; in which 8.6 percent of its gross income is derived from retail sales of motor vehicles is subject to the tax imposed by Section 2c of that statute at the rate of one-half of one percent on 8.6 percent of its gross income; and in which 9.5 percent of its gross income is derived from service, which is not taxable under any other statutory provision, is subject to the tax imposed by Section 2h of that statute at the rate of one percent on 9.5 percent of its gross income.

Peters, Merricks, Leslie, Kenna & Mohler, Lee M. Kenna, Charleston, for appellant.

C. Donald Robertson, Atty. Gen., Edward B. Simms, Asst. Atty. Gen., Charleston, for appellee. HAYMOND, Judge.

The question involved in these consolidated proceedings is whether, under the provisions of Chapter 11, Article 13, Code, 1931, as amended, known as the business and occupation tax statute, a taxpayer engaged in an integrated business of selling motor trucks and machinery at wholesale and of selling at retail repaired and serviced motor vehicles, accepted as a credit upon the purchase price of such motor trucks and machinery, and of maintaining a service department in which some motor vehicles which are not sold in the business are repaired and serived, and in which 81.9 percent of the gross income of its business is derived from wholesale sales, 8.6 percent of the gross income of its business is derived from retail sales, and 9.5 percent of the gross income of its business is derived from service, shall be taxed as to all the activities of such business, as a taxpayer engaged entirely in the sale of property by wholesale, or as a taxpayer engaged in the separate activities of the sale of property by wholesale and by retail and of rendering service upon articles not included in the wholesale or the retail sales of property.

After an audit in 1957, at the instance of the state tax commissioner, herein sometimes referred to as the plaintiff, of the books of the taxpayer, J. D. Moore, Inc., herein sometimes referred to as the defendant, the state tax commissioner on March 10, 1958, levied a deficiency assessment against the defendant of $1,785.01, additional taxes which had accrued during the period August 1, 1953 to December 31, 1956, and a penalty of $615.01, aggregating $2,400.02. That assessment was based upon the allocation of 81.9 percent of the gross income of the business of the defendant to its wholesale sales, 8.6 percent of its gross income to its retail sales, and 9.5 percent of its gross income to its service.

The defendant petitioned for a reassessment of the tax and a refund on the ground that its business activities were predominantly wholesale in character; that the retail sales and the service activities of its integrated wholesale sales business were merely incidental to such business; and that its entire business should be assessed at the rate levied upon a wholesale sales business. On January 16, 1959 the state tax commissioner denied the petition for a reassessment but waived the penalty, and by letter dated January 27, 1959 to the attorney for the defendant refused any refund. On February 27, 1959 the defendant filed its appeal in the Circuit Court of Kanawha County and, after the appeal was filed, the plaintiff instituted a declaratory judgment proceeding in that court on June 10, 1960. These proceedings were consolidated by order entered November 22, 1960 and by final judgment rendered October 26, 1961 the circuit court affirmed the action of the state tax commissioner in levying the deficiency assessment and in waiving the penalty originally imposed and in refusing defendant's claim for a refund. From that judgment this Court granted this appeal and supersedeas on July 2, 1962 upon the petition of the defendant.

The principal error assigned by the defendant is the action of the circuit court in holding that a single integrated business may be separated by the state tax commissioner into component parts for the purpose of taxation under the several applicable sections of the business and occupation tax statute, which are Sections 1, 2 and 2c, Chapter 165, Acts of the Legislature, 1955, Regular Session, and Section 2h, Chapter 86, Acts of the Legislature, 1935, Regular Session, the statute in effect during the period of the accrual of the taxes involved in these consolidated proceedings, and being Sections 1, 2, 2c and 2h, Article 13, Chapter 11, Code, 1931, as amended by those Acts of the Legislature.

The material facts are not disputed and the question for decision is a question of law.

Before the inception of this controversy the defendant customarily reported that 88 percent of its gross income was derived from its sales at wholesale and that 12 percent of its gross income was derived from its sales at retail. It does not appear that it reported that any of its gross income was derived from any service rendered by it in its integrated business.

Section 1, Article 13, Chapter 11, Code, 1931, as amended by Chapter 165, Acts of the Legislature, 1955, Regular Session, the statute in effect when the foregoing taxes accrued, contained, among others, these pertinent provisions: "Sale', 'sales' or 'selling' includes any transfer of the ownership of, or title to, property, whether for money or in exchange for other property.'; "Gross income' means the gross receipts of the taxpayer received as compensation for personal services and the gross receipts of the taxpayer derived from trade, business, commerce or sales and the value proceeding or accruing from the sale of tangible property (real or personal), or service, or both, * * *.'; "Business' shall include all activities engaged in or caused to be engaged in with the object of gain or economic benefit, either direct or indirect. * * *.'; "Service business or calling' shall include all nonprofessional activities engaged in for other persons for a consideration, which involve the rendering of a service as...