Labrayere v. Goldberg, 61421.

• Decision Date: 15 October 1980
• Docket Number: No. 61421.,61421.
• Parties: Donald LABRAYERE and Ruth Labrayere, d/b/a Missouri Limestone Co., Respondents, v. Gerald H. GOLDBERG, Director of Revenue, State of Missouri, Appellant.
• Court: Missouri Supreme Court

605 S.W.2d 79

Donald LABRAYERE and Ruth Labrayere, d/b/a Missouri Limestone Co., Respondents, v. Gerald H. GOLDBERG, Director of Revenue, State of Missouri, Appellant.

No. 61421.

Supreme Court of Missouri, En. Banc.

September 9, 1980.

Opinion Modified On Own Motion On Denial of Rehearing October 15, 1980.

John Ashcroft, Atty. Gen., Richard Wieler, Asst. Atty. Gen., Jefferson City, for appellant.

Dale L. Rollings, St. Charles, for respondents.

Opinion Modified On Court's Own Motion On Denial of Rehearing October 15, 1980.

WELLIVER, Judge.

Appellant Gerald H. Goldberg, Director of Revenue of the State of Missouri, seeks review of a final order of the Circuit Court of Warren County, Missouri, which remanded to the Department of Revenue for an evidentiary hearing and preparation of a transcript, a case heard on respondents' petition for administrative review. Jurisdiction is in this Court because the case involves construction of the revenue laws of this state. Mo.Const. art V, § 3. We affirm.

Respondents Donald and Ruth Labrayere are engaged in the business of mining and selling limestone in the Warrenton, Missouri, area, doing business as the Missouri Limestone Company. Sales tax personnel of the Missouri Department of Revenue examined respondents' books and records and assessed against respondents an additional sales and use tax liability totaling $12,379.75 as of January 19, 1978.

On January 19, 1978, the Department of Revenue notified respondents by certified mail that they had been assessed for unpaid sales and use taxes between April 1, 1975 and March 31, 1977, of $12,379.75; that payment was due on February 7, 1978; and that "to contest this assessment, you must attend an informal hearing scheduled for February 7, 1978." The notice of assessment stated that the liability was based on an additional sales and use tax audit conducted by Vintra Snapp dated December 30, 1977. On February 9, 1978, the Department of Revenue mailed respondents its final decision following the informal hearing of assessment for sales and use taxes. The decision found no exceptions to the audit, and stated that the assessment of $12,379.75 "stands as is and is due and owing."

On March 10, 1978, respondents timely filed their petition for reassessment with the Department of Revenue, in which they contested the sales tax assessment on the ground that "the transportation charges alleged, among other allegations made, are not subject to sales tax." The petition was prepared by respondents' certified public accountant, T. J. Shannahan, under a power of attorney.

On May 2, 1978, Dennis Hoffert, Assistant General Counsel of the Department of Revenue, sent a letter to respondents which stated that respondents' petition was "statutorily insufficient" to be considered a petition for reassessment, citing the requirement of § 144.240(3), RSMo 1969, that a petition for reassessment "set forth specifically and in detail the grounds upon which it is claimed that the assessment is erroneous." The letter informed respondents that if they did not supply the Department of Revenue with specific and detailed information relative to their petition by May 17, 1978, the petition would be denied. On May 24, 1978, Tom Shannahan sent to the Department of Revenue a letter which stated:

ON PETITION FOR REASSESSMENT ON ASSESSMENT NO. 20068 IT WAS STATED THAT TRANSPORTATION CHARGES ARE NOT SUBJECT TO SALES TAX. TAXPAYER, AT THE HEARING, WILL REPEAT WHAT WAS SAID TO THE DEPARTMENT OF REVENUE REPRESENTATIVE PREVIOUSLY. THE TAXPAYER IS ATTENDING THE HEARING PRIMARILY TO FORECLOSE YOUR COURTROOM CONTENTION THAT HE FAILED TO COMPLY WITH THE LAW BY NOT ATTENDING THE HEARING.

On May 4, 1978, the Department of Revenue notified respondents by certified mail that a formal hearing on the petition for reassessment would be held on June 9, 1978, in the Missouri Department of Revenue office in the City of St. Louis at 1:30 p. m. On June 9, 1978, the formal hearing was held. At the conclusion of the hearing respondents were allowed until July 9, 1978, to provide any additional information to the Department of Revenue regarding their petition for reassessment. On July 11, 1978, respondents provided some additional information to the Department of Revenue. On January 23, 1979, Hearing Officer Dennis Hoffert issued findings of fact and conclusions of law on respondents' petition for reassessment, based upon the information and testimony provided at that hearing and the subsequent information received.

In addition to the facts related above, the hearing officer entered the following findings:

1.) that Petitioner presented no specific evidence with respect to the transactions it alleged were transportation charges;

2.) that petitioner presented no specific or competent evidence with respect to the transactions it alleged were exempt transactions;

3.) that the audit conducted by personnel of the Department of Revenue was not contradicted by any specific facts presented by Petitioner.

The hearing officer thereupon concluded:

It is the final decision of the Director of Revenue, that as a matter of law, petitioner has failed to meet the burden imposed upon it by Section 144.210 and therefore remains liable for the full amount of sales and use tax assessed.

The findings of fact and conclusions of law quoted that portion of § 144.210, RSMo 1969, which states that "the burden of proving that a sale of tangible personal property, services, substances or things was not a sale at retail, shall be upon the person who made the sale". As noted, the hearing officer concluded that the petitioner had failed to carry this burden, and that the assessment was correct.¹ The hearing officer stated:

In the event petitioner is not satisfied with this final decision in any respect, it may petition in the Circuit Court in the manner and to the extent provided in Chapters 536 and 144 RSMo.

On February 23, 1979, respondents filed a petition for judicial review in the Circuit Court of Warren County, Missouri, or, in lieu thereof, a remand to the Department of Revenue for a hearing at which an evidentiary record could be compiled. On March 29, 1979, respondents filed a motion to remand to the Department of Revenue for an evidentiary hearing and preparation of a transcript of the record for full review by the court.

The motion to remand was argued on April 4, 1979, and granted by the Circuit Court on April 13, 1979. The Director of the Department of Revenue filed a notice of appeal to this Court on May 14, 1979.

I

The threshold question presented is whether the circuit court had jurisdiction to entertain respondents' petition for review. Appellant contends that because the final decision of the director of revenue was rendered after August 13, 1978, the date on which S. B. 661, Laws of Mo. 1978, pp. 441-61 became effective, review of that decision was required to be performed not by the circuit court but by the Administrative Hearing Commission, under §§ 144.261 and 161.273, RSMo 1978.

Prior to the enactment of S. B. 661, disputes between taxpayers and the director of revenue regarding sales or use taxes were governed by the provisions of Chapter 144. Section 144.240, RSMo 1969, provided that when the director issued an additional sales tax assessment, the taxpayer could petition for reassessment, in which case the director was required to hold a hearing. Section 144.261, RSMo 1969, provided for judicial review of any decision, finding, order or ruling of the director of revenue under Chapter 144 in the manner provided by Chapter 536, RSMo. Section 144.680, RSMo 1969, provided that any taxpayer aggrieved by an action taken by the director of revenue concerning use taxes could petition for reassessment and the director was required to extend such taxpayer a hearing. Section 144.685, RSMo 1969, provided that any decision, finding, order or ruling of the director of revenue under the use tax provisions of §§ 144.600 to 144.745 was subject to judicial review pursuant to Chapter 536, RSMo, except that the taxpayer had one year after the decision, finding, order or ruling to file his petition for review and the cause would be heard de novo. Since the rights and privileges of taxpayers could only be determined subsequent to a hearing before the director, review of a final decision of the director under Chapter 144 was subject to the provisions of §§ 536.100 and 536.110, RSMo 1969. Thus, review of a final decision of the director of revenue was the responsibility of the appropriate circuit court.

Senate Bill 661, Laws of Mo. 1978, pp. 441-61, repealed the statutory provision for a hearing before the director of revenue upon a taxpayer's petition for reassessment of use taxes and repealed the statutory provision for judicial review of decisions of the director of revenue concerning use tax, §§ 144.680 and 144.685, RSMo 1969. Laws of Mo. 1978, p. 442. Senate Bill 661 also altered § 144.240, RSMo 1969, to remove the requirement that the director of revenue provide a hearing upon a petition for reassessment of sales taxes, and altered § 144.261 to provide that final decisions of the director of revenue under Chapter 144 are reviewable by the Administrative Hearing Commission under the provisions of § 161.273, RSMo 1978. Laws of Mo. 1978, p. 448. Senate Bill 661 included in § 161.273, RSMo 1978, the provision that "any person or entity shall have the right to appeal to the administrative hearing commission from any finding, order, decision, assessment or additional assessment made by the director of revenue."

The question whether the circuit court had jurisdiction over respondents' petition for review depends upon the effective date of § 161.273, RSMo 1978. Section A of S. B. 661 provides in part:

This act shall become effective August 13, 1978. Any hearing or review commenced prior to such date shall proceed pursuant to the law applicable at the time of its commencement.

Laws of Mo. 1978, p. 461...