Marhoefer Packing Co., Inc. v. Indiana Dept. of State Revenue

• Decision Date: 13 September 1973
• Docket Number: No. 2--1072A88,2--1072A88
• Citation: 157 Ind.App. 505,301 N.E.2d 209
• Court: Indiana Appellate Court
• Parties: MARHOEFER PACKING COMPANY, INC., Appellant, v. INDIANA DEPARTMENT OF STATE REVENUE, Appellee.

Page 209

301 N.E.2d 209

157 Ind.App. 505

MARHOEFER PACKING COMPANY, INC., Appellant, v. INDIANA DEPARTMENT OF STATE REVENUE, Appellee.

No. 2--1072A88.

Court of Appeals of Indiana, Second District.

Sept. 13, 1973.

Theodore D. Nering, Dutton, Kappes & Overman, Indianapolis, William F. Radcliff, DeFur, Voran, Hanley, Radcliff & Reed, Muncie, for appellant.

Theodore L. Sendak, Atty. Gen., Mark Peden, Deputy Atty. Gen., Indianapolis, for appellee.

SULLIVAN, Judge.

Plaintiff-appellant Marhoefer Packing Company, Inc. (Marhoefer) appeals from a judgment of dismissal pursuant to Rule TR. 12(B)(6). The litigation concerns the application of the Indiana Gross Income Tax Act, IC 1971, 6--2--1--1, Ind.Ann.Stat. § 64--2601 et seq. (Burns 1972 Supp.). ¹

Marhoefer is an Indiana corporation engaged in the sale of stocks of groceries to retail food establishments. The amount of taxes for which Marhoefer was liable under the Act, insofar as here pertinent, depended upon whether in tax years 1965, 1966 and 1967, Marhoefer came within the definition of 'wholesale grocer' as defined by IC 1971, 6--2--1--1, Ind.Ann.Stat. § 64--2601(s) (Burns 1961) (hereinafter cited as 2601(s)) which provides:

'In the case of wholesale grocers who are engaged in the business of selling stocks of groceries, tobacco products and expendable household supplies, gross income shall be deemed to mean the gross earnings, computed upon an annual basis, which are derived from wholesale sales of stocks of groceries, tobacco products and expendable household supplies to retail food establishments, and such wholesale grocers shall be subject to the rate of taxation as prescribed in section 3(f) ( § 64--2603(f)) of chapter 50 of the Acts of the Indiana general assembly of 1933, as the same has been amended: Provided; That for the purpose of this subsection only gross earnings shall be construed to mean the gross receipts derived from the sale at wholesale of stocks of groceries, tobacco products and expendable household supplies which are customarily sold through retail food establishments less the cost of the stocks of groceries, tobacco products and expendable household supplies sold during such period, without any deductions of any other kind or character.'

The Indiana Department of State Revenue (Department) in 1961 promulgated Instruction 4--154 which interpreted § 2601(s) in such a manner as to exclude Marhoefer's business operation from the definition of 'wholesale grocer.' In reliance upon this interpretation, in 1965, 1966 and 1967, Marhoefer 'voluntarily' ² paid taxes in amounts greater than would have been due had it been deemed a wholesale grocer.

On December 22, 1971, the Appellate Court of Indiana decided Indiana Dept. of State Revenue v. Stark-Wetzel & Co. (1971), Ind.App., 276 N.E.2d 904 which Marhoefer contends held, in affirming a judgment of the trial court, that the Department's Instruction 4--154 incorrectly interpreted § 2601(s) and that in fact Marhoefer for the years in question should have been considered a wholesale grocer.

Relying apparently upon the trial court decision in the Stark-Wetzel case, ³ Marhoefer on June 30, 1971, filed a petition with the Department for refund of a portion of the taxes paid in 1965, 1966 and 1967. Upon the Department's denial of this petition, Marhoefer filed its complaint in the Delaware Circuit Court seeking recovery of the amounts allegedly overpaid.

The Delaware Circuit Court dismissed Marhoefer's complaint pursuant to a Trial Rule 12(B)(6) motion upon the grounds that IC 1971, 6--2--1--19, Ind.Ann.Stat. § 64--2614a(a) (Burns 1961) required that a refund petition be filed within three years after payment of the tax; that it was in effect a statute of limitations and as such barred Marhoefer's civil action.

Two issues are presented for review:

1. Does IC 1971, 6--2--1--19, Ind.App.Stat. § 64--2614a (Burns 1961) (hereinafter cited as § 2614a) constitute the exclusive remedy available to a taxpayer for recovery of taxes paid?

2. Does the three year time requirement applicable to the filing of a refund petition constitute a statute of limitations upon, or a condition precedent to, the filing of a civil suit?

§ 2614a IS THE EXCLUSIVE REMEDY FOR

RECOVERY OF TAXES PAID

§ 2614a contains four sections ((a), (b), (c) and (d)), as follows:

'(a) If any person considers that he has paid to the department for any year an amount which is in excess of the amount legally due from him for that year under the terms of this act ( §§ 64--2601--64--2631), he may apply to the department, by petition in writing, at any time within three (3) years after the payment for the annual period for which such alleged overpayment has been made, for a correction of the amount so paid by him to the department, and for a refund of the amount which he claims has been illegally collected and paid. In such petition, he shall set forth the amount which he claims should be refunded, and the reasons for such claim. The department shall promptly consider such petition, and may grant such refund in whole or in part, or may whooly deny the same. If denied in whole or in part, the petitioner shall be forthwith notified of such action of the department, and of its grounds for such denial. The department may in its discretion, grant the petitioner a further hearing with respect to such petition. Any person improperly charged with any tax provided for under the terms of this act, and required to pay the same, may recover any amount thus improperly collected, together with interest, in a civil action or suit against the department in the circuit or superior court of the county of his residence or business location and if he has no such residence or business location, then in the Marion circuit or superior court. The state hereby consents to such suits in said courts and no others and said courts are hereby granted exclusive jurisdiction of said suits: Provided, however, That except as hereinafter provided, no court shall have jurisdiction over any such suit unless the taxpayer shall show that the complaint therein was filed within three (3) months after he shall have received notification of the action of the department denying said petition for refund in whole or in part. In the event that the department shall take no action upon such petition for refund within six (6) months after the same shall have been filed, the taxpayer may elect to institute such suit for refund at any time thereafter, but not more than three (3) months after such claim shall have been denied in whole or in part, in no event more than three (3) years from the date of the filing of the claim for refund. Any such petition shall be subject to the provisions of section 11(b) ( § 64--2611). In every such action, a copy of the complaint shall be served upon the department, with the summons, which summons shall be so served at least thirty (30) days before the return date thereof. It shall not be necessary for any taxpayer to protest against the payment of the tax in order to maintain such suit. It any suit to recover taxes paid, or to collect taxes, imposed under the provisions of this act, the court shall adjudge costs to such extent and in such manner as may be deemed equitable.

(b) Either party to such suit shall have the right to appeal, as now provided by law in civil cases. In the event a final judgment is rendered in favor of the taxpayer in a suit to recover illegal taxes, then it shall be the duty of the state auditor, upon receipt of a certified copy of such final judgment, to issue a warrant directed to the treasurer in favor of such taxpayer, to pay such judgment out of any funds in the state treasury not otherwise appropriated.

(c) It shall be the duty of the attorneygeneral to represent the department, and/or the state of Indiana, in all legalmatters or litigation, either criminal or civil, relating to the enforcement, construction, application and administration of this act.

(d) No injunction to restrain or delay the collection of any tax claimed to be due under the provisions of this act shall be issued by any court, but in all cases in which, for any reason, it be claimed that any such tax about to be collected is wrongful or illegal in whole or in part, the remedy, except as otherwise expressly provided in this act, shall be by payment and action to recover such tax as provided in this section. (Acts 1933, ch. 50, § 14A, as added by Acts 1955, ch. 165, § 2, p. 330.)'

§ 2614a(a) contains the provisions for the refund of taxes paid. Marhoefer contends that § 2614a(a) was not intended to be the sole remedy of a taxpayer and cites Dept. of Treasury v. Ridgely (1936), 211 Ind. 9, 4 N.E.2d 557 as supporting authority.

The Ridgely case concerned an attempt by a taxpayer to enjoin the collection of taxes which the taxpayer considered illegal. The taxpayer had submitted his return and paid and amount he thought due. The Department of Treasury demanded additional taxes. The court stated that a taxpayer may use injunctive procedures to protect himself against an imposition of an illegal tax. The premise upon which the court based its decision was that remedies provided in the Indiana Gross Income Tax Act were not exclusive. At the time of the Ridgely case, all provisions for refunds of taxes paid were contained in Ind.Ann.Stat. § 64--2612 (Burns 1933).

In 1937, the General Assembly revised the refund remedies of the Indiana Gross Income Tax Act. § 2612 of the 1933 Statute contained sections (a), (b), (c) and (d). Sections (a), (b), and (c) were modified, then transferred to newly enacted § 2614. Section (d) was modified but remained in § 2612. Thus, § 2612 of the 1937 statute contained provisions for the Department of Treasury to reassess a taspayer and for the taxpayer to object to any improper reassessment while § 2614 contained provisions for remedies to a taxpayer for refund of taxes already paid. In addition to sections (a), (b) and (c) in §...