Nash Finch Co. v. South Dakota Dept. of Revenue, No. 13435

CourtSupreme Court of South Dakota
Writing for the CourtDUNN; WOLLMAN, C. J., and FOSHEIM; WOLLMAN; FOSHEIM
Citation312 N.W.2d 470
PartiesNASH FINCH COMPANY, d/b/a Prairie Market Stores, Appellee, v. SOUTH DAKOTA DEPARTMENT OF REVENUE, Appellant.
Decision Date18 November 1981
Docket NumberNo. 13435

Page 470

312 N.W.2d 470
NASH FINCH COMPANY, d/b/a Prairie Market Stores, Appellee,
v.
SOUTH DAKOTA DEPARTMENT OF REVENUE, Appellant.
No. 13435.
Supreme Court of South Dakota.
Argued Oct. 1, 1981.
Decided Nov. 18, 1981.

Page 471

Thomas J. Welk of Boyce, Murphy, McDowell & Greenfield, Sioux Falls, for appellee.

Gene R. Woodle, Asst. Atty. Gen., Pierre, for appellant; Mark V. Meierhenry, Atty. Gen., Pierre, on the brief.

DUNN, Justice.

The South Dakota Department of Revenue appeals from an order and judgment of the circuit court which found that the membership fee paid to Prairie Market Stores (appellee) was not subject to sales tax as the sale of a service and the free merchandise given to customers was also not subject to use tax. We affirm the order and judgment of the circuit court.

Appellee is a foreign corporation doing business in South Dakota as the Prairie Market Stores. Appellee operates wholesale grocery stores in which customers mark and carry out their own merchandise. Before customers may shop at appellee's store, they must pay a fee and become members. There are two types of memberships: a regular membership and a golden age membership. A regular member pays a monthly two dollar fee and receives a membership card that will expire on the last day of the month after the fee has been paid. After the card has expired, the regular member is entitled to redeem the expired card for merchandise worth approximately one dollar. The golden age membership is available to those customers who have health insurance claim numbers. A golden age member pays an annual two dollar fee and is not entitled to receive the bonus merchandise. All members are allowed to make purchases of merchandise at lower prices than found in retail stores. Nonmembers may not. Members are also entitled to some other minor privileges.

Appellee admits that one dollar of the regular membership fee which is applied towards the bonus merchandise provided to the regular member is subject to sales tax liability. Appellee has previously paid sales tax on this portion. Appellee has not paid sales tax on the remaining one dollar of the regular membership fee or on the two dollar golden age membership fee.

Appellee requested a declaratory ruling from the Secretary of Revenue regarding whether the membership fees were subject to sales tax. After an administrative hearing, the Deputy Secretary of Revenue determined that the membership fees resulted from the sale of a service and thus were subject to sales tax and that the free merchandise given to customers was subject to use tax. Appellee appealed to circuit court which reversed and vacated, and ordered

Page 472

the South Dakota Department of Revenue to return the tax previously paid upon membership fees with interest.

The construction of a statute is a question of law. Therefore, the decisions of the administrative agency and the circuit court are fully reviewable. Matter of Sales Tax or Use Tax, Etc., 290 N.W.2d 865 (S.D.1980). As a general rule, statutes which impose taxes are to be construed liberally in favor of the taxpayer and strictly against the taxing body. Iowa Auto Dealers v. Iowa Dept. of Revenue, 301 N.W.2d 760 (Iowa 1981). Ambiguities in a statute imposing a tax are interpreted in favor of the taxpayer. KTVO, Inc. v. Bair, 255 N.W.2d 111 (Iowa 1977); I.B.M. Corp. v. State, Dept. of Treasury, 75 Mich.App. 604, 255 N.W.2d 702 (1977); Geo Resources, Inc. v. Tax Com'r, 288 N.W.2d 54 (N.D.1980).

The Department of Revenue contends that the membership fees...

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27 practice notes
  • Permann v. South Dakota Dept. of Labor, Unemployment Ins. Div., No. 15390
    • United States
    • Supreme Court of South Dakota
    • April 21, 1987
    ...fully reviewable. Matter of Change of Bed Category of Tieszen, 343 N.W.2d 97 (S.D.1984); Nash Finch Co. v. South Dakota Dept. of Rev., 312 N.W.2d 470 (S.D.1981). When the issue is a question of fact, we ascertain whether the administrative agency was clearly erroneous. Matter of S.D. Water ......
  • Aliberti v. Solem, No. 16017
    • United States
    • Supreme Court of South Dakota
    • May 26, 1988
    ...fully reviewable. Matter of Change of Bed Category of Tieszen, 343 N.W.2d 97 (S.D.1984); Nash Finch Co. v. South Dakota Dept. of Rev., 312 N.W.2d 470 (S.D.1981). When the issue is a question of fact, we ascertain whether the administrative agency was clearly erroneous. Matter of S.D. Water ......
  • Estate of Gossman, Matter of, No. 19519
    • United States
    • Supreme Court of South Dakota
    • September 12, 1996
    ...Ambiguities in a statute imposing a tax are interpreted in favor of the taxpayer." Nash Finch Co. v. South Dakota Dep't of Revenue, 312 N.W.2d 470, 472 (S.D.1981) (citations omitted). 3 However, this Court "must assume that the legislature meant what the statute says and therefore......
  • Farmland Ins. Companies of Des Moines, Iowa v. Heitmann, No. 17854
    • United States
    • Supreme Court of South Dakota
    • April 7, 1993
    ...of a statute is a question of law. Vellinga v. Vellinga, 442 N.W.2d 472 (S.D.1989); Nash Finch Co. v. South Dakota Dep't of Revenue, 312 N.W.2d 470 (S.D.1981). Review of the trial court's order granting summary judgment will be affirmed if any basis exists which supports the ruling. Trapp, ......
  • Request a trial to view additional results
27 cases
  • Permann v. South Dakota Dept. of Labor, Unemployment Ins. Div., No. 15390
    • United States
    • Supreme Court of South Dakota
    • April 21, 1987
    ...fully reviewable. Matter of Change of Bed Category of Tieszen, 343 N.W.2d 97 (S.D.1984); Nash Finch Co. v. South Dakota Dept. of Rev., 312 N.W.2d 470 (S.D.1981). When the issue is a question of fact, we ascertain whether the administrative agency was clearly erroneous. Matter of S.D. Water ......
  • Aliberti v. Solem, No. 16017
    • United States
    • Supreme Court of South Dakota
    • May 26, 1988
    ...fully reviewable. Matter of Change of Bed Category of Tieszen, 343 N.W.2d 97 (S.D.1984); Nash Finch Co. v. South Dakota Dept. of Rev., 312 N.W.2d 470 (S.D.1981). When the issue is a question of fact, we ascertain whether the administrative agency was clearly erroneous. Matter of S.D. Water ......
  • Estate of Gossman, Matter of, No. 19519
    • United States
    • Supreme Court of South Dakota
    • September 12, 1996
    ...Ambiguities in a statute imposing a tax are interpreted in favor of the taxpayer." Nash Finch Co. v. South Dakota Dep't of Revenue, 312 N.W.2d 470, 472 (S.D.1981) (citations omitted). 3 However, this Court "must assume that the legislature meant what the statute says and therefore......
  • Farmland Ins. Companies of Des Moines, Iowa v. Heitmann, No. 17854
    • United States
    • Supreme Court of South Dakota
    • April 7, 1993
    ...of a statute is a question of law. Vellinga v. Vellinga, 442 N.W.2d 472 (S.D.1989); Nash Finch Co. v. South Dakota Dep't of Revenue, 312 N.W.2d 470 (S.D.1981). Review of the trial court's order granting summary judgment will be affirmed if any basis exists which supports the ruling. Trapp, ......
  • Request a trial to view additional results

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