Oxford v. J. D. Jewell, Inc.

• Decision Date: 08 January 1960
• Docket Number: No. 20690,20690
• Parties: OXFORD, State Revenue Commissioner, v. J. D. JEWELL, INC
• Court: Georgia Supreme Court

Page 601

112 S.E.2d 601

215 Ga. 616

OXFORD, State Revenue Commissioner, v. J. D. JEWELL, INC.

No. 20690.

Supreme Court of Georgia,

Jan. 8, 1960.

Syllabus by the Court.

1. (a) Under the Georgia Retailers' and Consumers' Sales and Use Tax Act (Ga.L.1951, p. 360; Code, Ann., § 92-3401a et seq.), which levies and imposes a privilege or license tax upon every person who engages in the business of selling tangible personal property at retail in this State, the amount to be computed at the rate of three percent of the sales price of each item or article of tangible personal property when sold, the tax imposed is upon the retailer and not upon the vendee or upon the sale.

(b) Under the Sales Tax Act of 1951 as amended, the retailer is required to pay the sales tax upon all sales of tangible personal property, except those items which are excluded by the act.

(c) Since the tax is upon the retailer and not upon the sale, a tax is not levied against the sales to the United States, which the State would be without authority to tax by reason of the Federal Constitution. Therefore, sales to the United States are not excluded by section 3(c) 2(d) of the act, providing that, 'Sales which a State would be without power to tax under the limitations of the Constitution of the State or the United States. * * *' or by any other provision of the act.

2. The act, in levying and imposing a tax upon the retailer measured by the sales of tangible personal property to the United States, is not unconstitutional as being violative of article 6, clause 2, of the Constitution of the United States (Code, § 1-602), which makes the United States Constitution the supreme law of the land, or of Federal immunity from State taxation, since the tax is not imposed upon the sales or upon the purchaser but upon the retailer.

3. The act when construed as a vendor's tax is not violative of the equal-protection clause of the Fourteenth Amendment to the United States Constitution (Code, § 1-815) or of the due process clause of the State Constitution (Code, § 2-103), for reasons set forth in division 3 of the opinion.

The exception is to a judgment of the Superior Court of Hall County in favor of the plaintiff, J. D. Jewell, Inc., in an action against Dixon Oxford as State Revenue Commissioner for a refund of sales taxes. The case was tried by the judge upon a stipulation of facts without the intervention of a jury.

The plaintiff was a registered dealer under the Georgia Retailers' and Consumers' Sales and Use Tax Act (Ga.L.1951, p. 360; Code, Ann., § 92-3401a et seq.) as amended, engaged in selling food products; and, as such, it made sales of poultry to the United States government, that is, to a military establishment thereof located at Fort Benning, on which he paid sales taxes in the amount of $199.56 to the defendant.

The sole question presented for decision is whether, under the act, a retailer is required to pay sales taxes on retail sales made to the United States government.

Eugene Cook, Atty. Gen., Ben F. Johnson, Jr., Robert H. Walling, John M. Bowling, Louis F. McDonald, John E. Dean, Asst. Attys. Gen., for plaintiff in error.

Wm. L. Norton Jr., Wheeler, Robinson, Norton & Thompson, Gainesville, C. E. Gregory, Jr., Arnall, Golden & Gregory, Atlanta, for defendant in error.

Smith, Kilpatrick, Cody, Rogers & McClatchey, Harry S. Baxter, Atlanta, Wm. C. Cowan, Atlanta, Harold M. Walker, Marietta, for party at interest, not party to record.

Charles K. Rice, Asst. Atty. Gen., of the U. S., Lee A. Jackson, Myron C. Baum, Mark S. Charwat, Washington, D. C., Chas. D. Read, Jr., U. S. Atty., Atlanta, for party at interest, not party to record.

MOBLEY, Justice.

1. It is conceded by the Commissioner that the State cannot constitutionally impose a vendee-type tax on sales made to the United States and that if, under the act, the tax imposed is upon the vendee, the judgment of the trial court should be affirmed. He contends, however, that the tax is a vendor-type tax, that the act levies the tax upon the licensed retailer, that the legal incidence of the tax is upon the retailer, and that only the economic burden is upon the vendee or consumer. He further contends that the tax is not upon the retail sale, but is placed upon the retailer for the privilege and license of doing business, and that sales to the United States are not excluded from retail sales on which the retailer must pay the tax.

This court in Williams v. Bear's Den, Inc., 214 Ga. 240, 104 S.E.2d 230, 231, a case in which the question presented was, 'Where a retail dealer has collected the tax from his customers under the Sales Tax Act of 1951, is his duty or obligation to the State that of an agent, liable only for the use of ordinary care in the safe-guarding and remittance of such taxes or is he liable as a taxpayer? In other words is the tax levied, under the statute, upon the dealer or against the customer?' held, with Presiding Justice Wyatt dissenting: 'From a review of the whole act, we are of the opinion that it was the intent and purpose of the legislature to levy the tax against the dealer. The levy of the tax is against him and the responsibility of collecting the tax on each sale from the purchaser and remitting to the Commissioner is solely upon him. If he fails to collect the tax from the purchaser he has to pay the tax. The Act specifically declares the relationship between the dealer and purchaser as that of debtor and creditor. The dealer's relationship to the State is that of a taxpayer. The tax on sales is imposed upon the dealer with the duty of the dealer 'as far as practicable' to add the amount of the tax to the sales price and though the tax is ultimately borne by the purchaser its imposition and responsibility for payment is upon the dealer. * * * For the reporting, accounting and payment of the tax the dealer is a taxpayer, with the right of the State in the case of his default to proceed against him, not as ordinary agent, but as a taxpayer.'

Counsel for the Commissioner in his brief refers to a 'schizophrenic interpretation' of the act. A more accurate statement would be that the court is called upon to interpret an act with schizophrenic symptoms. The act has two faces--one, that of a vendor tax; the other, a vendee tax. However, we reaffirm the conclusion reached in Williams v. Bear's Den, Inc., 214 Ga. 240, 104 S.E.2d 230, supra, that, from a review of the act as a whole, the tax imposed by the Georgia Sales and Use Tax Act is on the retailer for the privilege and license of engaging in the retail business in this State.

Where, as here, the tax is levied upon the vendor, would he be required to pay sales taxes upon sales made to the United States? The retailer is required to pay the tax upon all retail sales except those excluded by the act. Retail sales are used solely as a measure of the retailer's liability. While the act requires the retailer, 'as far as practicable,' to collect the tax from the consumer, his failure or inability to collect does not relieve him from paying the tax. If all his sales were one-cent sales on which it would not be practicable to collect the tax, or if the United States were, under the Federal Constitution, exempt from payment of the tax, his liability would not be affected. Unless retail sales made by the retailer are exempt under provisions of the act, he must pay the tax on them. The nature of the sales is of no moment, except as the exclusion provisions of the act might affect them.

Accordingly, the question is, whether sales to the United States are excluded by the act from retail sales which shall be used in computing the tax liability of the retailer. 'The exemption from taxation must be strictly construed, 'and the exemption will not be held to be conferred unless the terms under which it is granted clearly and distinctly show that such was the intention of the Legislature.' Mayor, etc., of Macon v. Central Railroad & Banking Co., 50 Ga. 620 * * *.' Cherokee Brick & Tile Co. v. Redwine, 209 Ga. 691, 693 75 S.E.2d 550, 551, and cases cited. The plaintiff urges that section 3(c) 2(d) of the act does exclude such sales. After defining in section 3(c) 1 the terms 'retail sale' or 'sale at retail' within the meaning of the act, section 3(c) 2(d) provides that the terms 'retail sale' and 'sale at retail' shall not include the following: 'Sales which a State would be without power to tax under the limitations of the Constitution of the State or the United States, together with sales to the State of Georgia, any county or municipality of said State.' Section 2 of the act, imposing the tax upon the retailer for the privilege or license of doing business, fixes the base or measure of tax liability at three percent of retail sales. Retail sales under a vendor-type tax serve to measure the amount of tax liability of the retailer. Under the act, the terms 'retail sales' and 'sale at retail' define the measure of the tax. Thus, section 3(c) 2(d) excludes sales which cannot constitutionally be used as a base or measure of the tax. Since the tax is upon the retailer and not upon the sale, a tax is not levied against the sale to the United States, which the State would be without authority to tax by reason of the Federal Constitution. See Esso Standard Oil Co. v. Evans, 345 U.S. 495, 73 S.Ct. 800, 97 L.Ed. 1174.

In Western Lithograph Co. v. State Board of Equalization, 11 Cal.2d 156, 78 P.2d 731, 734, 117 A.L.R. 838, the Supreme Court of California, in dealing with the same question that is before us--that is, whether a sales tax was due by the vendor under a vendor-type tax on sales made to an instrumentality of the United States, where the statute excluded from the tax 'the gross receipts from sales of tangible personal property which this State is prohibited from taxing under the Constitution or laws of the United States of America or under the Constitution of this State'--held that there was no...