People v. Universal Film Exchanges
| Citation | 213 P.2d 697,34 Cal.2d 649 |
| Court | United States State Supreme Court (California) |
| Decision Date | 20 January 1950 |
| Parties | PEOPLE v. UNIVERSAL FILM EXCHANGES, Inc. Sac. 5959. |
Loeb & Loeb, Los Angeles, Thomas B. Richardson, Oakland, Downey, Brand, Seymour & Rohwer, Sacramento, and Adrian A. Kragen, San Francisco, for appellant.
John W. Preston, Los Angeles, Athearn, Chandler & Farmer, Hoffman & Angell, F. G. Athearn, Leigh Athearn, Brobeck, Phleger & Harrison, Theodore R. Meyer, Robert H. Walker and Hart H. Spiegel, San Francisco, amici curiae on behalf of appellant.
Fred N. Howser, Attorney General, James E. Sabine and Irving H. Perluss, Deputy Attorneys General, for respondent.
This action was instituted by the state to recover the use tax allegedly due and owing from the defendant under the Use Tax Act of 1935, Stats.1935, ch. 361, p. 1297, Deering's Gen. Laws, Act 8495a, 1935 Supplement, p. 2018, for the period from July 1, 1935, to March 31, 1937. The case was tried upon a stipulation of facts, which presented the question of whether the statute of limitations contained in section 15 of the act, now Rev. & Tax. Code, sec. 6487, was effective in bar of this action. The trial court adjudicated this issue contrary to defendant's claim, and from the adverse judgment thereupon entered defendant has appealed.
As in the trial court, the sole question submitted here for determination is the sufficiency of appellant's regularly filed quarterly tax returns to start the statute of limitations running against a use tax sufficiency assessment. Appellant maintains that its respective tax returns satisfied the law as a report of its use tax liability for the period in question. An analysis of the returns sustains appellant's position.
From the record it appears that appellant, Universal Film Exchanges, Inc., is a foreign corporation engaged in business in the state of California; that on March 20, 1946, a use tax determination was made by the State Board of Equalization (hereinafter referred to as the board) with respect to the use or storage of prints of motion pictures, certain office supplies and film equipment during the period from July 1, 1935, to March 31, 1937; that following the board's denial of a petition for redetermination of said tax liability on August 1, 1947, the alleged deficiency assessment became final, and this action was commenced; and that during the entire period involved, appellant had filed quarterly returns upon a form prescribed by the board for a combined showing of sales and use tax liability as follows:
SALES AND USE TAX RETURN
Computation of Retail Sales Tax
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For Retailers For Board
Use Use Only
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1. Total sales (as defined in Sec. 2
Retail Sales Tax Act) $
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2. Add--Cost of tangible personal
property purchased for resale and
subsequently used or consumed
rather than resold
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3. Total (Item 1 plus Item 2)
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4. Less--Allowable deductions (as per
details on back hereof)
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5. Taxable sales (Item 3 less Item 4)
subject to Retail Sales Tax Act
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6. Retail Sales Tax due and payable
(3% of amount shown in Item 5)
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Computation of Use Tax
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7. Total sales price of tangible
personal property sold for
storage, use or other
consumption in California and
exempt from the Retail Sales
Tax as sales in interstate
commmerce or sales made outside
this State
------------------------------------------------------------------------------
8. Add--Sales price of tangible
personal property purchased
outside of California or in
interstate commerce for storage
use or other consumption in this
State by you on which seller has
not collected use tax from you
------------------------------------------------------------------------------
9. Total (Item 7 plus Item 8)
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10. Amount of use tax required to be
collected (3% of amount shown in
Item 9)
------------------------------------------------------------------------------
11. Total amount of tax due and
payable (Item 6 plus Item 10)
------------------------------------------------------------------------------
CERTICIFATE Penalty
I HEREBY CERTIFY, That I have
examined this report and that the
statements made and the figures
shown herein and in any accompanying Interest
schedules are to the best of my
knowledge and belief a true and
complete return, made in good faith
for the period stated, pursuant
to the Retail Sales Tax Act of
1933 and the Use Tax Act of 1935. Total
------------------------------------------------------------------------
Name of business or taxpayer
------------------------------------------------------------------------
Agent, or officer if corporation, trustee, etc
------------------------------------------------------------------------
Title
The instructions which accompanied the returns in question contained in each case a specific direction corresponding to each numbered item on the return, but there was no general statement to the taxpayer to complete all blanks or to make entries on each line. Appellant's respective returns showed under the sales tax subheading entries as to items 1, 3, 4, 5 and 6 but a blank as to item 2; under the use tax shbheading blanks as to items 7, 8, 9 and 10; and finally an entry as to item 11, the same figure as was entered for item 6 there appearing as a total amount due for both the sales tax and use tax.
It further appears from the stipulation of facts that from July 1, 1935, to October 20, 1943, it was the practice of the section of the board which audited sales and use tax returns to treat the filing of such a return as a return of both sales and use tax; that during such period the board issued no notice of determination that such a return as appellant filed was not a sales and use tax return within the meaning of the applicable statute (Use Tax Act, sec. 7) for the reason that items 7 to 10, or any of them, were left blank; but that after an opinion of the attorney general dated October 21, 1943, which stated that the filing of a return on which there was no entry of information under the subheading 'Computation of Use Tax' was 'insufficient' as a report of use tax liability 'to start the running of the statute of limitations', 2 Attorney General's Opinions 335, 336, the practice of the board was changed, and a return completed in the manner followed by appellant was considered as one limited solely to a sales tax report. Thereafter a notation which indicated either 'none' or 'zero' in response to the use tax items was a sufficient marking of that phase of the return within the administrative practice of the board. The parties further stipulated that the returns were filed by appellant in good faith, with no intent to avoid payment of either sales or use tax.
At the time appellant's returns were filed, section 7 of the Use Tax Act of 1935 required 'every retailer maintaining a place of business in this State' to 'file with the board' a quarterly return 'in such form as may be prescribed by the board' showing the transactions subject to the use tax for the reported period; and section 15 of the act provided that 'Except in the case of a fraudulent return, or neglect or refusal to make a return, every notice of a determination of an additional amount due shall be mailed within three years after the return was filed.' Sections 9 and 21, respectively, of the Sales Tax Act of 1933, St.1933, pp. 2602, 2606, provided similarly with regard to a return in report of transactions subject to the sales tax. Here more than nine years elapsed after the filing of appellant's returns before the board determined that a use tax was due from appellant for the period in question. The additional assessment, including interest of approximately sixty per cent, was then made against appellant upon the theory that it had made no use tax return during the designated period and hence, within the exception of section 15 of the Use Tax Act above quoted, the statute of limitations was tolled. But a reasonable interpretation of the form of appellant's returns does not sustain such theory.
Pursuant to its statutory authority, the board prescribed a single form denominated, according to its combined purpose, a 'Sales and Use Tax Return,' with the items numbered consecutively irrespective of the particular tax involved, and a concluding certificate stating the report to be 'a true and complete return' pursuant to the Sales and Use Tax Acts. Appellant did not strike out the latter tax reference in completing the form furnished by the board for report of both tax liabilities. In making entries on the sales tax portion of the form, appellant left blank item 2 but filled in figures for the other items, including item 6 as a total therefor. Then leaving blank...
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