Standard Oil Co. of Ind. v. State Tax Com'r of N. D., 6706.

• Decision Date: 29 July 1941
• Docket Number: No. 6706.,6706.
• Citation: 71 N.D. 146,299 N.W. 447
• Parties: STANDARD OIL CO. OF INDIANA v. STATE TAX COM'R OF STATE OF NORTH DAKOTA.
• Court: North Dakota Supreme Court

71 N.D. 146

299 N.W. 447

STANDARD OIL CO. OF INDIANA

v.STATE TAX COM'R OF STATE OF NORTH DAKOTA.

No. 6706.

Supreme Court of North Dakota.

July 29, 1941.

Syllabus by the Court.

Federal excise taxes on sales of gasoline, 48 Stat. 764, 26 U.S.C.A. Int.Rev.Code, § 3412, paid by the purchaser to the seller for payment by the latter to the Federal Government, do not constitute part of the sales price, or “gross receipts” of sales within the purview of the State sales tax law. Laws 1939, Ch. 234; Laws 1937, Ch. 249.

Appeal from District Court, Burleigh County; F. Jansonius, Judge.

Proceeding upon the appeal by the Standard Oil Company of Indiana, a corporation, from an order of the State Tax Commissioner of the State of North Dakota that the amount of a federal excise tax on the sale of gasoline must be added to the net price as a basis for computing state sales tax on the sale of gasoline exempt from state vehicle fuel tax. From an order setting aside such assessment by the State Tax Commissioner, the State Tax Commissioner appeals.

Affirmed.

Alvin C. Strutz, Atty. Gen., C. E. Brace, Asst. Atty. Gen., and T. A. Thompson, of Bismarck, for appellant.

O'Hare, Cox & Cox, of Bismarck, for respondent.

CHRISTIANSON, Judge.

The question presented on this appeal is whether in computing sales tax, Ch. 249, Laws 1937, Ch. 234, Laws 1939, on sales of gasoline exempted from the “motor vehicle fuel tax” Laws 1939, Ch. 147, there should be included as a part of the sales price on which the sales tax is computed the one cent Federal excise tax on sales of gasoline, 48 Stat. 764, 26 U.S.C.A. Int.Rev.Code §§ 3412. The laws of this State impose a license tax for the privilege of engaging in business as a dealer in motor vehicle fuel. The tax is measured by the number of gallons sold. Initiated Measure, Laws 1927, p. 547; Laws 1929, Ch. 166; Laws 1939, Ch. 170. The dealer is made liable for, and required to pay, the tax on all motor vehicle fuel sold by him. He is permitted to charge and collect the amount of the tax as a part of the selling price, but he is not required to so do and may pay part or all of the tax on all sales or on any sale. Federal Land Bank of St. Paul v. DeRochford, 69 N.D. 382, 400, 287 N.W. 522, 530.

As originally enacted, the motor vehicle fuel tax act made no provision for exempting any sales of motor vehicle fuel in the computation of the tax. The dealer was required to pay the prescribed tax on all sales made by him, but provision was made for a refund of the amount of the tax to a purchaser who had been required to pay the tax arising upon the sale of motor vehicle fuel that had been purchased and used for purposes other than the operation of motor vehicles upon the public highways or streets in the State.

In 1939, the Legislative Assembly abolished the system of refund formerly prevailing and provided that gasoline sold in this State to be used solely for agricultural and industrial purposes shall be exempt from the tax imposed on dealers in motor vehicle fuel for the sale of motor vehicle fuel, and provided for the issuance of licenses to persons who were shown to be eligible to purchase such tax exempt gasoline. Ch. 147, Laws 1939. Under the provisions of this latter act, a duly licensed dealer in motor vehicle fuel is authorized to sell gasoline to a person holding a license authorizing him to purchase such tax exempt gasoline, without such dealer being required to pay the prescribed tax for motor vehicle fuel; but the dealer is required to collect from the purchaser of such “tax exempt” gasoline the general sales tax prescribed by the law of this State, amounting to two percent (2%) of the sales price. The act provides: “Delivery of tax exempt gasoline shall be made only from a duly licensed station and to a person permitted to buy tax exempt gasoline as provided in this act.” Idem, Sec. 3. It further provides:

“The dealer shall issue receipts in triplicate for each sale of tax exempt gasoline, which receipt shall be in the form and colors prescribed by the State Auditor and shall show the date, name, residence, and license number of the dealer and the purchaser, and the number of gallons sold; Each receipt shall be signed by the purchaser.

Two of such triplicate receipts shall be retained by the licensed seller and one shall be delivered to the licensed purchaser. One of said receipts shall be delivered to the dealer importing gasoline into the State of North Dakota and originally liable for the payment of the gasoline tax. The original of such receipts shall be accepted by the State Auditor in lieu of the payment by the dealer importing gasoline into the State of North Dakota of the gasoline tax provided by law to the extent of the number of gallons of gasoline shown on said receipts as having been sold for agricultural and industrial purposes to a licensed purchaser thereof.” Idem, Section 4.

The laws of the United States impose “on gasoline sold by the producer or importer thereof, or by any producer of gasoline, a tax of 1 cent a gallon”-except in certain circumstances which are not material here. 48 Stat. 764, 26 U.S.C.A. Int.Rev.Code, § 3412. On July 1, 1940, the tax was increased from 1 cent to 1 1/2 cents by Act June 25, 1940, 54 Stat. 522, 26 U.S.C.A. Int.Rev.Code, § 1650. The law of the United States imposing the tax requires that every person subject to the tax shall, before incurring any liability for such tax, register with the collector for the district in which is located his principal place of business, and shall give a bond, to be approved by such collector, “conditioned that he shall not engage in any attempt, by himself or by collusion with others, to defraud the United States of” such tax; “that he shall render truly and completely all returns, statements, and inventories required by law or regulations in pursuance thereof and shall pay all taxes due”. 48 Stat. 764, 26 U.S.C.A. Int.Rev.Code, § 3412. The regulations of the United States Treasury Department relative to the Federal excise tax on gasoline provides: “When tax attaches: In the case of a sale, the tax attaches at the instant the sale is made.” Regulation 44, Art. 4, under Revenue Act of 1932, as amended.

In making sales of gasoline to a person holding a license authorizing him to purchase gasoline exempt from the motor vehicle fuel tax, the plaintiff issues a receipt showing a net price per gallon, the total amount of the sale based upon such net price; the amount of the North Dakota retail sales tax computed upon such sales price, and the amount of the Federal excise tax based upon the number of gallons sold. It is undisputed that all sales in questionhere were made, and the sales tax computed and collected, on the basis shown in the receipts. That is, on all sales of gasoline exempt from motor vehicle fuel tax, the plaintiff collected from the purchaser (1) the amount of the net price, (2) the amount of the State sales tax computed on such price, and (3) the amount of the Federal excise tax based upon the number of gallons sold. The State Tax Commissioner ruled that the amount of the Federal excise tax must be added to the net price...