State ex rel. St. Louis Die Casting Corp. v. Morris

• Decision Date: 14 March 1949
• Docket Number: 41209
• Parties: State of Missouri ex rel. St. Louis Die Casting Corporation, a Corporation, Respondent, v. M. E. Morris, Director of Revenue of the State of Missouri, Appellant
• Court: Missouri Supreme Court

219 S.W.2d 359

358 Mo. 1170

State of Missouri ex rel. St. Louis Die Casting Corporation, a Corporation, Respondent, v. M. E. Morris, Director of Revenue of the State of Missouri, Appellant

No. 41209

Supreme Court of Missouri

March 14, 1949

Motion for Rehearing or to Transfer to Banc Overruled April 11 1949.

Appeal from Circuit Court of City of St. Louis; Hon. Joseph J Ward, Judge.

Affirmed and remanded (with directions).

J. E Taylor, Attorney General, Tyra W. Burton and Harry J. Salsbury, Assistant Attorneys General, for appellant.

(1) The assessment complained of was legally made; the notice of the assessment, the one complained of in the petition for the writ of certiorari, was duly served by registered mail and, since the taxpayer failed to pursue his administrative remedy, no other notice, except the one referred to above, was required. The trial court erred in quashing the assessment. Sections 11408, 11411, 11413, 11416, 11420, 11421, 11422 and 11433 of the Sales Tax Act, Laws of Missouri, 1945, starting at p. 1868, provide for the levying of the tax, manner of assessing and collecting same. (2) Section 11433, supra, also provides for giving the notice of the assessment by the Director of Revenue to the person assessed, by registered mail. Wymore v. Markway, 338 Mo. 46, 89 S.W.2d 14; State ex rel. v. Highway Commission, 349 Mo. 865, 163 S.W.2d 948; State v. Levey, 29 So.2d 129; State v. Player, 6 N.E.2d 124; Tatz v. State, 62 N.E.2d 674. (3) Notice of the assessment was duly given and the assessment became due and payable fifteen days after the mailing of the notice. The Director of Revenue acts judicially in making assessments. Sec. 11427, Laws 1945, p. 1874; State ex rel. v. Dungan, 265 Mo. 353; Brinkerhoff-Faris Trust & Sav. Co. v. Hill, 323 Mo. 180, 19 S.W.2d 746; T.J. Moss Tie Co. v. Allen, 8 S.W.2d 1038; State ex rel. v. F.W. Woolworth Co., 348 Mo. 1180, 159 S.W.2d 297. (4) The trial court had authority, only, to review questions of law and fact determined by the Director of Revenue in making the assessment. The trial court erred in permitting plaintiff below, to file an amended petition for the writ of certiorari after the writ had been issued; by permitting plaintiff below to file a reply to the return of the writ, and by permitting plaintiff below to introduce evidence at the trial. Sec. 11445, Laws 1945, p. 1878; State ex rel. v. Remmers, 101 S.W.2d 70; State ex rel. v. Ossing, 336 Mo. 386, 79 S.W.2d 255; People v. Allman, 68 N.E.2d 203; State ex rel. v. Neaf, 139 S.W.2d 958. (5) The assessment complained of, was based on an investigation and an audit of the sales made by the corporation, agreed to and paid by it, but it stopped payment on the check. The assessments should have been sustained by the trial court. Sections 11420, 11421, 11422, Laws 1945, p. 1872; Ford Motor Co. v. Gehner, 325 Mo. 24, 27 S.W.2d 1; State ex rel. v. State Highway Commission, 163 S.W.2d 948; State v. Levey, 29 So.2d 129; State v. Player, 6 N.E.2d 124; Tatz v. State, 62 N.E.2d 674; State ex rel. v. F.W. Woolworth Co., 348 Mo. 1180, 159 S.W.2d 297; State ex rel. v. Smith, 356 Mo. 25, 201 S.W.2d 153. (6) The corporation failed to pursue its administrative remedy and the trial court erred in quashing the assessment. Sec. 11428, supra. State ex rel. v. Bank of Neosho, 120 Mo. 161; Tatz v. State Department of Finance, 62 N.E.2d 674; Brinkerhoff-Faris Trust & Savings Co. v. Hill, 323 Mo. 180, 19 S.W.2d 746.

Dubail & Judge and Henry H. Stern for respondent.

(1) In making an additional assessment of sales tax, the Director of Revenue is required by Section 11420 of our Statutes to give to the taxpayer a written notice of such assessment "together with written notice of the time and place where the person may be heard on a petition by him for reassessment," and he is not relieved of the duty to give such notice of hearing by Section 11428. Castilo v. State Highway Commission, 312 Mo. 244, 279 S.W. 673; State ex rel. Dean v. Daues, 321 Mo. 1126, 14 S.W.2d 990; State ex rel. Commission v. Padberg, 346 Mo. 1133, 145 S.W.2d 150; Graves v. Little Tarkio Drainage District, 345 Mo. 557, 134 S.W.2d 70; Jacoby v. Drainage District, 349 Mo. 818, 163 S.W.2d 930. (2) Failure to give notice of hearing and to provide a hearing as required by Section 11420 results in the purported additional assessment of sales tax being void. State ex rel. Lane v. Corneli, 351 Mo. 1, 171 S.W.2d 687; State ex rel. Harrison v. Springer, 134 Mo. 212, 35 S.W. 589; State ex rel. Lemon v. Board, 108 Mo. 235, 18 S.W. 782; Eaton v. St. Charles, 76 Mo. 492; State ex inf. Killam v. Colbert, 273 Mo. 198, 201 S.W. 52; State ex rel. Kerr v. Landwehr, 32 S.W.2d 83. The records of appellant, certified to the circuit court, show that the additional tax was assessed on transactions which were integral parts of sales in interstate commerce, contrary to Section 11409. American Bridge Co. v. Smith, 352 Mo. 616, 179 S.W.2d 12; Binkley Coal Co. v. Smith, 352 Mo. 627, 179 S.W.2d 17.

Bohling, C. Westhues and Barrett, CC., concur.

OPINION

BOHLING

This appeal involves a construction of the Missouri Sales Tax Act ^[1] with respect to an additional assessment of tax against the St. Louis Die Casting Corporation, a corporation, relator here. The Director of Revenue of the State of Missouri appeals from a judgment quashing his proceedings imposing said additional tax. An issue for determination is whether the Director of Revenue was required to accompany the notice of such additional assessment "with written notice of the time and place where the person may be heard on a petition by him for reassessment." § 11420.

The return of the Director of Revenue to the writ of certiorari issued upon relator's petition discloses the following facts:

A "Consolidated Sales Tax Return" of relator, as reported by Sales Tax Auditor F. W. Muldering, covering the period between September 11, 1945, and August 31, 1946, and bearing date of September 5, 1946, shows "Additional tax due" as follows: Tax findings $ 375.29; Penalty and interest $ 14.66. Total $ 389.95. Relator issued its check to cover on September 10, 1946; but under date of September 11, 1946, notified the Collector of Revenue by letter, that the check had been inadvertently issued; that the assessment involved covered sales in interstate commerce upon which no sales tax was due under the Act, and that it had stopped payment on the check.

On October 18, 1946, relator received a notice, dated October 17, 1946, of an assessment for unpaid sales tax for the period mentioned above, as follows: "Additional tax $ 375.29; Penalty $ 93.82; Interest $ 73.18. Total $ 542.29," which said notice advised that the same was based upon said return and report of September 5, 1946; that the examination of the auditor disclosed evasive sales tax returns for the period covered, and a penalty of 25% had been assessed; and further: "Your remittance should be attached to this assessment and mailed to Collector of Revenue, Box 840, Jefferson City, Missouri, within fifteen (15) days after receipt of this notice." This was followed by the signature of the tax officer and: "This assessment becomes final within 15 days."

Relator instituted this certiorari proceeding under § 11445 on November 6, 1946, to test the propriety of said "additional tax."

With respect to the sufficiency of the notice, the Director of Revenue says that he gave notice according to the provisions of § 11433, the "fraud or evasion" section; that since relator did not pursue the administrative remedy provided by § 11428 by petitioning for a reassessment, no further notice or hearing was required, and that the additional assessment should be sustained and judgment entered against relator as provided in § 11445. Relator's position is that § 11428 does not relieve the Director of Revenue of the duty to give the "written notice of the time and place where the person may be heard on a petition" for reassessment as required by § 11420, which notice admittedly was not given.

The Sales Tax Act, insofar as material, imposes a tax payable by the purchaser (§ 11412) of two per cent of the purchase price upon retail sales (§ 11408), subject to certain exemptions (§ 11409). The seller is required to collect the tax from the purchaser. § 11411. He is also required to make a return to the Director of Revenue, who is charged with the administration of the Act (§ 11413), showing his gross receipts from taxable transactions, the tax due thereon, and to remit the tax on or before the 15th day of the following calendar month (§§ 11411, 11416). This return is subject to review and revision as provided in said Act. § 11416. The Director of Revenue, or his authorized agent, may conduct investigations and hearings and examine the books and records, et cetera, required to be kept by persons subject to the Act (§ 11421) for the purpose of ascertaining the correctness of any return (§ 11422).

After placing the burden upon the seller of proving a given transaction not subject to the tax, § 11420 provides: ". . . If the Director of Revenue is not satisfied with the return and payment of the tax made by any person, he is hereby authorized and empowered to make an additional assessment of tax due from such person, based upon the facts contained in the return or upon any information within his possession or that shall come into his possession. The Director of Revenue shall give to the person written notice of such additional or revised assessment, together with written notice of the time and place where the person may be heard on a petition by him for reassessment."

Section 11433 provides: "If fraud or evasion on the part of a person is discovered by the Director of Revenue, he shall determine the amount of which the...