State Tax Commission v. City of Logan

• Decision Date: 19 February 1936
• Docket Number: 5675
• Citation: 88 Utah 406,54 P.2d 1197
• Court: Utah Supreme Court
• Parties: STATE TAX COMMISSION v. CITY OF LOGAN

54 P.2d 1197

88 Utah 406

STATE TAX COMMISSION v. CITY OF LOGAN

No. 5675

Supreme Court of Utah

February 19, 1936

Rehearing denied May 26, 1936.

Appeal from District Court, First District, Cache County; Melvin C Harris, Judge.

Action by the State Tax Commission against the City of Logan. From a judgment of dismissal, the plaintiff appeals.

REVERSED AND REMANDED, WITH DIRECTIONS.

Ned Warnock, of Salt Lake City, for appellant.

Leon Fonnesbeck, of Logan, for respondent.

ELIAS HANSEN, Chief Justice. FOLLAND, EPHRAIM HANSON, MOFFAT, and WOLFE, JJ., concur.

OPINION

ELIAS HANSEN, Chief Justice.

In this action the state tax commission of Utah, hereinafter referred to as the commission, seeks to recover a sales tax from Logan City, hereinafter referred to as the city, for electric energy, generated by a hydroelectric power plant owned and operated by the city, and sold by it to its inhabitants. To the complaint filed by the commission the city demurred generally and specially. The demurrer was sustained. The commission refused to further amend its complaint, whereupon the action was dismissed. The commission appeals. It assigns as error the order sustaining the demurrer and the judgment dismissing the action. The commission claims authority to collect the sales tax in controversy pursuant to the provisions of Laws of Utah 1933, c. 63, as amended by Laws of Utah 1933, Second Special Session, c. 20. Both the constitutionality and the construction of the statutes levying a sales tax are brought in question. We quote those portions of the act which bear upon the questions which divide the parties to this controversy. The title of Laws of Utah 1933, c. 63, is as follows:

"An act to Provide for the Raising of Revenue for Emergency Purposes by imposing a Tax Upon the Retail Purchase of Certain Commodities, Admissions and Services and for the Ascertainment, Assessment and Collection of Said Taxes; to Provide for the Distribution of Said Revenue and to Provide Penalties for the Violation of the Terms of This Act."

The act contains among its provisions the following:

Section 4, subd. (b) thereof:

"From and after the thirty-first day of May, 1933, there is hereby levied and there shall be collected and paid. * * *

"A tax equivalent to three-quarters (3/4) of one (1) per cent of the amount paid for all services rendered or commodities furnished for domestic or commercial consumption by any utility of the state of Utah."

Section 2, subd. (i):

"The term 'utility' as herein used, shall be construed to mean any utility under the jurisdiction of the public utilities commission."

Section 5: "Every person receiving any payment or consideration upon a sale of property or service subject to the tax under the provisions of this act, or to whom such payment or consideration is payable (hereinafter called the vendor) shall be responsible for the collection of the amount of the tax imposed on said sale and shall, on or before the fifteenth day of each month, make a return to the state tax commission for the preceding month and shall remit the taxes so collected to the state tax commission. Such returns shall contain such information and be made in such manner as the state tax commission may by regulation prescribe. The state tax commission may extend the time for making returns and paying the taxes collected under such rules and regulations as it may prescribe, but no such extension shall be for more than ninety days."

Section 8: "As soon as practicable after the return is filed, the tax commission shall examine it; if it then appears that the correct amount of tax to be remitted is greater or less than that shown in the return to be due, the tax shall be recomputed. If the amount paid exceeds that which is due, the excess shall be credited against any subsequent remittance from the same person. If the amount paid is less than the amount due, the difference, together with interest thereon at the rate of one-half of one per cent per month from the time the return was due, shall be paid by the vendor ten days after notice and demand to him from the tax commission.

"If any part of the deficiency is due to negligence or intentional disregard of authorized rules and regulations with knowledge thereof, but without intent to defraud, there shall be added ten per cent of the total amount of the deficiency and interest in such a case shall be collected at the rate of one per cent per month on the amount of such deficiency from the time the return was due, from the person required to file the return, which interest and additions shall become due and payable ten days after notice and demand to him by the commission. If any part of the deficiency is due to fraud with the intent to evade, then there shall be added not more than one hundred per cent of the total amount of the deficiency and in such case, the whole amount of the tax unpaid, including the additions, shall become due and payable ten days after notice and demand by the tax commission and an additional one per cent per month on said amount shall be added from the date the same was due until paid."

Section 9: "It shall be the duty of every person engaging or continuing, in this state, in any business for the transaction of which a license is required under this act, to keep and preserve suitable records of all sales made by him and such other books or accounts as may be necessary to determine the amount of tax for the collection of which he is liable under the provisions of this act. It shall be the duty of every such person to keep and preserve for a period of three years all invoices of goods and merchandise purchased for resale and all such books, invoices and other records shall be open for examination at any time by the tax commission or its duly authorized agent. If no return is made by any person required to make returns as provided herein, the tax commission shall give written notices by mail post paid to such person to make such return within thirty days of the date of such notice and if such person shall fail or refuse to make such return as he may be required to make in such notice, then such return shall be made by the tax commission from the best information available and such return shall be prima facie correct for the purposes of this act, and the amount of the tax due thereon shall be deemed a deficiency and subject to the addition of penalties and interest as provided in section 8 hereof."

Section 11: "A tax due and unpaid under this act shall constitute a debt due the state from the vendor and may be collected, together with interest, penalty and costs, by appropriate judicial proceeding, which remedy shall be in addition to all other existing remedies."

Section 12: "If any person, having made a return and paid the tax provided by this act, feels aggrieved by the assessment made upon him by the tax commission, he may apply to the tax commission by petition in writing within ten days after the notice is mailed to him for a hearing and a correction of the amount of the tax so assessed, in which petition he shall set forth the reasons why such hearing should be granted and the amount by which such tax should be reduced. The tax commission shall notify the petitioner of the time and place fixed by it for such hearing. After such hearing, the tax commission may make such order in the matter as may appear to it just and lawful and shall furnish a copy of such order to the petitioner."

Section 13: "Every decision of the tax commission shall be in writing and notice thereof shall be mailed to the vendor within ten days, and all such decisions shall become final upon the expiration of thirty days after notice of such decision shall have been mailed to the vendor, unless proceedings are taken within said time for review by the supreme court upon writ of certiorari as herein provided, in which case it shall become final, (1) when affirmed or modified by the judgment of the supreme court; (2) if the supreme court remands the case to the tax commission for rehearing, when it is thereafter determined as hereinabove provided with respect to the initial proceeding."

Section 14: "Within thirty days after notice of any decision of the tax commission, any party affected thereby may apply to the supreme court of this state for a writ of certiorari or review for the purpose of having the unlawfulness of such decision inquired into and determined. Such writ shall be made returnable not later than thirty days after the date of the issuance thereof, and shall direct the tax commission to certify its record, which shall include all the proceedings and the evidence taken in the case to the court. Upon the hearing, no new or additional evidence may be introduced, but the case shall be heard on the record before the tax commission as certified to by it. The decision of the tax commission may be reviewed both upon the law and facts and the provisions of the code of civil procedure of this state relating to appeals so far as applicable and not in conflict with this act apply to the proceedings in the supreme court under the provisions of this section."

Section 15: "No court of this state, except the supreme court, shall have jurisdiction to review, reverse, or annul any decision of the tax commission or to suspend or delay the operation or execution thereof; provided, that a writ of mandamus shall lie from the supreme court in all proper cases."

The title of chapter 20, Laws of Utah 1933, Second Special Session, reads as follows:

"An Act to Amend Sections 2, 4, 5, 6 and 21 and Repealing Sections 22 and 25 of Chapter 63, Laws of Utah, 1933, Known as the Emergency Revenue Act of 1933, Relating to Taxes Imposed Upon Certain Sales, Admissions and Services; Defining...