State Tax Commission v. J. & W. Auto Service, Inc.

• Citation: 92 Utah 123,66 P.2d 141
• Decision Date: 22 March 1937
• Docket Number: 5856
• Parties: STATE TAX COMMISSION v. J. & W. AUTO SERVICE, Inc
• Court: Supreme Court of Utah

66 P.2d 141

92 Utah 123

STATE TAX COMMISSION v. J. & W. AUTO SERVICE, Inc

No. 5856

Supreme Court of Utah

March 22, 1937

Appeal from District Court, Second District, Weber County; L. A Wade, Judge.

Suit by the State Tax Commission of Utah against J. & W. Auto Service, Inc. Judgment for the defendant, and the plaintiff appeals.

REVERSED WITH INSTRUCTIONS.

Ned Warnock and Alfred Klein, both of Salt Lake City, for appellant.

L. J Holther, of Ogden, for respondent.

WOLFE Justice, FOLLAND, C. J., and HANSON, MOFFAT, and LARSON, JJ., concur.

OPINION

WOLFE, Justice.

The respondent company made retail sales of automobiles between January 1 and December 31, 1934. It filed returns of sales for each and every month during said period showing itself liable for $ 740.09 sales tax which it remitted to appellant. Appellant audited the returns, recomputed the said tax under section 8, c. 63, Laws Utah 1933, as amended by chapter 20, Laws Utah 1933, Second Special Session, which laws will be hereafter referred to as the Sales Tax Act.

Section 8 provides that if upon recomputation of the tax returns something is found owing to the commission, the amount so found to be due, together with interest thereon, "shall be paid by the vendor ten days after notice and demand to him from the tax commission." In pursuance of this section, appellant audited respondent's tax returns and found an additional amount of $ 236.25 due. On February 5, 1936, appellant gave notice in writing to the respondent and demanded payment thereof. More than ten days elapsed after the date of said notice and defendant failed to pay said sum or any part thereof, nor did it petition the appellant in writing for a rehearing or a correction of the amount of tax so computed. In fact, it ignored the notice and demand. The appellant added 10 per cent as a penalty and 1 per cent per month as interest, adding respectively, $ 23.62 for penalties and $ 27.24 for interest, claiming a total sum of $ 287.11

Appellant brought suit to collect this $ 287.11 with interest from February 5, 1936, on $ 236.25 at the rate of 1 per cent per month. The action was brought under section 11 of the Sales Tax Act, reading as follows:

"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."

The defendant (respondent here) admitted the recomputation of the tax commission and the assessment of $ 236.25 to have been made; also admitted the demand and notice and that no petition for a hearing had been asked for. It set up in defense that the purported tax of $ 236.25 was on sales made in Nevada and Idaho and that its returns showed these as deductions. It claimed the purported tax as to these items was void because the commission had no authority to tax interstate sales. The court permitted the defense and found for the defendant. The tax commission appeals.

The commission contends that the so-called assessment of $ 236.25, when defendant was notified of it and failed in ten days to ask for a correction or a hearing and failed to pay, was conclusive in the lower court and could not be attacked except to show lack of jurisdiction.

Defendant, the respondent here, contends as follows: That sections 13, 14, 15, and 16 of the act dealing with the procedure regarding an appeal from a decision of the tax commission to the Supreme Court apply only in case a taxpayer chooses to ask for a hearing and correction and the commission makes a decision thereon. That if the taxpayer ignores the notice of increased assessment upon recomputation, he may, on suit in the district court, open up there the matter of whether the recomputation was correct. Defendant founds this argument on two grounds: First, that section 12 reads in part as follows:

"Any person, having made a return and paid the tax * * * may apply to the tax commission by petition in writing within ten days," etc.

The argument is that "may" is permissive. He is not required to do so because it does not say he must petition for a hearing and correction. Certainly, he has the choice. No person is required to question an assessment, but if he does not do it within the proper time and according to specified procedure, he will either pay or lose his property. Many acts within the law are permissive in that sense. A person served with summons is not required to appear, but if he does not he may find himself burdened with a default judgment. It is only in those matters where appearance before the court is compelled that contempt for failing may be adjudged.

The second ground advanced by defendant is that sections 13, 14, and 15 of the act speak only of a "decision" and that these sections which provide the exclusive remedy of appeal to the Supreme Court relate only to the case where the commission makes a decision. And where the taxpayer served with a demand to pay or apply for a hearing does neither, no decision of the commission can be made to which the sections can attach. In other words, a taxpayer, by failing to follow the procedure laid down and absenting himself from appearance before the commission, is in better position as far as a suit in the district court is concerned than one who follows such procedure. Such contention is untenable.

The language of section 9, stating that a return made by the commission for a taxpayer who wholly fails to make a return "shall be...