State v. Louis Pizitz Dry Goods Co.

• Decision Date: 07 January 1943
• Docket Number: 6 Div. 34.
• Citation: 243 Ala. 629,11 So.2d 342
• Parties: STATE v. LOUIS PIZITZ DRY GOODS CO.
• Court: Alabama Supreme Court

11 So.2d 342

243 Ala. 629

STATE v. LOUIS PIZITZ DRY GOODS CO.

6 Div. 34.

Supreme Court of Alabama

January 7, 1943

Rehearing Denied Jan. 28, 1943.

Wm N. McQueen, Atty. Gen., and John W. Lapsley, Asst. Atty Gen., for appellant.

Pritchard, Aird & Fox and Victor H. Smith, all of Birmingham, for appellee.

FOSTER Justice.

In this case appellee was subject to the Alabama Sales Tax Act of February 8, 1939, page 16, see, Title 51, sections 752 et seq., Code of 1940. He filed this return and paid the tax under the requirement of section VI of the Act (which is section 756, Title 51, Code of 1940), on the 26th of October 1939, whereas that feature of the Act required it to be done on or before the 20th day of the month. And section XIV of the Act provides that "Any person who fails to pay the tax herein levied within the time required by this Act shall pay, in addition to the tax, a penalty of ten (10%) per cent of the amount of tax due [with interest, etc.]. Such penalty and interest to be assessed and collected as a part of the tax." In bringing that provision into the Code of 1940 as section 764, there was added: "Provided the department, if a good and sufficient reason is shown, may waive or remit the penalty of ten percent or a portion thereof."

The taxpayer in making payment with return on October 26, 1939, took a discount of three per cent. under section XXXVI of the Act of 1939, page 29, section 785, Title 51, Code amounting to $159.67. The Department of Revenue on that day advised the taxpayer that the penalty of $532.23 and discount of $159.67 and interest of $26.61 were charged to his account because of the failure to make returns and pay the tax by October 20. Thereupon on November 18, 1939, the taxpayer filed with the Department of Revenue an objection to this charge and a petition asserting that the delay was due to an oversight in the office as follows: "During the month of October and prior to the 20th day of said month, petitioner, taxpayer changed over its office system and particularly that part of the same in which its vouchers were drawn, and particularly changed over its 'tickler, follow up file,' which gave notice to the voucher clerk as to the various checks to be drawn on various days and dates. In said change over in some unaccountable way that part of said 'tickler follow up file' which gave notice that the check to the State of Alabama for sales taxes must be drawn and mailed on October 18th, became mislaid or misplaced, and accordingly the voucher clerk overlooked and failed to draft a voucher and see that the same was mailed to the State on October 18th or 19th in the amount of the sales tax due the State for the month of September, 1939, namely, $5,322.30. The said defect in said machine and system was noted only when the comptroller of the company in checking over the vouchers issued for the preceding ten day period, noted that no voucher had been drafted payable to the State for sales tax on or about October 18th or 19th. Whereupon an investigation developed that the leaf from the old machine was still in the old file and machine, and had not for some unexplainable reason been taken and set up in the new file or machine upon which taxpayer was relying during the entire month of October for notice and information as to the days and dates of drafting and mailing vouchers of the type here in question," and prayed "that the time for filing its September, 1939, sales tax return be extended for the period of six days from October 20th to October 26, 1939, within which to file said return, to the end that said return be filed within the time and without incurring any penalty whatsoever for and on account of the filing of the same; and in the alternative petitioner, taxpayer respectfully prays that the State Revenue Commissioner, accept the discount disallowed, namely, $159.67, and the interest asserted, namely, $26.61, the aggregate sum of $186.28, as in full satisfaction of all penalties and interest asserted or to be asserted against taxpayer for and on account of the delinquency herein indicated; or in the alternative that the said sum be accepted as a condition precedent to the commissioner's granting the six days extension of time for filing said return as herein first prayed for."

On March 13, 1940, the department made a ruling as follows:

"Whereas, said petition having been duly considered and it appearing that the petitioner is not entitled to such claimed discount for the reason that said return was not filed within the time required by law and in accordance with the regulations duly adopted by the commissioner relating to the allowance of discounts under the provisions of the Sales Tax Act, and that the commissioner is without authority of law to relieve petitioner of the payment of interest accruing by law from the date upon which said tax became payable, or to relieve petitioner of the payment of the above mentioned penalty in the amount of $532.23.

"It is, therefore, ordered, by the Commissioner of Revenue that said petition be and the same is hereby denied."

And on March 12 the commissioner wrote a letter to the attorney for the taxpayer in which it was stated: "As you know, I acted in the first instance upon the advice that I was without authority to grant a request for waiver on penalty under the statute as now written, and it was also my belief and information that the authority given to me to grant an extension of time did not serve to relieve the taxpayer of the penalty when such a request for an extension of time was filed after the penalty had attached. As we have many cases involving this same question, I would prefer that the matter be carried to its conclusion in order that I may establish once and for all my authority in such cases." And on March 13, wrote another letter, in which he stated: "I hope that you will believe me when I say that the delay in this case was occasioned by my effort and hope to find a remedy for granting relief. I might say that I have suggested to the Code Committee that the codification of the Sales Tax law contained a provision which will give the head of this department discretion in such matters. This suggestion has received favorable consideration by those to whom it has been made and I hope that the Code will carry that provision." On March 30, 1940, the department made an assessment of $718.51, stating that the return and computation were found to be correct, but that they were received on October 26, 1939, and notified the taxpayer that he would be heard on April 22, 1940. On that day the department treated the former petition and objection as refiled and proceeded to reconsider it, and made the assessment final for the sum of $736.47, including accrued interest.

Thereupon, on May 1, 1940, the taxpayer in accordance with the provisions of section XVIII of the said Act (see, Acts of 1939, page 23, also section 768, Code, supra) filed an appeal to the equity side of the Circuit Court of Jefferson County, Alabama, as provided in the Act of April 21, 1936 (Special Session, Acts 1936, page 172: see section 140, Title 51, Code of 1940).

Thereafter on April 1, 1941, with no disposition of the proceeding on appeal, and with it still pending in the Circuit Court, in equity, the taxpayer filed in the same court in equity, and apparently as an incident in the proceeding on such appeal what he termed a petition for "preliminary declaratory judgment," which was later amended by filing a substituted petition, making the "State of Alabama" the sole party respondent, praying as follows: "That a declaratory judgment be rendered adjudging and declaring that the Commissioner of Revenue has the legal authority to enter an order extending the time for petitioner to file its September 1939 Sales Tax return from October 20, 1939 to October 26th, 1939; and that the court specify a period of time in which to afford the Commissioner of Revenue an opportunity to make such an order; and that further proceedings in the main cause be suspended during said period of time; and if petitioner be mistaken as to the relief herein prayed for, petitioner prays for such other further and different relief as to your honor seems meet and proper."

The petition contained the following allegations in part: "Petitioner avers that the Commissioner of Revenue is now ready, willing and anxious to make and enter an order extending the time for the filing of petitioner's September 1939 Sales Tax Return from October 20, 1939 to October 26, 1939, if it be judicially declared and ascertained that the Commissioner of Revenue has legal authority to make such order of extension; but at the present time the Commissioner of Revenue is unwilling to make and enter such order of extension solely for the reason that he incorrectly conceives that he lacks the legal authority and power to make such order of extension. Petitioner avers that the Commissioner of Revenue now has the legal authority and power to make such order of extension, with retroactive effect."

This is made manifest by attaching a letter from the Commissioner of Revenue, dated March 13, 1940, and another letter from him dated March 12, 1940, to both of which we have referred.

We think it may be well to repeat emphatically that by virtue of section 14 of the Constitution of Alabama of 1901, under no circumstances and in no sort of suit can the State of Alabama ever be made a defendant in any court of law or equity. This prohibition cannot be waived, and it cannot be avoided by suing a State agency when the substance and effect is a suit against the State. Alabama Girls' Industrial School v. Reynolds, 143 Ala. 579, 42 So. 114; Cox v. Board of Trustees University of Alabama, 161 Ala. 639, 49 So 814; State Docks Comm. v....