State v. Thoni Oil Magic Benzol Gas Stations, Inc.

• Decision Date: 06 March 1970
• Docket Number: No. 2,No. 45031,45031,2
• Citation: 174 S.E.2d 224,121 Ga.App. 454
• Parties: STATE of Georgia v. THONI OIL MAGIC BENZOL GAS STATIONS, INC
• Court: Georgia Court of Appeals

Page 224

174 S.E.2d 224

121 Ga.App. 454

STATE of Georgia v. THONI OIL MAGIC BENZOL GAS STATIONS, INC.

No. 45031.

Court of Appeals of Georgia, Division No. 2.

March 6, 1970.

Rehearing Denied March 20, 1970.

Certiorari Granted July 9, 1970.

Arthur K. Bolton, Atty. Gen., Harold N. Hill, Jr., Exec. Asst. Atty. Gen., William L. Harper, H. Perry Michael, Asst. Attys. Gen., Atlanta, for appellant.

Charles L. Weltner, Atlanta, for appellee.

Sutherland, Asbill & Brennan, D. R. Cumming, Jr., Walter H. Wingfield, Carey P. DeDeyn, Atlanta, amici curiae.

Syllabus Opinion by the Court

EBERHARDT, Judge.

The State Revenue Commissioner made an assessment of taxes against Thoni, a gasoline dealer, which he contended to be due under the Sales and Use Tax Act (Code Ann. Ch. 92-34a) on gasoline sold through its retail stations. The assessment arose by reason of the fact that in calculating the sales tax to be paid on the gasoline sold, Thoni had not included as a part of the retail selling price the amount of the Federal excise tax imposed under 26 U.S.C.A. § 4081, or the amount of the motor fuel tax levied under Code Ann. Ch. 92-14 by the State. It is the contention of the Commissioner that these taxes are imposed on the dealer and are a part of the retail sales price as defined by Code Ann. § 92-3402a, upon which the sales tax is levied. Thoni contends that the excise tax and the motor fuel tax are imposed upon sales to the consumer, are not properly a part of the retail sales price, and that if these are included in the calculation of the sales tax it results in a 'tax on taxes,' which is not authorized under the Sales and Use Tax Act. There was a levy under the assessment, and Thoni filed its affidavit of illegality, which the Commissioner traversed. The matter came on for hearing under an agreed statement of facts. Thoni moved for summary judgment, and from a sustaining of that motion the Commissioner appeals. Held:

1. The Federal Excise Tax. This tax is imposed under 26 U.S.C.A. § 4081: 'There is hereby imposed on gasoline sold by the producer or importer thereof, or by any producer of gasoline, a tax of 4 cents a gallon.' Producer is defined in § 4082 as including 'a refiner, compounder, blender, or wholesale distributor, and a dealer selling gasoline exclusively to producers of gasoline, as well as a producer. Any person to whom gasoline is sold tax-free under this subpart shall be considered the producer of such gasoline.'

The question here involved is whether this imposition of the tax occurs when the gasoline is sold by the retailer to the consumer, or at some prior time. There is no question but that the tax is, as a matter of general practice, passed on to the consumer and he bears the economic burden of it. The courts of some States find that the imposition, as contended by Thoni, is in fact and in truth on the consumer, and hence that it is not a part of the retail 'sales price' of the gasoline on which a sales tax can be levied. Standard Oil Co. of Indiana v. State Tax Commissioner of North Dakota, 71 N.D. 146, 299 N.W. 447, 135 A.L.R. 1481; Tax Review Board of Philadelphia v. Esso Standard Division, 424 Pa. 355, 227 A.2d 657; Standard Oil Co. v. State, 283 Mich. 85, 276 N.W. 908; Socony-Vacuum Oil Co. v. City of New York, 247 App.Div. 163, 287 N.Y.S. 288; Kesbec, Inc. v. Taylor, 253 App.Div. 353, 2 N.Y.S.2d 241; Gulf Oil Corp. v. McGoldrick, 256 App.Div. 207, 9 N.Y.S.2d 544. Others conclude contrarily that the tax is imposed on the 'producer' at a time prior to the retail sale, is not a tax on the incident of that sale, and thus that it is properly includable as a part of the retail sales price. Sun Oil Co. v. Gross Income Tax Division, 238 Ind. 111, 149 N.E.2d 115; Pure Oil Company v. State of Alabama, 244 Ala. 258, 12 So.2d 861, 148 A.L.R. 260.

In Undercofler v. Capital Automobile Co., 111 Ga.App. 709, 143 S.E.2d 206 we dealt with the matter of whether the Federal excise tax imposed on automobiles under 26 U.S.C.A. § 4061 is properly includable as a part of the retail sales price for the purpose of calculating the retail sales tax, and concluded that it is, because 'The manufacturer's excise tax upon automobiles (26 U.S.C.A. (I.R.C.1954) § 4061) is a tax liability resting directly upon the manufacturer * * *. To the dealer it is an element of 'the cost of the property sold' within the meaning of the unambiguous language of Code Ann. § 92-3403a(E), and hence, to the purchaser, a part of the sales price, just as much so as the manufacturer's cost of raw materials and labor as elements figuring in the 'sales price' as defined by this Code section.'

The imposition of the excise tax on automobiles in 26 U.S.C.A. § 4061 is couched in language that is substantially the same as that used in imposing the excise tax on gasoline in 26 U.S.C.A. § 4081. In the first instance it is imposed on vehicles 'sold by the manufacturer, producer, or importer.' In the latter it is imposed on gasoline sold by 'the producer or importer,' and the producer is defined to include the 'refiner, compounder, blender, or wholesale distributor.' In neither instance does it appear that the tax is imposed on the incident of a sale made to the consumer.

For the reasons stated in Undercofler v. Capital Automobile Co., 111 Ga.App. 709, 143 S.E.2d 206, supra, we conclude that the Federal excise tax is properly includable as a part of the retail sales price on which the sales and use tax is to be calculated.

2. The Georgia Motor Fuel Tax. Here we have a very different situation, and for reasons...