Warren v. Fink
| Decision Date | 06 November 1937 |
| Docket Number | 33682-33684. |
| Citation | 72 P.2d 968,146 Kan. 716 |
| Parties | WARREN v. FINK et al., State Tax Commission. ROLLEY et al. v. SAME. KANSAS SERVICE GROCERS, Inc., v. SAME. |
| Court | Kansas Supreme Court |
Syllabus by the Court.
A grocer using electricity for refrigeration to preserve perishable products sold was not a "processor" within meaning of Retail Sales Act, and electricity was subject to sales tax (Laws 1937, c. 374, § 2(i, l).
The rule that one seeking exemption from tax must bring himself clearly within exemption provisions is applicable to Retail Sales Tax Act (Laws 1937, c. 374).
Retail dealers in fish and in bottled drinks, who used ice to refrigerate and preserve products sold, were not "processors" within exemption provision of Retail Sales Act, and hence ice was subject to sales tax (Laws 1937 c. 374, § 2(i, l).
Where tangible personalty is sold for purchaser's use or consumption and not for resale in substantially same condition as purchased, there is a "retail sale" within terms of Retail Sales Tax Act rather than a "wholesale sale," and, aside from specific statutory exceptions or exemptions, real test is existence of sale to one who uses or consumes the property, irrespective of whether property is used in purchaser's place of business or in his home (Laws 1937, c. 374, § 2(i, l).
A retail grocer was not a "producer, manufacturer, or compounder" within exemption provision of Retail Sales Tax Act, and wrapping paper and containers sold by electric company to grocer, delivered by grocer to purchasers, and computed as overhead expense, were subject to sales tax, as being subjects of a "retail sale" by a "retailer" (Laws 1937, c. 374, § 2(i, l).
In actions in mandamus, brought primarily for the interpretation of certain provisions of our Sales Tax Act (chapter 374, Laws 1937), the provisions under consideration are construed, and it is held:
1. The general rule that one who claims a statutory exemption from a tax must bring himself clearly within the statute is applicable to the Sales Tax Act.
2. Electric energy sold to one engaged in the retail grocery and meat business, and used by him for the operation of his refrigeration system, wherein he stores meat, milk, and other perishable products kept for sale to his customers, is subject to taxation under the act. In using such electricity for that purpose the grocer is not a processor within the meaning of the statute.
3. Sales of ice to a grocer, used by him to cool his refrigerator, and sales of ice to one who uses it to cool bottled drinks which he sells to the public, are subject to the tax.
4. A sale by a wholesale grocery company to a retail grocer of merchandise consisting of paper trays, butter trays, wrapping paper, tying twine, paraffin paper, and paper bags used by the retail grocer for wrapping of goods sold by him, the cost of which merchandise is figured as a part of the overhead expense of conducting the business, is subject to the tax.
5. The test of a retail sale of tangible personal property is whether it is sold to one who uses or consumes the property.
Three separate original proceedings in mandamus by Frank J. Warren doing business as the Frank J. Warren Food Market, by Paul W Rolley and Roscoe Gray, partners, doing business as the American Ice Company, and by the Kansas Service Grocers Inc., against W. G. Fink and others, constituting the State Tax Commission of the State of Kansas.
Writs denied.
E. R. Sloan, W. Glenn Hamilton, Floyd A. Sloan, and Eldon R. Sloan, all of Topeka, for plaintiffs.
D.C. Hill, of Wamego, for defendants.
W. G. Fink, of Fredonia, and Lester Luther, of Cimarron, pro se.
These are three separate mandamus proceedings briefed and argued together, brought originally in this court, in which the respective plaintiffs seek orders requiring defendants to accept as correct returns made by them under our recent Sales Tax Act (chapter 374, Laws 1937). This is an act providing for a tax upon the privilege of selling tangible personal property at retail. Generally speaking, it levies and provides for the collection and disbursement of a tax at the rate of 2 percent. upon the sales of tangible personal property made to the consumer and not for resale. By its terms the act is to be administered by the State Tax Commission, which is authorized to make and enforce such reasonable rules and regulations not inconsistent with the provisions of the act, as it may deem necessary. Under this authority defendant has made a number of rules and regulations, some of which deal with reports to be made by those whose duty it is, under the act, to collect and remit such taxes. The act contains definitions of some of the terms used therein, and some exceptions and exemptions are made in the act. Specific provisions of the act pertinent to the questions to be determined will be mentioned as we proceed.
In the Warren case, No. 33682, plaintiff is in the retail grocery and meat business in Topeka. During June, 1937, he purchased from the Kansas Power & Light Company electric energy used for the purpose of running his refrigeration system wherein he stored meat, milk, vegetables, and other perishable products kept for sale to his customers, the cooling system being necessary to preserve and keep such products in condition for sale. The cost of the current to June 25 was $16. He claims to be exempt from paying the tax on the cost of this current under section 2(i) and (l). The pertinent portions of these subdivisions read:
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...part of the article, substance, service or commodity which he manufactures or compounds, produces or furnishes" are exempt. 146 Kan. at 718, 72 P.2d 968. The plaintiff, a retail grocer, purchased electricity in order to run the refrigeration system in which he stored meat, milk, vegetables,......
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