Webre Steib Co v. Commissioner of Internal Revenue

• Decision Date: 12 February 1945
• Docket Number: No. 148,148
• Citation: 89 L.Ed. 819,324 U.S. 164,65 S.Ct. 578
• Parties: WEBRE STEIB CO., Limited, v. COMMISSIONER OF INTERNAL REVENUE
• Court: U.S. Supreme Court

324 U.S. 164

65 S.Ct. 578

89 L.Ed. 819

WEBRE STEIB CO., Limited,

v COMMISSIONER OF INTERNAL REVENUE.

No. 148.

Argued Dec. 13, 1944.

Decided Feb. 12, 1945.

Messrs. C. J. Batter and Wm. A. Sutherland, both of Washington, D.C., for petitioner.

Miss Helen R. Carloss, of Washington, D.C., for respondent.

Mr. Justice JACKSON delivered the opinion of the Court.

This is a proceeding brought for recovery of sugar processing taxes paid under the Agricultural Adjustment Act of 1933, 7 U.S.C.A. § 601 et seq. The Commissioner having denied in entirety the taxpayer's claim for $8,167.97, the total tax paid by it, taxpayer petitioned for review by the Processing Tax Board of Review, as provided by statute. 49 Stat. 1749. The Board awarded refund in the amount of $3,655.82, and motions for rehearing made by both parties were denied by the Tax Court, which had succeeded to the jurisdiction of the Processing Tax Board of Review. 56 Stat. 798, 967, § 510(a), 7 U.S.C.A. § 648 note. On appeal, the Court of Appeals for the Fifth Circuit reversed and held that the claim should be denied. 140 F.2d 768. We took the case to review questions of application of the 'prima facie evidence' and 'presumption' sections of Title VII, Revenue Act of 1936, on which there was conflict in the circuits. Commissioner v. Bain Peanut Co., 5 Cir., 134 F.2d 853, certiorari granted 320 U.S. 721, 64 S.Ct. 36, dismissed on motion of petitioner 321 U.S. 800, 64 S.Ct. 633; Helvering v. Insular Sugar Refining Corp., App.D.C., 141 F.2d 713; cf. E. Regensburg & Sons v. Helvering, 2 Cir., 130 F.2d 507.

A new administrative procedure for recovery of taxes paid under the Agricultural Adjustment Act was provided by Title VII of the Revenue Act of 1936, §§ 901—917, 49 Stat. 1747, 7 U.S.C. §§ 644—659, 7 U.S.C.A. §§ 623 note, 644—659, repealing §§ 21(d), (e), and (g) of the 1935 amendments to the Agricultural Adjustment Act, 49 Stat. 771—773. The provisions were reviewed at length and their constitutionality upheld in Anniston Mfg. Co. v. Davis, 301 U.S. 337, 57 S.Ct. 816, 81 L.Ed. 1143. In outline, so far as relevant to this case, they are as follows: The claimant is required to prove that he bore the burden of the tax. § 902. Average 'margins' per unit of the commodity processed, consisting of the difference between cost of the commodity (plus tax paid, if any) and gross sales value of the articles resulting from the processing, are to be computed for the tax period and a base period; the base period is the period two years preceding imposition of the tax and the six months thereafter (February to July, 1936). §§ 907(b), (c). If the margins for the tax period are lower than those for the base period, it is 'prima facie evidence' that, to that extent, the claimant bore the burden of the tax; if they are not lower, it is 'prima facie evidence' that none of the burden was borne by the claimant. § 907(a). But this 'presumption' may be rebutted either by the claimant or by the Commissioner, by proof of 'the actual extent' to which the claimant shifted the tax to others. Such proof may include, but is not limited to, certain types of evidence described by the statute. § 907(e).

For our purposes the material facts must be gleaned from the findings and memorandum of the Board of Review and a stipulation filed by the parties in the Court of Appeals.

Petitioner is a grower and purchaser of sugarcane, which it processes into direct-consumption sugar and edible molasses.¹ It operates during the months of October November, and December of each year. The tax went into effect on June 8, 1934 and petitioner paid taxes until November 8, 1935, so that it paid processing taxes—$7,067.12 on sugar and $1,102.85 on molasses—for the months of October, November and December 1934 and October and November 1935. Its average statutory margin for this period was $.01192, and the total number of units processed was 2,256,676 pounds of sugar. Petitioner's base period consisted only of the two years prior to the tax because it did no processing in the six months February to July 1936. Its average statutory margin per unit for the base period was $.01354. Thus the margin during the tax period was $.00162 per unit lower than that during the base period, creating 'prima facie evidence' that petitioner had borne the tax to the extent of $3,655.82, the amount of refund allowed by the Board. Petitioner contends that this amount should have been increased by including in the margins its first processing after invalidation of the Agricultural Adjustment Act, which was its processing of the 1936 crop, October 1936 to January 1937. The average margin per unit for this period, computed as for the base period, was $.01582, or $.00228 more than the base-period margin.

Evidence that the tax was not borne by petitioner was as follows: Universal increases in the sale price of sugar were effected on the date of imposition of the processing tax in the amount of $.55 per hundred pounds, to cover the amount of the tax. All of the accounts stated between petitioner and its broker, E. A. Rainold, Inc., respecting sales of molasses made through that broker, included the processing tax as a separate item and as an addition to the sale price of the article. 'An account sale, typical of all such accounts, respecting the sale of sugar, made through its said broker' bore the notation, 'Golden Ridge, 100 Pkts. 10,000# @3.71¢ $371.00. F.O.B. Pltn. Tax Pd. Tax 0.526¢,' $.526 being the prevailing rate of processing tax at the time the particular account was rendered. A letter from the broker Rainold to petitioner, dated January 17, 1936, contained the following: 'According to memorandum you furnished us on processing tax you paid on 298,017 pounds of sugar, and we have accounted to you for there (three) cars of 800 pockets and part car of 300 pockets and when we get paid for balance of this part car, or 500 pockets, it will total 3200 pockets or 320,000# on which the processing tax was included in the price. Therefore you have not paid anymore tax than you collected and these sugars in warehouse here and elsewhere, that is Chicago, or (are) really tax free.'

On the foregoing facts the Board of Review found that 'The extent to which the processing tax (was) paid and borne by the petitioner and not shifted to others in any manner whatsoever is $3,655.82,' and it awarded refund in that amount. This award was based, the Circuit Court of Appeals thought, 'upon the theory that the claimant had established facts sufficient to invoke the statutory presumption that it had borne the burden of the tax' to that extent. In the view of the Court of Appeals, however, the evidence 'clearly was sufficient to dissolve the presumption, and since there was no other proof to support any refund, the claim should have been disallowed in its entirety.'

Our first question is whether the Board was entitled to base an award upon the statutory 'prima facie evidence' or 'presumption,' or whether the Government's evidence removed the presumption from the case as a matter of law. For, although the Board did not state how it arrived at its award, it seems likely that it relied upon the prima facie evidence provisions and not upon a weighing of the evidence; petitioner does not assign error to the contrary, although it contends that the evidence supports the Board's award.

The statute, unfortunately, is beset by the ambiguity and the imprecision of definition which are not uncommon with respect to presumptions. But the difficulties of the subject will not excuse us from the duty to apply as best we may a statute Congress has seen fit to enact. At one point it speaks only of 'prima facie evidence' and at another it refers to the prior section as creating a 'presumption.' 'Prima facie evidence' alone might be taken to signify only a permissive inference, indicating that the Commissioner or the courts might, if they saw fit, permit a recovery solely on the basis of the margin evidence. See Crane v. Morris' Lessee, 6 Pet. 598, 621, 8 L.Ed. 514; Bailey v. Alabama, 219 U.S. 219, 234, 31 S.Ct. 145, 149, 55 L.Ed. 191; 9 Wigmore on Evidence (3d ed. 1940) § 2494. But the statute's later use of the word 'presumption' and the careful detail with which the margin evidence and rebuttal evidence are described argue against such an interpretation, as does the legislative background. A committee report on Title VII, explaining the necessity for amending the existing refund provisions, stated: 'It has been contended that while that section (§ 21(d) of the Agricultural Adjustment Act) states the conditions under which the Commissioner may deny a refund of taxes paid, it does not establish affirmatively any conditions, compliance with which will enable the claimant to secure a refund.' Sen.Rep. 2156, 74th Cong., 2d Sess., p. 33. From this it seems clear that the new provision was meant to prescribe a minimum of proof which would require refund in the absence of opposing evidence. Therefore the inference arising from the margin evidence must be a compelled one.

The statute does not tell, however, on what event the existence of the presumed fact must cease to be assumed by the trier. Does the presumption cease to operate as soon as the Commissioner has met the burden of going forward with evidence to show shifting of the tax, or does it place on him the burden of proof? The Government and the court below, taking the former view, support it with the contention that 'It is never the function of a rebuttable presumption to shift the burden of proof.' Commissioner v. Bain Peanut Co., 5 Cir., 134 F.2d 853, 857. It is unnecessary for us to take so broad a ground, even if it is correct.² Dealing only with the particular presumption now before us, we find nothing to indicate that Congress attached exceptional probative value to the margin evidence, or that it desired for any other reason to tilt the scales sharply against the Commissioner rather than merely to even them...