Welcome Wagon Intern., Inc. v. South Dakota Dept. of Revenue

• Citation: 318 N.W.2d 5
• Decision Date: 07 April 1982
• Docket Number: No. 13528,13528
• Parties: WELCOME WAGON INTERNATIONAL, INC., Appellant, v. SOUTH DAKOTA DEPARTMENT OF REVENUE, Appellee.
• Court: Supreme Court of South Dakota

Page 5

318 N.W.2d 5

WELCOME WAGON INTERNATIONAL, INC., Appellant, v. SOUTH DAKOTA DEPARTMENT OF REVENUE, Appellee.

No. 13528.

Supreme Court of South Dakota.

Argued Jan. 20, 1982.

Decided April 7, 1982.

John S. Lovald, Pierre, for appellant.

Joe Nadenicek, Asst. Atty. Gen., Pierre, for appellee, Mark V. Meierhenry, Atty. Gen., Pierre, on brief.

FOSHEIM, Justice.

The South Dakota Department of Revenue (Department) determined that the revenues of Welcome Wagon International, Inc. (appellant), are subject to the tax imposed by the Retail Sales and Service Tax Act, SDCL ch. 10-45. The circuit court affirmed the Department's determination. We reverse.

Appellant is a nationwide company which employs local agents to contact new residents, newlyweds and couples with a new born baby within the agent's locality. The agent contacts these individuals at their homes, explains the various business services available within the area, and leaves them with promotional literature. Appellant's income is generated from the businesses it represents when it contacts local residents. Each business executes a contract agreeing to pay appellant for its services.

The sole issue on appeal is whether appellant is exempt from the Retail Sales and Service Tax Act by reason of the exemption granted to "advertising services" in SDCL 10-45-12.1. It is the position of the Department that the services of appellant are subject to tax pursuant to SDCL 10-45-5.2.

SDCL 10-45-5.2 specifically subjects certain services, as enumerated in the 1972 Standard Industrial Classification Manual (SIC Manual), to taxation. The SIC Manual is prepared by the Statistical Policy Division of the Federal Government's Office of Management and Budget. Among the groups made subject to the tax by SDCL 10-45-5.2 is "business services (major group 73)." In the SIC Manual, classified under the general heading of Major Group 73--Business Services, are various types of services designated by group number and each group number is subdivided by industry number. For example, Group No. 731--Advertising is subdivided into four categories: Industry No. 7311--Advertising Agencies; Industry No. 7312--Outdoor Advertising Services; Industry No. 7313--Radio, Television, and Publisher's Advertising Representatives; Industry No. 7319--Advertising, Not Elsewhere Classified. Welcome Wagon, by name, is classified in the SIC Manual under Major Group 73--Business Services in Group No. 739--Miscellaneous Business Services, Industry No. 7399--Business Services Not Elsewhere Classified.

SDCL 10-45-4 provides, in part, that "any service as defined by SDCL 10-45-4.1 ¹ shall be taxable, unless the service is specifically exempt from the provisions of this chapter." Appellant claims exclusion under the exemption for "advertising services" contained in SDCL 10-45-12.1, ² entitled "services specifically exempt from tax." Since it appears undisputed that the services of appellant fall within the definition of "service" contained in SDCL 10-45-4.1, we must determine if they were services specifically exempt from the provisions of the chapter under SDCL 10-45-12.1.

The thrust of appellant's argument is that it was misclassified in a nonadvertising category by the federal government in the 1972 SIC Manual, but that such misclassification should not prevent it from receiving the 12.1 exemption as it has demonstrated that it is in fact an advertising service. At oral argument appellant contended it should properly be classified under Group No. 731--Advertising, Industry No. 7319--Advertising, Not Elsewhere Classified. Appellant argues that since 12.1's exemption for advertising services is found in that part of the statute which does not specifically refer to the SIC Manual, any service, however or whether classified in the SIC Manual, which can prove it is an advertising service should be allowed the exemption for advertising services. We agree.

There is little doubt that Welcome Wagon in practice provides an advertising service. That seems to have been assumed by the trial court's statement that "it is not sufficient for Appellant to show that its services constitute advertising[.]" The Department, while not conceding that Welcome Wagon is an advertising service, does not seriously challenge that fact; instead it based its decision to tax Welcome Wagon on the SIC Manual's listing of Welcome Wagon in a category other than advertising. We must look beyond the SIC Manual to determine if Welcome Wagon is entitled to the tax exemption. The legislative enactment is to be considered as a whole, and when possible, effect must be given to all provisions of the statute if they can be reconciled. State v. Hirsch, 309 N.W.2d 832 (S.D.1981); Matter of Sales Tax Refund Applications, 298 N.W.2d 799 (S.D.1980); State v. Heisinger, 252 N.W.2d 899 (S.D.1977). This means that when construing statutes courts must attempt to reconcile apparent contradictions between statutes, having in mind the principle of pari materia which assumes that all legislative enactments are consistent and harmonious in their several provisions. Matter of Certain Territorial Elec. Boundaries, Etc., 281 N.W.2d 72 (S.D.1979); In re Schneider's Estate, 72 S.D. 174, 31 N.W.2d 261 (1948). SDCL 10-45-4.1 states a general definition of "service." SDCL 10-45-5.2 enumerates a representative list of services intended to be taxable and incorporates by reference portions of the SIC Manual. One of the services classified under business services ...