William McCullough Transp. Co. v. Division of Motor Vehicles, Bureau of Motor Carriers

• Decision Date: 17 February 1971
• Citation: 273 A.2d 786,113 N.J.Super. 353
• Parties: WILLIAM McCULLOUGH TRANSPORTATION COMPANY, Petitioner-Appellant, v. DIVISION OF MOTOR VEHICLES, BUREAU OF MOTOR CARRIERS, Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 353

113 N.J.Super. 353

273 A.2d 786

WILLIAM McCULLOUGH TRANSPORTATION COMPANY, Petitioner-Appellant, v. DIVISION OF MOTOR VEHICLES, BUREAU OF MOTOR CARRIERS Defendant-Respondent.

Superior Court of New Jersey Appellate Division.

Argued Feb. 1, 1971.

Decided Feb. 17, 1971.

Richard D. Catenacci, Newark, for appellant (Hughes, McElroy, Connell, Foley & Geiser, Newark, attorneys).

Alfred L. Nardelli, Deputy Atty. Gen., for respondent (George F. Kugler, Jr., Atty Gen., attorney; Stephen Skillman, Asst. Atty. Gen., of counsel).

Before Judges CONFORD, KOLOVSKY and CARTON.

The opinion of the court was delivered by

CONFORD, P.J.A.D.

Appellant, a motor carrier subject to the Motor Carriers Road Tax Act of 1963 (L.1963, c. 44; N.J.S.A. 54:39A--1 et seq.), appeals from a denial by defendant, administrator of the tax, of its claim for refund of $37,491.63. This amount represented payment by it in 1967 to Connecticut, Maryland and Pennsylvania of road use taxes assessed by those states for various years from 1962 to 1967 measured by motor fuel used by its vehicles on highways in those states on which motor fuel sales taxes had been paid by it in New Jersey pursuant to the Motor Fuel Sales Tax Act (L.1935, c. 319, as amended; N.J.S.A. 54:39--1 et seq.).

Of the total amount mentioned, $6,052.68 represented the New Jersey taxing period prior to October 1, 1964, during which the statute contained no provision for refund on account of taxes paid other states. For that reason there was no statutory basis upon which defendant could have made a refund of that sum. But effective October 1, 1964 the road tax act was amended by L.1964, c. 258, so as to provide, by what is now N.J.S.A. 54:39A--8 (section 8 hereinafter), for a refund for similar taxes paid to another state 'on or by reason of the use or consumption therein within such carrier's reporting period of motor fuel attributable to purchase in this State * * *.' The remainder of the $37,491.63 claimed was for reporting periods subsequent to October 1, 1964, but defendant rejected those claims because appellant had not filed the claims 'within 4 months following the end of the (respective) reporting period(s),' as expressly required by section 8.

The instant litigation came about as a result of claims in 1967 by the tax authorities in the states referred to that audits of appellant's returns for the years mentioned had disclosed additional amounts of road use taxes due those states in the aggregate sum stated. When appellant paid the added assessments it sought refunds from defendant. These were rejected, as just indicated.

Our determination of the issues presented will be simplified by considering separately the different portions of the refund claim in question.

As to the $6,052.68 claim

While appellant's precise position as to this portion of the claim is not too clear, it is, as best we can understand it, that the absence of a refund provision in the statute prior to October 1, 1964 for road use taxes paid in other states rendered the statute illegal as imposing 'double taxation' and an unconstitutional burden on interstate commerce.

To appraise the contention one must examine the relationship between the motor fuel sales tax act and the road tax act, as the latter stood prior to the 1964 amendment. The motor fuel sales tax act imposes a tax on every gallon of motor fuel sold or used in this state. N.J.S.A. 54:39--27. The tax is passed on to the purchaser. 'Use' includes transfer of fuel by a distributor into a motor vehicle. N.J.S.A. 54:39--8.

The road tax act as first enacted provided that every motor carrier, as defined in the act (including appellant), should 'pay a road tax equivalent to the rate per gallon of the motor vehicle fuel tax which is currently in effect, calculated on the amount of motor fuels used in its operations within this State.' N.J.S.A. 54:39A--3. N.J.S.A. 54:39A--6 provided that the amount of motor fuels used in the State should 'be computed to be such proportion of the total amount of such motor fuels' used in the carrier's 'entire operations within and without this State as the total number of miles traveled within this State bears to the total number of miles traveled within and without this State.' The Director of the Division of Motor Vehicles was authorized, byN.J.S.A. 54:39A--5, to impose the tax on a quarterly basis, starting with the quarter from June 1 to August 31, 1963. If the motor carrier purchased any motor fuel in New Jersey during a given quarter, the amount of tax paid thereon (pursuant to N.J.S.A. 54:39--27) was allowed, under section 8, as a credit against the road tax imposed by the 1963 act (N.J.S.A. 54:39A--3). Section 8 also provided that if

the amount of the credit herein provided to which any motor carrier is entitled for any reporting period exceeds the amount of the (road) tax for which such carrier is liable for the same reporting period, such excess of the credit shall, under such regulations as the director shall prescribe, be allowed as a credit on the (road) tax for which such carrier would be otherwise liable in any of the succeeding 3 quarters.

The statute failed, however, to provide adequately for the carrier who consistently bought more motor fuel in New Jersey than he used within the State. For such a carrier, the amount of credit for motor fuel taxes paid to which he was entitled would exceed that amount of the road tax levied against him in each quarter, and the credit would consequently become nugatory to the carrier. This led to the 1964 amendment of the act discussed later therein.

Appellant contends that the interacting effect of the motor fuel sales tax act and of the road tax act, as applied to motor carriers, constituted both statutes in combined effect simply a taxing imposition on the use of the highways. From that premise it argues that the failure of the road tax act prior to October 1964 to allow appellant credit for road taxes paid by it in other states on fuel purchased in New Jersey but used in those states caused the levy to become an illegal double tax and an unconstitutional burden on interstate commerce.

We do not agree. The two tax acts are separate and distinct and cannot be confused in operation and effect merely because the Legislature for reasons of policy decided to allow credits against the one for amounts paid under the other. Insofar as appellant in the first instance paid motor fuel taxes on fuel purchased here, the tax was free of constitutional defect notwithstanding the fuel...