In reversing a finding of the State Tax Commission the circuit court has found that certain of International Business Machines. Corporation’s (IBM) transactions are not subject to the state sales tax and has therefore ordered a refund of $238,459.69 “with interest from date of payment at the rate of six per cent.” Thus upon this appeal by the commission the question for determination is whether certain rental or lease-transactions are subject to the two per cent sales tax. Specifically, the question is. whether those transactions under IBM’s. “Agreement for IBM Machine Service” are in fact sales at retail and therefore subject to the tax.
The briefs of the parties, at least in the citation of cases and statutes, have taken a wide range, but the cause was submitted' to the circuit court upon the agreed statement of facts presented to the tax commission and that submission has limited and', narrowed the issues involved. In view of the precisely limited question thus presented it is neither necessary nor desirable to-consider terms and definitions not involved in the appeal, as “gross receipts,” or other taxes not in issue, as the closely related’ and supplementary “use tax.” V.A.M.S. § 144.600 et seq. Southwestern Bell Tel. Co. v. Morris, (Mo.)
The background of the controversy is this: Throughout the history of the sales tax act, since 1935, there had been a dispute as to whether it covered certain transactions, particularly transactions involving rentals or leases requiring some servicing of the leased machine or product. The controversy was resolved in 1946 when by letter the taxing authorities and IBM entered into an agreement “that 50% of all rental receipts were, in essence, charges for services and were not taxable under the Sales Tax Law, but taxes (meaning 2% sales tax) were paid on the balance.” That expedient or arrangement continued until July 30, 1959, when the Department of Revenue advised IBM that thereafter “no deduction for service will be allowed, other than actual and accurate charges for direct labor used in servicing or repairing rented machines.” IBM refused to make a separate billing and report of its rental and service transactions and took the position that no part of its rental or lease transactions was subject to tax under the act and, as indicated, filed with the department its tax adjustment affidavit for taxes paid under the 1946 arrangement beginning with the fourth quarter of 1957.
The transactions immediately involved are those made under IBM’s written contract form called “Agreement for IBM Machine Service,” and, as indicated, this appeal is not concerned with “Agreement (s) for Sale of IBM Machines” or any other IBM transaction. The court found, perhaps it was tacitly agreed by the parties, that the transactions involved “constitute bona fide payments * * * for the use or rental of its various office and business machines” and so there is no problem or question here of a tax evasion device. By this “Agreement for IBM Machine Service,” IBM “agrees to furnish to the Customer, * * * its IBM Machine Service comprising the use of the below listed machines and devices manufactured and to be kept in good working order by IBM." Following this printed provision is a space for the inserted description of the machine or device including a space for noting “Monthly Charge Each." On a second page or reverse side the printed agreement provides that it is effective and “shall remain in force * * * for one year from the date the first machine is installed * * and may be terminated by either party then, provided written notice is received three (3) months prior." And, “Thereafter it may be terminated * * * by either party at the end of any calendar month” on three months’ notice. There is a detailed provision with respect to the “monthly charges’’ and they provide for the use of the machines “by only one shift of clerks,” use by more than one daily shift calls for an additional charge. Also added to the specified charges are “any taxes, however designated, levied or based on such charges or on this Agreement or the machines or their use, including state and local privilege or excise taxes based on gross revenue * IBM agrees, however, to pay “personal property taxes assessed on the machines and taxes based on net income.” There are further provisions relating to additional machines, cards and tape, maintenance, alterations and attachments as well as provisions for the customer’s paying drayage charges. *638 (Italics supplied in quoting from the agreement.)
The state does not contend, apparently, that IBM’s dealings under these agreements are not as a matter of fact rental or lease transactions. The sales tax act defines a “sale at retail,” as far as material here, as ■“any transfer made by any person engaged in business as defined herein of the ownership of, or title to, tangible personal property to the purchaser, for use or consumption and not for resale in any form as tangible personal property, for a valuable consideration; * * (Italics supplied for emphasis.) V.A.M.S. § 144.010, subd. 1 (8). Without specific regard to the stipulated written agreement the state seizes up-en the italicized language and urges that “Respondent’s rental transactions are transfers of the ‘ownership of’ tangible personal property and as such are retail sales” within the meaning of the act. It is said that IBM’s “rental transactions grant the right to continuous possession or use of business machines and thus they transfer the ‘ownership of’ tangible personal property” as defined in a “sale at retail.” For these reasons it is urged therefore that there is a plain legislative intention “to tax these rental transactions.” In addition, in support of its argument, the state invokes certain auxiliary rules of statutory construction and what is said to have been the administrative interpretation of the act over the years.
To further precisely delimit the issues involved upon this appeal it is well at this juncture to note the contentions and concessions made by IBM. -In the first place, IBM insists that this appeal may not be decided upon the basis of generalities of either law or fact, that a mere advisory or abstract opinion is neither sought nor involved, and that the case “must be decided on the record and the facts in this case.” In the second place, IBM concedes, at least tacitly, that certain leases or rentals of certain types of property could be “continuous” or so transfer the “use” or “possession” for “consumption” as to thus in point of fact constitute a retail sale in the guise of a rental. It is urged, however, that “these agreements do not contain the factual elements which would justify their treatment as if they were (retail) sales” and therefore subject to the tax. IBM contends that in the stipulated circumstances the legislature “intended to tax retail sales which it equated to transfer of title or ownership” however accomplished, but that it recognized bona fide rental transactions and the fact that they are not subject to the sales tax. IBM likewise invokes the auxiliary rules of statutory construction and administrative interpretation over the years.
With the issues thus further and plainly delimited, it is not necessary to review and carefully distinguish the cited cases. Some of them illustrate the conceded principle that some rental transactions may in fact be “retail sales” or so transfer possession or use as to constitute sales at retail and some of the statutes specifically taxed rental transactions as sales. Ford Car Leasing Co. v. Oklahoma Tax Comm. (Okl.)
*639 As indicated, in the delimited circumstances of bona fide rental transactions and in view of the plain implication of unambiguous statutes, it is not necessary to resort to the auxiliary rules, some consideration of the statute alone is sufficient to resolve the problems of this appeal. In the first place, the statutes do not in terms define rental or lease transactions as “sales at retail.” In addition to defining a sale at retail the statute, V.A.M.S. § 144.010, subd. 1(8), specifically provides that the term “shall be construed to embrace” certain specified transactions, some or all of them in the nature of rental or lease transactions. These embraced transactions are all enumerated subdivisions of subsection (8) which defines “sale at retail.” V.A.M.S. § 144.010, subd. 1(8). For example, subdivision (8) (a) embraces “Sales of admission tickets, cash admissions, charges and fees to or in places of amusement, * * * games and athletic events.” And in (8) (c) the definition of retail sale includes “Sales of service to telephone subscribers * * * and the sale, rental or leasing of all equipment or services pertaining or incidental thereto.” In subdivision (8) (e) a retail sale embraces “charges for all rooms * * * furnished at any hotel, * * * dining car, tourist camp,” and (8) (f) embraces the sale of tickets for railroad and sleeping car seats and bus tickets for the transportation of persons. These definitions embrace rental transactions in some senses or meanings and of course as to telephone service a retail sale in express terms includes the “rental or leasing of all equipment or services” — an instance in which eventually the rental charges far exceed the value of the thing rented. In the following section, 144.-020, when the 2% sales tax is levied and imposed, the distinctions in these definitions is continued and followed. There is a 2% tax “for admission and seating accommodations,” a 2% tax on telephone service and “the sale, rental or leasing of all equipment or services pertaining or incidental thereto,” a tax on charges for hotel rooms and bus and railroad tickets. V.A.M.S. § 144.-020, subd. 1(2), (4), (6), (7).
In short, had the legislature desired or intended to impose a sales tax on any and all lease transactions it would have been a very simple matter to plainly manifest that purpose by express provision in the act. By carefully defining “sale at retail” and purposefully embracing in the definition and the tax certain rental-type transactions, it would appear that other rentals and leases were not embraced. In the strictly limited circumstances of this record and these particular rental transactions by IBM the statutes are unambiguous and do not either expressly or by plain implication subject these transactions to the 2% sales tax.
As to the second problem, the period of time for which a refund may be claimed, the auxiliary rules of statutory construction have some force. The sales tax act, since 1939 and through three amendments, has provided for refunds of taxes erroneously or illegally collected, provided however that “no such credit or refund shall be allowed unless duplicate copies of a claim for refund are filed within one year from the date of overpayment.” V.A.M.S. § 144.190(2). In 1951 the general laws governing the Division of Collection, State Revenue Department, were amended and a new provision added, Laws Mo. 1951, p. 866. The new provision also authorizes the director of revenue to credit and refund erroneous collections or payments “of any tax” from funds appropriated for that purpose, provided that “No refund shall be made by the director of revenue unless a claim for refund has been filed with him within two years from the date of payment.” V.A.M.S. § 136.035(3). The state, of course, relies on section 144.190(2) of the sales tax act and contends that any claim for sales tax payments not made within one year is barred. On the other hand, IBM relies on section 136.035(3) and insists that under the law relating to the director and all taxes collected by him it had two years in which to file a claim or as here make a claim for payments made over a two-year period.
IBM says that section 136.035 (3) is a general statute covering the same subject pro
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vided for in section 144.190, that 144.190 is a special statute and therefore there is an obvious legislative intent that the general statute displace the operation of the special statute. This particular rule and its applicability is illustrated by Schott v. Continental Auto Ins. Underwriters,
It is not necessary to a disposition of this phase of the appeal to undertake an explanation of these cases or a reconciliation of these rules. The requirement that claims for refund or credit must be “filed within one (1) year from date of overpayment” (Laws Mo.1941, p. 708) is a part of the sales tax act and therefore specifically applicable to sales taxes. Section 136.035 applies to the director of revenue and “any tax which the state is authorized to collect.” This language is broad enough to embrace sales taxes, but in addition to sales taxes the director collects a large number of other taxes. Then too, supporting the view that by this general statute there was no legislative intention to repeal by implication only the special statute, is the obvious fact that the general law in its title or otherwise did not purport to amend or modify section 144.190, that section is not mentioned. Laws Mo.1951, p. 866. There may be many reasons, either practical or of policy, for specifically requiring that claims for refunds of sales taxes be filed within one year and at the same time permitting refunds of other taxes after two years. Supporting this view is another auxiliary rule of statutory construction that repeals by implication are not favored. Fleming v. Moore Bros. Realty Co., supra.
In addition there is the rather firmly fixed rule that “On grounds of public policy, the law discourages suits for the purpose of recovering back taxes alleged to be illegally levied and collected.” 51 Am.Jur. (Taxation), Sec. 1167, p. 1005. And it is for this .reason of policy that the remedy of a refund, including the time in which it must be filed is the exclusive remedy. 51 Am.Jur., Secs. 1168-1174, pp. 1006-1010 ; 84 C.J.S. Taxation § 633, p. 1269; annotation
In addition to the principal sum involved the court’s judgment directed that the sum refunded be paid “with interest from date of payment at the rate of six per cent.” In general it may be said that there are conflicting views as to the “Right to interest on tax refund.” Annotations
The judgment is reversed and the cause remanded to the end that a judgment consistent with this opinion may be entered.
The foregoing' opinion by BARRETT, C., is adopted as the opinion of the Court.
All of the Judges concur.