50 Cal. App. 2d 765 | Cal. Ct. App. | 1942
This action was brought by Rath jen Bros., Inc. to recover deficiency excise taxes collected by the State Board of Equalization under the Alcoholic Beverage Control Act (Stats, of 1935, p. 1123, ch. 330) as amended in 1937 (Stats, of 1937, p. 2126, ch. 758). The plaintiff is a duly licensed distilled spirits'rectifier and distributor engaged in business in California, and, as such, for the tax period commencing July 1, 1937, and ending June 30, 1938, paid to the state large sums of money under the tax statute here involved. The State Board of Equalization, pursuant to the authority conferred by the act, levied a deficiency assessment against plaintiff for that period. After a hearing, and after deducting from the original deficiency assessment a loss tolerance to which the taxpayer was entitled, the board determined there was a deficiency owing the state of $1,083.39. This sum was paid by the taxpayer under protest and this action instituted to recover the amount so paid. The trial court rendered judgment for the taxpayer, and the defendants appeal.
The act under which these taxes were paid was passed in 1935, and materially amended in 1937. The 1937 amendments are admittedly applicable to this proceeding. Generally speaking, the act imposes a stamp tax, the stamps to be purchased by the wholesaler or rectifier, and such stamps must accompany delivery of the distilled spirits to the retailer, by whom they are affixed to the bottles and canceled.
The appellants contend that regardless of the other contentions made, the decision in Empire Vintage Co. v. Collins, 40 Cal. App. (2d) 612 [105 Pac. (2d) 391], decided by the First Appellate District, Division Two, requires a reversal. The Supreme Court denied a hearing in that case, three of the justices voting for a hearing, and two of the justices not participating. The same tax statute as that involved in the instant case was involved in the Empire Vintage Co. case, but the period in dispute was for the period July 1, 1935, to June 30, 1937. The action in the Empire Vintage Co. ease, as in the instant ease, was brought to recover a deficiency paid under protest by the wholesaler. On pleadings and evidence substantially similar to those here involved, the trial court rendered its judgment in favor of the taxpayer. The appellate court reversed this judgment on the sole ground that the findings did not support the judgment. The findings in that ease were to the effect that the wholesaler there involved had
In their closing brief the appellants urge that this decision compels a reversal of the judgment in the instant ease for the asserted reason that the findings in the two cases are “identical.” An examination of the records in the two cases demonstrates that the findings are not only not identical, but that in the instant case there is a positive finding on the very issue that the court failed to find on in the Empire Vintage Co. case. The complaint in the present case, as in the Empire Vintage Co. case, contained in paragraph VII, this allegation:
“That plaintiff above named at all times complied with and performed the provisions of the said Alcoholic Beverage Control Act as the same was then in force and effect, and purchased and delivered as required therein Excise Stamps on all sales made by it upon which the said Excise Tax was imposed.” In the Empire Vintage Co. ease there was no finding of the truth of this allegation, but in the instant ease the court found that this allegation was true. It should be mentioned that in the opinion in the Empire Vintage Co. case there*768 are two obvious typographical errors. After correctly setting forth the allegations of the complaint the court stated, on page 616: ‘ ‘ The trial court found that all the allegations of the complaint contained in paragraphs I, II, III, IV, V, and VII are true ...” An examination of the clerk’s transcript in that case shows that the “VII” should have read “VIII.” That there was no finding of the truth of paragraph VII is correctly stated on page 618 of the decision. On the same page appears the statement that: “In paragraph VII the plaintiff alleged that the defendant board caused an examination to be made of plaintiff’s books and records ...” The correct reference is to paragraph VIII. The major premise of the court’s opinion in the Empire Vintage Co. case was that there was no finding that the taxpayer had paid all taxes ' due—but simply a finding that such taxes had been paid on all sales to licensees. It was for that reason alone that the judgment was reversed. But the very finding that was lacking in that case was made in the instant case. For this reason, the argument that the prior decision compels a reversal is without merit.
The appellants next urge that the evidence does not support the findings. This contention, with which we agree, requires a reference to some of the provisions. of the act as originally enacted, and as amended in 1937. Section 24, as amended in 1937, provides that “An excise tax is hereby imposed upon all distilled spirits sold in this State by rectifiers or wholesalers” in amounts as therein fixed. The tax is a stamp tax (§33). Section 27, as amended in 1937, gives the state authority to levy a deficiency assessment where an examination of the boobs of the taxpayer shows that stamps purchased by wholesalers or rectifiers are' not sufficient to pay the tax on spirits sold by him. Section 24.2 was added to .the act in 1937. So far as pertinent here, that section provides: “It shall be presumed that all distilled spirits acquired by any rectifier or distilled spirits wholesaler have been sold in this State by such rectifier or wholesaler unless proven to the satisfaction of the board, in verified reports on forms prescribed by the board, that such distilled spirits are [here follows a list of nontaxable disposals].” The proper application of this last-quoted section presents the basic problem on this appeal.
In determining the deficiency due from respondent, the
The above figures apply only to the Oakland office of respondent. The respondent also operates a San Francisco office, but except in one particular hereafter mentioned, the tax on sales from that office is not here involved. It will be noted that the quantity of distilled spirits sold, and the amount of the tax due thereon, were determined by the board by deducting from the spirits possessed at the beginning of the tax period and acquired during the period, the quantity on hand at the close of the period and the quantity disposed of in nontaxable transactions. That is in exact accord with the provisions of section 24.2 above-quoted. Under that section, the figure so computed is presumed to represent the amount of taxable sales.
In spite of the fact that the board followed precisely the procedure outlined by section 24.2, the respondent urges that the deficiency assessed against it was not levied in the man
It will be noted that the board in computing the deficiency did not examine those of respondent’s books which constituted the record of sales made. It determined the amount of sales made by first ascertaining the quantity of liquor possessed and acquired during the taxable period, and deducting from that figure the amount of liquor then on hand and the amount shown by the books to have been disposed of in nontaxable transactions. This figure—97,239.02 gallons—rather than a figure taken from sales records, was adopted by the board as the quantity sold and subject to tax. It is to be noted that the taxpayer in this action to recover the deficiency did not produce its sales records. It simply relied on its point that the board, by not examining the records of actual sales, did not follow the procedure required by the act. The obvious answer to respondent’s argument is that the portion of section 27 above-quoted and relied upon by it does not prescribe the manner in which total sales taxable shall be ascertained. The only section that refers to that matter is section 24.2, and that section creates a presumption which applies when the procedure here adopted has been followed, and in the absence of controverting evidence. Respondent, in its argument, simply disregards the presumption created by that section. The presumption is based on common sense. If, from the total gallon-age possessed or acquired during the taxable year, there is
It, therefore, follows that the procedure adopted by the board in computing the deficiency was in exact compliance with the statute. The only other question necessary to discuss is whether the respondent in this action has produced other evidence sufficient to rebut the presumption, and sufficient to show that the figure for taxable sales arrived at by the board was wrong. Stated another way, is there any evidence in the record to sustain the finding of the trial court that this taxpayer “purchased and delivered . . . Excise Stamps on all sales made by it upon which the .. . Excise Tax was imposed” ? In determining this issue it must be kept in mind that the board followed the procedure set forth in the act, and that under the express terms of the act when that procedure is followed it is presumed the resulting figure correctly shows the gallonage disposed of in taxable sales. There can be no doubt that in view of the presumption created by section 24.2 of the act the burden is on the taxpayer to show why the figure arrived at through application of such presumption is not correct. The taxpayer, in trying to prove his case, did not offer any evidence to challenge the board’s audit. It admitted that it had on hand during the taxable year the gallonage as fixed by the board; it admitted that the gallonage it had on hand at the close of the taxable year had been properly computed; it admitted that the quantity sold in nontaxable sales had been deducted and that a loss tolerance had been allowed, but contended that the resulting figure did not represent taxable sales. There was a certain gallonage not now in its possession that was unaccounted for in the invoices of sales to on- and off-sale licensees. The position it took was that the board had to prove what became of that unaccounted for gallonage. It did not offer any evidence as to what had become of that gallonage. It completely disregarded the presumption created by section 24.2 of the act. The real question is, who must prove what happened to the gallonage not accounted
The respondent contends that as against the deficiency assessed against its Oakland office it is entitled to a credit of $273.04, which is the amount the board’s auditor found that the San Francisco office had overpurchased stamps. All of the facts concerning this alleged overpayment do not appear in the record. Whether this sum was credited to the taxpayer is not entirely clear from the evidence. Separate board auditors examined the books of each office. They testified that they compared their analyses and reconciled the same. At any rate, inasmuch as the judgment must be reversed for reasons already set forth, this matter of the San Francisco overpayment is a matter that may properly be examined into on the new trial.
The judgment appealed from is reversed.
Knight, J., and Ward, J., concurred.
Respondent’s petition for a hearing by the Supreme Court was denied May 25, 1942. Gibson, C. J., and Traynor, J., did not participate therein. Spence, J., acted pro tern.