295 N.Y. 499 | NY | 1946
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *501 Was the Comptroller of the City of New York empowered in December, 1943, to revoke determinations of deficiencies in the payment of local sales taxes made against the plaintiff taxpayer for three prior tax periods ending respectively on December 31st of 1935, 1936 and 1937, and thereupon to redetermine sales tax deficiencies for those prior tax periods at sums in excess of amounts fixed by the determinations thus revoked?
That question emerges as the decisive issue in this action in equity which arose in the following circumstances: The plaintiff corporation was engaged in the sale of plumbing supplies and related specialties in New York City between December 10, 1934, and December 31, 1937. Upon sales made between those dates the plaintiff was required by local law to collect sales taxes and to pay the same to the city. (Local Laws, 1934, Nos. 20 [published as No. 21], 25 of City of New York; 1935, No. 29 of City of New York; 1936, No. 31 of City of New York; 1937, No. 20 of City of New York.) The plaintiff filed sales tax returns for the three tax periods — December 10, 1934, to December 31, 1935, and the full years 1936 and 1937 — and paid the amounts due under those returns. Thereafter, following an audit by the *504 city's Department of Finance of plaintiff's books and records for each of the three tax periods the deputy comptroller sent to the plaintiff a notice of the comptroller's determination that there was due a deficiency of sales taxes collected for each of the three tax periods respectively as follows — $13,934.79, $6,292.81 and $8,250.22. Each of those notices contained the following clause which varied only in inconsequential details and was phrased as required by section 7 (formerly § 6 in Local Law No. 21 of 1934) of Local Laws Nos. 21 and 25 of City of New York, 1934; No. 29, 1935; No. 31, 1936 and No. 20, 1937 — "Notice is hereby given that this determination shall finally and irrevocably fix the amount of tax due unless application in writing is made by you for a hearing thereon within thirty days after date hereof." Upon receipt of each notice the plaintiff paid the amount claimed by the comptroller to be due. Thereafter, on December 4, 1943, the taxpayer received a written notice that the comptroller had revoked the three determinations of sales tax deficiencies, the latest of which was made more than five years prior thereto, and had made redeterminations of such deficiencies upon which demand was made for additional taxes including penalties and interest, amounting in all to $37,351.68.
Meantime — during the years which intervened between the dates of payment of the three deficiency assessments and December 3, 1943, when the comptroller purported to revoke such determinations — the plaintiff had complied with the requirement of applicable local sales tax laws that its records of receipts from sales and of the sales tax payable thereon "shall be preserved for a period of three years, except that the comptroller may consent to their destruction within that period or may require that they be kept longer." (Local Laws, 1934, No. 25 of City of New York, § 4; 1935, No. 29 of City of New York, § 4; 1936, No. 31 of City of New York, § 4; 1937, No. 20 of City of New York, § 4.) In that connection we must accept the facts pleaded by the plaintiff that during the period commencing December 10, 1934, and ending December 31, 1937, it sold millions of dollars worth of merchandise each year; that orders, invoices, records and similar data relating to several hundred thousand items and composing great physical bulk were accumulated each year in connection with the taxpayer's business; that the *505 comptroller did not require the plaintiff to preserve for more than three years its records of sales for the tax periods here involved — December 10, 1934, to December 31, 1937 — and, accordingly, that such records and data were destroyed by the plaintiff at the end of each three-year period, thus depriving itself of evidence to establish its contention in this case that all sales taxes due for the tax periods in question have been paid to the City of New York.
Asserting that the comptroller was without authority in 1943 to revoke the determinations of deficiencies made for the three tax periods mentioned above — the latest of which ended December 31, 1937 — and that the comptroller was without authority to redetermine such prior deficiencies, the plaintiff instituted the present suit to restrain such action by the comptroller,pendente lite and permanently, and to obtain a declaratory judgment that the purported revocation by the comptroller in 1943 of his prior determinations of deficiencies was invalid.
At Special Term the plaintiff's motion for a temporary injunction was denied and a cross motion by the defendants was granted dismissing the complaint for lack of the court's jurisdiction of the subject matter of the action. At the Appellate Division the order denying a temporary injunction and the judgment dismissing the complaint were unanimously affirmed. The opinion by the Appellate Division informs us that — although contrary to the view of Special Term it held that the challenge to the power of the comptroller to redetermine tax deficiencies made the present action appropriate and available to the taxpayer — the court ruled that the dismissal of the complaint by Special Term was correct on the merits. The present appeal by the plaintiff is by our leave.
We agree with the disposition of the case by the Appellate Division insofar as it held, contrary to the ruling at Special Term, that the remedy by action chosen by the plaintiff was available to it as a means of challenging the authority of the comptroller to redetermine sales tax deficiencies. (Dun Bradstreet, Inc., v. City of New York,
In support of the right asserted by the comptroller toredetermine on December 3, 1943, the sales tax deficiencies which he had previously determined for tax periods in 1934-1935, 1936 and 1937, the defendants point to language found in local laws effective when the original deficiency assessments were made. (Local Laws 1934, Nos. 20 [published as No. 21], 25 of City of New York; 1935, No. 29 of City of New York; 1936, No. 31 of City of New York; 1937, No. 20 of City of New York.) Each of those local laws empowered the comptroller "to assess, revise, readjust and impose the taxes authorized to be imposed under this local law". We find in the language last quoted above no indication of a clear legislative purpose to grant to the comptroller the retroactive power which he has exercised in the present case by redetermining in 1943 sales tax deficiencies which he had determined more than five years prior thereto. "A statute must be read and given effect as it is written by the Legislature, not as the court may think it should or would have been written if the Legislature had envisaged all the problems and complications which might arise in the course of its administration. A power not expressly granted by statute is implied only where it is `so essential to the exercise of some power expressly conferred as plainly to appear to have been within the intention of the legislature. The implied power must be necessary, not merely convenient, and the intention of the legislature must be free from doubt.' (Peo. ex rel. City ofOlean v. W.N.Y. P.T. Co.,
In an effort to find legislative sanction for the comptroller's action here challenged the defendants point to section N41-7.0 of the Administrative Code of the City of New York, as amended by Local Laws, 1943, No. 18 of the City of New York which provides in part: "DETERMINATION OF TAX. If a return required by thistitle [i.e., Title N, in effect since July 1, 1938] or byarticles seventeen to twenty, inclusive, of title E [i.e., the sales tax laws in effect from December 10, 1934, up to June 30, 1938] of chapter forty-one of the code is not filed, or if areturn when filed is incorrect or insufficient the amount of tax due shall be determined by the comptroller from such information as may be obtainable * * *. Notice of such determination shall be given to the person liable for the collection and/or payment of *507 the tax. Such determination shall finally and irrevocably fix the tax unless the vendor or purchaser against whom it is assessed, within thirty days after the giving of notice of such determination, shall apply to the comptroller for a hearing, or shall cause the same to be reviewed by a proceeding under article seventy-eight of the Civil Practice Act, or unless thecomptroller of his own motion shall re-determine the same. * * *". (Italics supplied.)
We do not find in the italicized portions of section N41-7.0 quoted above — upon which the defendants lay special emphasis — that "clear expression of the legislative purpose" which is required to sanction the exercise retroactively of the power which the comptroller has assumed in this instance. (Jacobus v.Colgate,
That conclusion is reinforced by other considerations. "A tax law should be interpreted as the ordinary person reading it would interpret it." (Per HUBBS, J. writing in Howitt v. Street Smith Publications, Inc.,
The plaintiff — assuming arguendo that section N41-7.0 as amended by Local Laws, 1943, No. 18 of City of New York, is construed to operate retroactively — advances the further argument that the enactment would be effective to impair plaintiff's vested rights and accordingly would be unconstitutional. We know that — "A statute must be construed, if fairly possible, so as to avoid not only the conclusion that it is unconstitutional but also grave doubts upon that score." (United States v. Jin Fuey Moy,
The judgments should be reversed, with costs to the plaintiff in all courts and the action remitted to Special Term for further proceedings not inconsistent with this opinion.
LOUGHRAN, Ch. J., CONWAY, DESMOND and FULD, JJ., concur; THACHER and DYE, JJ., taking no part.
Judgments reversed, etc. *510