Fredman Bros. Furn. Co. v. Dep't of Rev. ( 1984 )

JUSTICE BARRY

delivered the opinion of the court:

This cause has come before this court for a second time. In 1979 the Department of Revenue issued a notice of tax liability to Fredman Brothers Furniture Company (Fredman) for the period January 1, 1976, through December 31, 1978, and following an administrative hearing, the Department issued its final assessment finding that Fred-man owed $12,403.78 in taxes, penalties, and interest. The assessment was issued on August 24, 1981, and was received by Fredman on August 26, 1981. Pursuant to section 4 of the Retailers’ Occupation Tax Act (Ill. Rev. Stat. 1981, ch. 120, par. 443), Fredman filed a request for rehearing on September 24, 1981, which was denied on October 15,1981.

On November 19, 1981, Fredman filed a complaint for judicial review of the Department’s final assessment in the circuit court of Peoria County. The court subsequently dismissed the complaint because Fredman failed to post bond within 20 days as required by section 12 of the Retailers’ Occupation Tax Act (Ill. Rev. Stat. 1981, ch. 120, par. 451). Fredman appealed, and this court reversed the dismissal and remanded the cause with directions that Fredman be granted a review of the assessment in the circuit court. (Fredman Brothers Furniture Co. v. Department of Revenue (1982), 110 Ill. App. 3d 479, 442 N.E.2d 627.) Upon remand, the Department filed another motion to dismiss the complaint, this time on the ground that the circuit court lacked subject-matter jurisdiction to review the August 24, 1981, final assessment because Fredman had failed to file its complaint for administrative review within the time allowed by statute. Under former section 267 of the Administrative Review Act (now a part of article III of the Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 3 — 103)), an action to review a final administrative decision must be commenced by filing a complaint within 35 days from the date a copy of that decision is served upon the party affected. Here the complaint was filed on November 11, 1981, more than 35 days after August 26, 1981, the date when Fredman received the order. The trial court granted the Department’s motion to dismiss, and Fredman appeals that ruling.

Taxpayer Fredman contends that the trial court ignored the mandate of this court to grant taxpayer review of the disputed assessment and that the jurisdiction issue was waived when it was not raised during the previous appeal. The Department relies upon the rule that lack of jurisdiction of the parties or the subject matter “can be raised at any time, in any court, either directly or collaterally.” (Dorr-Wood, Ltd. v. Department of Public Health (1981), 99 Ill. App. 3d 170, 173, 425 N.E.2d 499, 501. See also City of Chicago v. Fair Employment Practices Com. (1976), 65 Ill. 2d 108, 357 N.E.2d 1154.) We believe the words “at any time, in any court” would include in the circuit court following a remand from the appellate court. The mandate of this court directing the trial court to proceed to review the assessment was, of course, based on the assumption that the circuit court had jurisdiction of the subject matter. Accordingly, we hold that it was proper for the trial court to entertain the Department’s objection to jurisdiction.

Although not urged by the parties to this appeal, the dissent to this opinion takes the view that the 35-day limit for commencing judicial review of an administrative decision is a statute of limitations, not a jurisdictional requirement, and, therefore, is a defense that can be waived. We believe that the law of Dlinois is to the contrary. The 35-day limit has been held to be a jurisdictional requirement. People ex rel. Olin Corp. v. Department of Labor (1981), 95 Ill. App. 3d 1108, 420 N.E.2d 1043; Hoffman v. Department of Registration & Education (1980), 87 Ill. App. 3d 920, 410 N.E.2d 291; Johnson v. State Police Merit Foard (1968), 99 Ill. App. 2d 458, 241 N.E.2d 468.

Fredman also argues that our decision in the first appeal of this cause was final as to all questions which were raised and also all issues which could have been raised. As we have indicated, the prevailing rule is that a challenge to jurisdiction of the subject matter is always timely and can be raised at any stage of the proceeding, even upon remand following an appeal.

Next Fredman argues that the Department’s “final assessment” was not a final administrative decision subject to judicial review until 35 days after the request for rehearing was denied. The time for seeking judicial review is set forth in section 3 — 101 of the Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 3 — 101), which states:

“In all cases in which a statute or a rule of the administrative agency requires or permits an application for a rehearing *** to be filed within a specified time (as distinguished from a statute which permits the application for rehearing *** to be filed at any time before judgment by the administrative agency against the applicant or within a specified time after the entry of such judgment), and an application for such rehearing *** is made, no administrative decision of such agency shall be final as to the party applying therefore until such rehearing *** is had or denied.”

Thus, the determining factor as to the finality of the administrative decision is whether the Retailers’ Occupation Tax Act permits application for rehearing within a specified time. The applicable provision of that act is found in section 4 (Ill. Rev. Stat. 1981, ch. 120, par. 443), which states, in part:

“After the issuance of a final assessment, or a notice of tax liability which becomes final without the necessity of actually issuing a final assessment as hereinbefore provided, the Department, at any time before such assessment is reduced to judgment, may (subject to rules of the Department) grant a rehearing *** upon the application of the person aggrieved.”

Thus, it is clear in this case the statute does not provide a specified time within which application for rehearing must be filed, but rather permits such application at any time before the assessment is reduced to judgment. Section 3 — 101 of the Code of Civil Procedure covers the instant situation, as follows:

“However, if the particular statute permits an application for rehearing *** to.be filed with the administrative agency for an indefinite period of time after the administrative decision has been rendered (such as permitting such application to be filed at any time before judgment by the administrative agency against the applicant ***), then the authorization for the filing of such application for rehearing or review shall not postpone the time when the administrative decision as to which such application shall be filed would otherwise become final, but the filing of the application for rehearing *** in this type of case shall constitute the commencement of a new proceeding before such agency, and the decision rendered in order to dispose of such rehearing *** shall constitute a new and independent administrative decision.” (Emphasis added.) (Ill. Rev. Stat. 1983, ch. 110, par. 3-101.)

The statute goes on to specify how judicial review may be obtained from the denial of a rehearing in such a case.

Since the Retailers’ Occupation Tax Act provides for an indefinite period for application for rehearing, the 35-day period for filing a complaint for judicial review began to run on August 26, 1981. Fred-man’s complaint filed on November 11, 1981, was barred under section 3 — 101. Although this result may at first blush seem harsh, we believe it is compatible with the well-recognized legislative policy of insuring the financial solvency of State and local governments by facilitating the collection of taxes. Rather than permit a taxpayer to delay payment of taxes indefinitely by seeking rehearings of administrative rulings, the legislature in its wisdom has imposed reasonable time limitations upon the aggrieved taxpayers.

In People v. Scudder Buick, Inc. (1971), 47 Ill. 2d 388, 266 N.E.2d 324, the Illinois Supreme Court ruled that an administrative decision by the Department of Revenue was not final until the application for rehearing was disposed of and, therefore, that the 35-day period for judicial review does not begin to run while the application for rehearing is pending. However, Scudder Buick does not aid Fredman, because that case involved the assessment of capital stock taxes, and the applicable rule of the Department of Revenue provided that applications for rehearing must be filed within five days after the decision has been rendered and notice given. Consequently, Scudder Buick was controlled by the provision of section 3 — 101 involving a specified time for application for rehearing. The instant case is not.

Fredman cites Danison v. Paley (1976), 41 Ill. App. 3d 1033, 355 N.E.2d 230, in support of its contention that the decision was not final and reviewable until the application for rehearing was denied. Actually, Danison involved a situation where the plaintiff did not file an application for rehearing, and the court ruled that the administrative decision was final since no rehearing was sought. The court also stated that it is not necessary to file an application for rehearing in order to exhaust administrative remedies.

Fredman also claims that it has appealed from the denial of the application for rehearing as an alternative to its appeal from the final assessment. However, the complaint for judicial review, as amended, does not by its language purport to seek review of the denial of the rehearing. The prayer for relief is limited to a request for a review of the final assessment, and, although the application for rehearing is mentioned in the complaint as a part of the history of the proceeding, mere reference does not entitle the taxpayer to a review of that ruling. We also note that section 3 — 101 of the Code of Civil Procedure (Ill. Rev. Stat. 1981, ch. 110, par. 3 — 101) specifies that the record upon judicial review of the denial of an application for rehearing shall be limited to the application for rehearing and the order denying such application “and shall not include the record of proceedings had before the rendering of the administrative decision as to which the application for rehearing *** shall have been filed unless the suit for judicial review is commenced within the time in which it would be authorized by this Act to have commenced if no application for rehearing *** had been filed.” Under this provision, the taxpayer cannot obtain review of the final assessment by means of judicial review of the denial of its application for rehearing in any event.

As we have indicated, we believe the trial court did not err in ordering the dismissal of Fredman’s complaint.

Affirmed.

HEIPLE, J., concurs.