Charleston Oil Co. v. Carter, Treas.

May 15, 1925. The opinion of the Court was delivered by The question causing the controversy in this case is:

"Did Charleston Oil Company pay all the tax due by it to the State of South Carolina for gasoline sold, or consigned, used, shipped, or distributed for purpose of sale within this State for the month of May, 1924?"

The facts are admitted, to wit: During said month the said company had on hand in its tank at Charleston, 136,391 gallons of gasoline; 94,876 gallons was not liable to a tax payable by said company, as the same had been purchased within the State from the Standard Oil Company, which was liable for the tax to the State, leaving 41,515 gallons of gasoline for which said Charleston Oil Company was liable for the tax to the State, the same having been purchased out of the State, and the State tax not having been paid thereon.

In the hearing of the case on circuit, counsel on both sides treated the quantity of gasoline as nontaxable and taxable in the ratio of 70 percent nontaxable and 30 per cent taxable, and this ratio will be adopted in this opinion as approximately correct, in the consideration of the questions involved.

During the said month of May the said Charleston Oil Company sold 114,065 gallons of gasoline from a tank used as a reservoir for both nontaxable and taxable gasoline, commingled, and forwarded a check to the State treasurer for $575.67, the tax of three cents per gallon on 19,189 gallons, the difference in the gallonage sold and the nontaxable gallonage; hence it will be observed that the Charleston Oil Company exempted from the first sales made all the nontaxable gasoline in the tank.

When the report of said Charleston Oil Company was filed, as provided by law, with the State tax commission, that tribunal took issue with the Charleston Oil Company and contended that 30 per cent of all the gasoline sold from said reservoir the month of May was taxable, and issued its certificate to the State treasury, as provided for in section 10 of Act No. 731 of 1924, which certificate showed that said Charleston Oil Company was still indebted to the State in the sum of $450.93 as a license tax on the gasoline sold during the month of May, 1924, to wit, three cents per gallon on 30 per cent of 114,065 gallons, and $45.09 as a penalty, all of said items aggregating $1,071.69.

If the method adopted by Charleston Oil Company for the payment of the taxable gasoline in said reservoir was valid, then the contention of the State treasurer must fail; but, if the method adopted by the State tax commission, was legal, then the position of the State treasurer should be sustained.

The functions of the State tax commission are most important, among which is the equalization of taxes; and it cannot be disputed that the State tax commission had jurisdiction in this matter, and that being so, under the law applicable to the case, the question arises whether the commission acted arbitrarily, unlawfully, or unjustly in making its certificate aforesaid, to the State treasury.

The Interstate Commerce Law (U.S. Comp. St. § 8563 et seq.) has no application to this case, as the shipment of gasoline had been delivered to the consignee, and put in its tank, and was being sold therefrom.Frank E. Kehrer, plaintiff in error, v. Andrew P. Stewart,197 U.S. 60; 25 S.Ct., 403; 49 L.Ed., 663.

When certain duties and powers are delegated to a board or commission or other body, and such delegation is legal, then the rulings, decisions, and acts of such body, if reasonable and within its jurisdiction, will not be disturbed. Pruitt v. King et al., 114 S.C. 525;104 S.E., 191. See cases in Brooke v. Milling Company, 78 S.C. 203;58 S.E., 806; 125 Am. St. Rep., 780, on right to exercise discretion in the discharge of certain duties imposed by contract or law.

In this case the State tax commission had its duties to perform, and was required to adopt a method for taxing the mixed gasoline, and, in my opinion, the method adopted by that commission was reasonable and just, for that method treated the Charleston Oil Company fairly and justly, and deprived it of no right, and at same time protected the other taxpayers of the State, and the method meted out substantial justice to the State and the Charleston Oil Company. The Charleston Oil Company, of its own volition, mixed nontaxable and taxable gasoline in the same reservoir, and, in equalizing the taxes, and in securing the uniformity of taxation, as required by article 10, § 1, of the Constitution of 1895, the State tax commission was entirely within its jurisdiction in assessing the tax on 30 per cent of the gasoline sold from said reservoir that month, and in adding the penalty prescribed by law for failure to pay the tax as provided by law.

To adopt the method suggested by the taxpayer in this case, that is, to put into its tank 70 per cent nontaxable and 30 per cent taxable gasoline each month, and sell therefrom a little more than the nontaxable that month, and continue this process, how and when would the State collect the tax due it? The method suggested by the taxpayer, if adopted generally, could be invoked to the great detriment of the State, and be an obstruction in the collection of its license tax.

In Crescent Mfg. Co. v. State Tax Commission (S.C.),124 S.E., 761, syllabus 8 reads as follows:

"If the legislative intent is apparent from an examination and consideration of the statute as a whole, the rule of strict construction in favor of taxpayer does not apply."

The powers and duties of the State tax commission are plain under the statute, and the legislative intent apparent, and one of those duties was to have three cents a gallon paid on gasoline, as already mentioned, and, to do this, it became necessary to adopt a reasonable and just method for collecting that tax when nontaxable and taxable gasoline were mixed in one reservoir.

The taxpayer in this case, having mixed the nontaxable and taxable gasoline, must abide the reasonable method adopted by the State tax commission for the payment of the tax due on the taxable portion in the mixture sold.

For the foregoing reasons, exception 1, the only exception taken, is sustained, and the order of the Circuit Court reversed.

MR. JUSTICE MARION and MR. ACTING ASSOCIATE JUSTICE F.A. MILLER concur.

ACTING ASSOCIATE JUSTICE F.A. MILLER: It is to be determined whether under the act of 1922 (32 Stat. 835), amended by act of 1923 (33 Stat., 204) the computation of the tax of three cents per gallon is to be made according to the contention of the South Carolina tax commission or according to the contention of the taxpayer, with which the Court below agreed.

It is conceded that the oil company had on hand during the month of May, 1924, 136,000 gallons of gasoline, on 95,000 gallons of which the tax had been paid and on 41,000 gallons of which the tax had not been paid, and which was therefore taxable; that the taxable and the nontaxable were mixed in a common reservoir, from which 114,000 gallons of the mixture were sold during May, 1924; that the nontaxable gasoline sold was practically 70 per cent of the whole, and the taxable 30 per cent thereof. Shall the tax be computed on the 30 per cent of all sales made from this mixture, or shall 70 per cent of all sales be first deducted as being tax exempt before the remainder is taxed?

There is no escape from the conclusion that, since the oil company mixed the 70 per cent nontaxable with the 30 per cent taxable and sold them so, the only fair basis for computing the tax is according to the physical fact, and appellants' contention thereabout must be sustained. I think, therefore, the judgment of the Circuit Court should be reversed.