Court Opinion

ID: 9457218
Source: CourtListenerOpinion
Date Created: 2023-08-04 20:16:23.115968+00
Date Added: 2024-06-11T17:35:16.287818
License: Public Domain

PELL, Circuit Judge
(concurring in part, dissenting in part).
In holding that there was no combination sale in the transactions here involved, both the district court and this court find their main support for such result in the fact that the non-taxable items were distributed simply for the promotion of the company’s product. In other words, the cabinets and stands were advertising material distributed without charge.
This rationale appears to ignore the fact, which apparently was not in dispute, that included among the items originally received by the ultimate purchaser was a Tel-Tale Wiper Arm Pressure Indicator ostensibly having a regular retail value of $9.85. “This precision instrument,” according to advertising material distributed by the company, “proves quickly, easily and with complete accuracy when wiper arms should be replaced.”
Prior to June 1961, the cabinet contractually remained the property of Anderson. After June 1961, contractually the dealer agreed that the cabinet would not be used to carry any product not made by Anderson. As far as I can see, neither contractual arrangement prohibited the use of the wiper arm pressure indicator to ascertain the need of new wiper blades nor to require that such need so demonstrated would only be fulfilled by Anderson blades. Thus, it would seem arguably that to the extent that the package included this Indicator it included an item not designed necessarily to promote the sale of Anderson blades.
However, noting that the suggested retail price of the blades to be acquired by the use of the certificate was $60.00, the substantial majority of the price received by Anderson was for that which was found by the court below, and by this court, to be in the nature of advertising material. Consequently, I cannot state that even though some other court might have reached a different result that the decision of the district court was clearly erroneous and I join in affirming the decision of the district court with respect to the combination sale.
Respectfully, however, I must dissent from that portion of the decision upholding the district court’s ruling that it had no jurisdiction over the eleven-twelve percent of the taxpayer sales where the certificate was not exchanged insofar as this pertained to the portion of the tax paid voluntarily. The district court held that Anderson did not file the requisite statement required by the regulations to “establish” that it had not included the tax in the sale price and had not collected the tax from the vendees insofar as the voluntary tax payment was concerned.
On this appeal, the primary thrust of the Government’s position was that in its refund claim Anderson did not rely upon the fact that there had been redemption of some of the certificates and that therefore there was no taxable sale. However, the claims of the taxpayer sought to recover the entire amount of tax paid and it would seem that the lesser amount on the alternative theory would *49be entitled to consideration if the greater amount were denied.
While the Government in the alternative asserts that the district court was correct in holding that it had no jurisdiction as to the 50% of the tax based on voluntary sales, it is of interest to note that the Government did not file a cross-appeal with regard to the district court’s refunding the part of the taxes paid on the other 50% where the certificate had not been redeemed.
As a matter of fact, in its original answer the Government raised the defense of jurisdiction specially in its answer to Count I (not here involved) but did not raise this as a special defense as to Count II involving the transaction before us. Subsequently, the Government did file an amended answer asserting the jurisdictional defense as to Count II and therefore the issue was before the district court.
Argument has been made and accepted in somewhat comparable cases that where the Director’s letter of denial was general in terms and could be considered as rejecting a claim on its merits that there was a waiver of the technical jurisdictional ground. See Etheridge v. United States, 112 U.S.App.D.C. 151, 300 F.2d 906 (1962). See also Rogue River Trailer Manufacturing Co. v. United States, 267 F.Supp. 272 (D.Oregon 1966); cf., however, West v. United States, 397 F.2d 381 (7th Cir. 1968). It is unnecessary, however, in my opinion, to reach the waiver question.
Accepting arguendo the district court’s interpretation of the regulation that there must be more than the bare allegation that the taxpayer had not included the tax in the price of the article, I find it difficult to justify the distinction in the finding of jurisdiction with regard to the non-voluntary tax payments as contrasted to the voluntary. The district court held that there should be a sufficient statement to establish that the taxpayer did not include the tax in the price or collect it from the customers. In each claim filed by the taxpayer the categorical statement was made: “None of the tax paid in connection with the sales of stands and cabinets was passed on to customers.” The district court, it seems to me, is requiring on its interpretation of the regulation more than the allegation of the ultimate fact which would give jurisdiction but is requiring in effect the pleading of evidence in the statement accompanying the 843 claim.
On this basis the district court found that since the statement accompanying the form 843 showed that the assessment was not paid until long after the transactions to which the tax attached had occurred, the taxpayer not intending to pay tax on this 50% obviously had not included the tax. However, this line of reasoning seems inevitably to carry us to the same result with regard to the first 50% involved in the voluntary tax situation. We are here dealing with two equals each being 50%. If the second half of the proceeds of the sale, by the district court’s reasoning, could not have included the tax, then it is difficult to see how the exactly equivalent amount involved in the proceeds on which tax was voluntarily paid could have included the tax.
The Government apparently recognized this dilemma in its amended answer where it asserted the jurisdictional defense by claiming that the claims for refund did not allege that the tax, presumably referring to the tax on 100% of the sale, was not included in the 50% of the sale price of cabinets and stands, referring, of course, to the 50% where the tax had been voluntarily paid.
In my opinion, the district court should have found that jurisdiction did exist and on the basis of the reasoning in his opinion, the same results should have been reached on the non-exchanged situations in both the voluntary and non-voluntary tax payments.
I would therefore reverse as to this one item on the basis that the papers on file presented prima facie that the tax was not passed on to the consumer.