Court Opinion

ID: 9672404
Source: CourtListenerOpinion
Date Created: 2023-08-24 03:54:14.386468+00
Date Added: 2024-06-11T18:16:15.857721
License: Public Domain

HENDERSON, Justice
(dissenting).
I respectfully dissent. This circuit court’s decision should be affirmed regarding (1) National’s fuel charges and (2) funds it retained from the sale of PAI. These proceeds fit within statutory exemptions in the South Dakota sales tax law.
The Department, and the majority of this Court, argue that National is in the business of renting ears, the gross receipts of which are subject to sales tax under SDCL 10-45-5. It is contended by the majority opinion that gross receipts are defined by SDCL 10-45-1(2) as the amount received in consideration of retail sales without deduction for any other costs or expenses and the fuel and PAI charges are part of the business of leasing cars, hence these charges fall within the taxable gross receipts. As National is unlicensed to sell either gasoline or insurance, it cannot fall within statutory exemptions to the sales tax because it fails to meet the letter of the law, it is further advocated. These contentions are met by this dissent in an effort to sustain the circuit judge’s correct ruling.
Resolutions of these issues mandate an analysis of several seemingly contradictory state statutes. Notice the word “seemingly.” It is nothing novel in this Court to consider statutes that appear to be in conflict. We have held the belief, however, that statutes should be read in harmony. Where there are multiple statutes covering the same subject matter, they should be construed to give effect to each statute. This is the decisional law of this state. In re Silver King Mines, 323 N.W.2d 858, 860 (S.D.1982); Kinzler v. Nacey, 296 N.W.2d 725, 728 (S.D.1980). For the “harmony statutory concept,” see State v. Woods, 361 N.W.2d 620, 622 (S.D.1985). While numerous cases are cited for the proposition that monies received for activities (e.g., transportation and delivery costs) which are integral parts of businesses as being includable within various definitions of “gross receipts,” these cases are not dispositive. Transportation charges billed separately from rental charges are not necessarily “gross proceeds” from lease or rental of *402tangible personal property. McNamara v. Patterson Services, Inc., 382 So.2d 971 (La.App.1980). Cardinal to a just determination of this case is a reasonable interpretation of pertinent South Dakota statutes.
Regarding the fuel charges, SDCL 10-45-11 “specifically exempt[s] from the provisions of this chapter and from the computation of the amount of tax imposed by it, gross receipts from the sale of gasoline ... subject to tax under ... chapter 10-48....” (Emphasis added.) SDCL 10-45-4.1, on the subject of services subject to taxation, provides: “ ‘Service’ means all activities engaged in for other persons for a fee, retainer, commission, or other monetary charge, which activities involve predominantly the performance of a service as distinguished from selling property....” In my opinion, National’s fuel charges more closely approximate the sale of gasoline, exempted from the sales tax by SDCL 10-45-11, than performance of a service integral to rental of a vehicle (SDCL 10-45-4.1). A specific statute is controlling over a general statute. In re D.H., 354 N.W.2d 185, 192 (S.D.1984); Hartpence v. Youth Forestry Camp, 325 N.W.2d 292, 295 (S.D.1982).* The circuit court was therefore correct, as a matter of law, when it ruled that National was exempt from paying sales tax on gasoline reimbursement receipts. This circuit judge did not make a “mistake of law” or “mistake in impression of legal principles” or a “conclusion[ ] of law ... in error as a matter of law.” In re Guardianship of Viereck, 411 N.W.2d 102, 108 (S.D.1987) (Henderson, J., specially concurring). Therefore, the circuit judge should be affirmed in his ruling. To hold otherwise, i.e., that National is in the gasoline business, is to fundamentally misperceive the nature of National’s business. Here, tne circuit judge relied upon a specific exemption, and this Court is reversing his decision. In absolutely precise language, “gross receipts from the sale of gasoline” are “specifically exempted.”
On tax questions, courts may look to the substance, not just the form, of a transaction. Midwest Federal Savings & Loan Ass’n v. Commissioner of Revenue, 259 N.W.2d 596, 599 (Minn.1977). It is respectfully suggested that this is exactly what should be done under this factual scenario. National rents vehicles. The customer is responsible for the fuel he uses. Where -the customer properly returns a full tank, the tax issue never arises. Only where the customer fails to refill his own tank does the State cry “TAX!” This is unfair. My reading on this subject also involves a case styled Material Contractors, Inc. v. Donahue, 14 Ohio St.2d 19, 235 N.E.2d 525 (1968), and it appears to be a case closest on its facts to the scenario before us. In Material Contractors, taxpayer leased tractor trailers to a third party who via agreement fueled the machines. Taxpayer reimbursed third party for cost of fuel. The question before the court was: Should taxpayer be assessed a sales tax based upon the full amount paid from third party or should taxpayer be entitled to subtract from “price” received the amount taxpayer reimburses to third party for fuel? The Ohio Court considered a statute similar to SDCL 10-45-11 and essentially held under a statute exempting sales of gasoline from sales tax, that the lessee of tractor trailers who reimbursed lessor for fuel costs, was not liable to pay sales tax on costs of fuel. Id., 14 Ohio St.2d at 22, 235 N.E.2d at 528. See also Copeland Corp. v. Lindley, 50 Ohio St.2d 33, 361 N.E.2d 1344 (1977).
Similarly, the majority’s inclusion in taxable gross receipts of the amounts National received from its sale of PAI to rental customers is incorrect.
Companies conducting an insurance business within South Dakota are subject to a premium tax under SDCL ch. 10-44. SDCL 10-44-8 provides:
Every company required to pay a tax under this chapter is exempt from the *403tax imposed under chapter 10-16, and from all other taxes, state and local, except taxes upon real and tangible personal property as may be owned by such company and the retail occupational sales tax and the use tax on tangible personal property. An insurance policy or annuity contract is considered intangible personal property for the purposes of this section. (Emphasis added.)
Relatedly, SDCL 10-45-12.1 provides: “The following services ... are exempt from the provisions of this chapter [“Retail Sales and Service Tax”]: ... commissions earned or service fees paid by an insurance company to an agent or representative for the sale of a policy....” Therefore, it behooves us to read these two statutes in harmony, as I have mentioned earlier.
A fundamental rule of statutory construction, as the majority notes, is to give words and phrases their plain meaning and effect. Petition of Famous Brands, Inc., 347 N.W.2d 882, 885 (S.D.1984); Board of Regents v. Carter, 89 S.D. 40, 46, 228 N.W.2d 621, 625 (1975). Again, multiple statutes covering the same subject matter should be construed to give effect to each statute. Kinzler v. Nacey, 296 N.W.2d 725, 728 (S.D.1980). In the area of taxation, exemptions are generally construed against the assertions of the taxpayer. See K Mart Corp. v. South Dakota Dep’t of Revenue, 345 N.W.2d 55, 57 (S.D.1984); In re Veith, 261 N.W.2d 424, 426 (S.D.1978). While it is true that exemption provisions must be construed in favor of the taxing agency, and against the taxpayer, such a construction must be fair, with due regard for the ordinary meaning of the language. Kaiser Steel Corp. v. Solano County, 90 Cal.App.3d 662, 153 Cal.Rptr. 546 (1979); English v. Alameda County, 70 Cal.App.3d 226, 138 Cal.Rptr. 634 (1977). The interpretation must be reasonable, natural, and practical. In re Veith, 261 N.W.2d at 426. How does National fit within this framework?
As the majority points out, National is neither required to pay a premium tax (SDCL 10-44-8) nor is it a licensed agent of Old Republic (SDCL 10-45-12.1). It concludes, therefore, that National is precluded from experiencing the benefits of those statutes. Technically, National may be unlicensed, but this does not alter the fact that monies earned by National result from the sale of PAI to rental customers. National, whether holding a license or not, acts as the agent of Old Republic, earning commissions on sales of insurance policies exempted from taxation by SDCL 10-45-12.1. Old Republic, licensed to sell insurance in South Dakota, pays the appropriate premium tax. To tax National on premiums, when a premium tax is also paid by Old Republic, would be duplicative. (The same duplication effect taints the taxation of National’s gasoline receipts when the gasoline is purchased by National from a taxpaying seller.) Therefore, the State reaps a windfall through these mental gymnastics. Rationale: The interpretation of these tax statutes becomes unreasonable, unnatural, and impractical, contrary to the holding in Veith, 261 N.W.2d at 426.
In summary, I would affirm the circuit court’s refusal to include National’s gasoline and PAI funds in taxable gross receipts. The legislature did not intend the sales tax to be a whip cracked on the back of a company like National for failure to obtain appropriate licenses. National, as Old Republic’s agent, is relieved from sales tax liability.

 This Court has historically refused to "read more into a statute than is written there by the legislature." F & M Agency v. Dombush, 402 N.W.2d 353, 357 (S.D.1987) (citing In re Famous Brands, Inc., 347 N.W.2d 882, 884-85 (S.D. 1984); Elk Point Independent Sch. Dist. v. State, 85 S.D. 600, 605, 187 N.W.2d 666, 669 (1971); Ex Parte Brown, 21 S.D. 515, 519, 114 N.W. 303, 305 (1907)).