Court Opinion

ID: 9592941
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:18:10.41966+00
Date Added: 2024-06-11T12:13:34.298073
License: Public Domain

HENDERSON, Justice
(dissenting).
This dissent is respectfully tendered to the majority opinion; the concurrence in part/dissent in part of Chief Justice Wuest is not joined hereby, for the reason that this dissent is based upon a clear statutory exemption.
It is my opinion that the circuit court should be affirmed upon the basis that the Argus was rendering advertising services which are exempt under state law, namely, SDCL 10-45-12.1. Furthermore, the Department of Revenue undertook to implement this statute by its own administrative rule, namely, A.R.S.D. 64:06:02:03. The Argus, per state law and administrative rule cited above, is not liable for the assessment of $25,147 which it paid under protest, and has now rightfully petitioned the Department of Revenue for a refund. The administrative rule plainly states: “Charges for advertising in newspapers or magazines are not taxable.”
The Department of Revenue also had its Guidelines ST-132, same to be used by taxpayers, accountants, and auditors, which provided in part: “The services of advertising is not within the services selected for taxation. Charges for advertising in newspapers, magazines or other publications are charges for service and therefore not taxable. Likewise, charges by advertising agencies for preparing and placing advertising in the media are not taxable.”
The Department of Revenue must abide by its own rules and guidelines. The administrative rules have the force and effect of law. Stellner v. Woods, 355 N.W.2d 1, 3 (S.D.1984); Thorsness v. Daschle, 285 N.W.2d 590, 591 (S.D.1979); Corbly v. City of Colton, 278 N.W.2d 459, 461 (S.D.1979).
Under SDCL 10-45-4.1, a service is defined as follows:
“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 determining what is a service, the intended use, principal objective or ultimate objective of the contracting parties shall not be controlling_ (Emphasis added.)
Argus’ transaction with Lewis predominantly involved the performance of a service. It was not selling property. Argus is not in the business of selling property to advertisers; it sells advertisements to advertisers. Any activity which is a service under the last-mentioned statute is exempt as an advertising service by virtue of SDCL 10-45-12.1; as such, it is absolutely entitled to exemption status. Welcome Wagon Int’l, Inc. v. South Dakota Dep’t of Revenue, 318 N.W.2d 5 (S.D.1982).
As this case pertains to charges for advertising services, and as our state law clearly exempts taxation for advertising services, it being the clear intent of the State Legislature to pass such a law, it is our duty to give meaning to the statutory exemption. Construction of a statute must be according to the manifest intent which is derived from the statute as a whole. Western Surety Co. v. Mydland, 85 S.D. 172, *813179 N.W.2d 3 (1970). Therefore, I would affirm the circuit court.