I agree with the opinion on rehearing in the Union PortlandCement Co. v. State Tax Commission, 110 Utah 152,176 P.2d 879, but think it is not applicable here. I also agree that this was not a "retail sale" but was an "isolated" or "occasional sale" as those terms are used in the Sales Tax Act and therefore this sale does not come within the scope of that act and is not subject to the sales tax. As I view it, since this sale does not come within the scope of the Sales Tax Act and is not subject to that tax, but is not expressly exempted therefrom by a specific statutory provision to that effect, and since it is included within the scope of the Use Tax Act and, as hereinafter pointed out, there are definite reasons why it should be excluded from the sales *Page 181 tax but be subject to the use tax I think the legislature intended it to be subject to the use tax.
If we adopt the broad view that every sale not subject to the sales tax is therefore exempt from the use tax, we eliminate all sales from the use tax and that act becomes a nullity. For every sale which is subject to the sales tax is expressly exempted from the use tax and every sale either is or is not subject to the sales tax. This the legislature clearly did not intend and just as clearly it did not intend to expressly exempt, some sales from the sales tax only to thereby make them subject to the use tax in exactly the same amount. If the Use Tax Act is to have any meaning, purpose or effect, whatever, we must draw a line somewhere between these two extremes. The reasonable place to draw this line is, in my opinion, to hold that where a sale, though not expressly exempted therefrom, does not come within the scope of the Sales Tax Act but does come within the scope of the Use Tax Act and is not expressly exempted therefrom and there is an apparent reason why such sale should be subject to the use tax though not subject to the sales tax, then such sale is subject to the use tax. However, every sale which comes within the general scope of the Sales Tax Act but is expressly exempted from that tax, where there is no apparent reason why such sale should be exempted from the sales tax and not from the use tax, should also be treated as exempted from the use tax. This is in full accord with the holding on rehearing in the Union Portland Cement Co. case and the most reasonable construction, in my opinion, of those enactments.
In the Union Portland Cement case we said, on pages 156 and 157 of 110 Utah, on page 881 of 176 P.2d
"that the Sales and Use Tax Acts are to be considered ascorrelative and complementary and that, as far as exemptionsare concerned, legislative created specific exemptions from thesales tax are also to be treated as exemptions from the use tax." (Emphasis added.)
There we pointed out that the two acts are "correlative" and "complementary" which to me means that they were *Page 182 intended to cover similar sales made for the same general purposes and uses but that the Use Tax Act, being later enacted was intended to place the tax on certain sales which were not within the scope of the Sales Tax Act, otherwise, there was no purpose in enacting the Use Tax Act. That opinion said nothing about exempting from the use tax sales not within the scope of the Sales Tax Act, it dealt only with "exemptions" from that act, and carefully limited such exemptions from the use tax to "legislative created specific exemptions from the sales tax." The reasons given in the Union Portland Cement case, 110 Utah at page 156, 176 P.2d at page 881, for such exemptions were that
"the legislature being fully informed of the interpretation for some seven years not only did not see fit to clarify the law but during that seven year period added other exemptions to the sales tax without expressly adding those same exemptions to the Use Tax Act. Unless the Tax Commission's interpretation is correct, such additional exemptions to the sales tax would be practically meaningless because those exemptions would remove the sales tax only to make the use tax applicable. When an exemption from a two per cent tax was granted by one act, the other act would ipso facto pick up the items exempt and they would be taxable. It is difficult to see what purpose the legislature would accomplish by a mere shift from the operation of the sales tax to an operation of the use tax by the aimless method of exempting certain articles from one act only to have them picked up as taxable items under another act yielding exactly the same revenue."
This is right in line with what we have said above. That opinion not only carefully limited the exemptions from the use tax to "legislative created specific exemptions from the sales tax" but also gave as the reason for extending such exemptions to the use tax to be that otherwise the exemptions from the sales tax would be practically meaningless and an aimless shifting of the tax from one act to the other. Such reasoning has no application to a case like this since the obvious purpose of the use tax was to impose a tax similar in amount to the sales tax on other sales not within the scope of that act, where there are apparent reasons why *Page 183 such sales were not covered by the sales tax but such reasons do not apply to the use tax.
The following provisions of the act throw light on this subject:
Section 80-15-4, U.C.A. 1943, as amended by the Laws of Utah 1943, c. 93, sec. 1, page 136, provides:
"From and after the effective date of this act there is levied and there shall be collected and paid:
"(a) A tax upon every retail sale of tangible personal property made within the state of Utah equivalent to two per cent of the purchase price paid or charged, * * *, provided, however, that the sale of coal, fuel oil and other fuels shall not be subject to the tax except as hereinafter provided."
Section 80-15-2, U.C.A. 1943, as amended Laws of Utah 1943, c. 92, pages 134-5, provides:
"(e) The term `retailer' means a person doing a regularly organized retail business in tangible personal property, known to the public as such and selling to the user or consumer and not for resale, and includes commission merchants and all persons regularly engaged in the business of selling to users or consumers within the State of Utah; but the term `retailer' does not include farmers, gardeners, stockmen, poultrymen or other growers or agricultural producers, except those who are regularly engaged in the business of buying or selling for a profit. The term `retail sale' means every sale within the state of Utah by a retailer or wholesaler to a user or consumer, except such sales as are defined as wholesale sales or otherwise exempted by the terms of this act; but the term `retail sale' is not intended to include isolated nor occasional sales by persons not regularly engaged in business, nor seasonal sales of crops, seedling plants, garden or farm or other agricultural produce by the producer thereof, or the return to the producer thereof of processed agricultural products."
Section 80-15-6, U.C.A. 1943, deals exclusively with what sales are exempt and what sales are subject to the sales tax. It lends no aid in determining the question here presented. There are other "specific exemptions" from the sales tax not contained in Section 80-15-6. See Sec. 80-15-2(f), U.C.A. 1943, as amended. *Page 184
From Section 80-15-4 it is clear that a non-retail sale of tangible personal property is not subject to the sales tax, not because it is specifically exempted therefrom but because it is not within the scope of sales covered by the Sales Tax Act. There is no express provision exempting non-retail sales, occasional or isolated sales from the tax, but the wording of the statute does not include such sales among those covered by the tax. This, I presume, is what the prevailing opinion meant by the term "an exclusion" as distinguished from a "specific exemption." Of course, if we treat as exempt from the use tax every sale which does not come within the scope of Sales Tax Act as well as every sale specifically exempted therefrom, then every sale not covered by the sales tax is thereby exempt from the use tax and that act becomes a nullity because it expressly exempts therefrom every sale which is subject to the sales tax.
The exemption of the sale of industrial coal from the sales tax, although provided for in Section 80-15-4 and not 80-15-6 which deals exclusively with exemptions, is a "legislative created specific exemptions from the sales tax." It comes within the scope of sales subject to that tax and then is expressly exempted therefrom by the following provision,
"provided, however, that the sale of coal, * * * shall not be subject to the tax except as hereinafter provided".
In the Union Portland Coment case we definitely limit exemptions which are deemed exempted from the use tax to "legislative created specific exemptions."
From the difference in the purposes and the surrounding circumstances it is apparent why occasional and isolated sales are excluded from the sales tax but are subject to the use tax. Section 80-16-3, U.C.A. 1943, which creates the use tax provides:
"There is levied and imposed an excise tax on the storage, use or other consumption in this state of tangible personal property purchased on or after July 1, 1937, for storage, use or other consumption in this state at the rate of two per cent of the sales price of such property. *Page 185
"Every person storing, using or otherwise consuming in this state tangible personal property purchased shall be liable for the tax imposed by this act, and the liability shall not be extinguished until the tax has been paid to this state."
Sales of tangible personal property only when made within the State are subject to the sales tax but such property sold outside this state for storage use or other consumption within this state is subject to the use tax. While nominally the sales tax is levied against the purchaser, yet only the vendor is liable to the state for that tax. 80-15-5, U.C.A. 1943. Only sales made by a vendor regularly engaged in the business of selling to users or consumers and not for resale are required to pay that tax. 80-15-2(e) and (f), U.C.A. 1943, as amended. By Section 80-15-3, U.C.A. 1943 all such vendors before making any sales are required to obtain a license from the state. Since the only means of collecting that tax is through the vendor who is regularly engaged in the business of making such sales it is apparent why only retail sales and not occasional or isolated sales were made subject to that tax. It was not because the legislature intended that occasional or isolated sales should not be subject to the tax but was merely a matter of convenience in collecting the same.
That reason does not apply to the use tax. Property sold either outside of or within the state for storage, use or other consumption in this state is subject to that tax when it is brought within this state and the purchaser where he did not purchase from and pay the tax to a vendor regularly engaged in business in this state was made liable to the state for the payment of such tax whether the sale was made in this state or not and it was immaterial whether it was an occasional or regular sale. 80-16-2(j), and 80-16-3, U.C.A. 1943; Twaits Co. v. UtahState Tax Commission, 106 Utah 343, 148 P.2d 343. Since, where the sale was made outside of the state, the tax had to be collected from the purchaser it made no difference in such case whether the sale was an isolated or occasional transaction or whether it was made *Page 186 through a person regularly engaged in business, because this state could not require a person doing business in another state to collect this tax for it. So the convenience in collecting this tax from a person regularly engaged in business which existed in the case of the sales tax and was the reason for limiting that tax to a retail sales and for not covering occasional or isolated sales does not exist in the case of the use tax. In view of these facts it would be unusual for the legislature to intend to make an automobile sold in another state for use in this state subject to the use tax if purchased from a regular dealer but to exclude it from that tax if it were purchased from a person not engaged in the selling business. The tax would be as easy to collect in the one case as in the other. Certainly the legislature did not intend to levy the tax on an occasional sale made outside of the state but exclude it from the tax when made within the state. The prevailing opinion, by stating that we express no opinion on whether an isolated or occasional sale made outside of the state is subject to the use tax indicates that is still an open question in this state. But in the Union Portland Cement case we expressly held that to exempt from the tax a sale made within this state while collecting the tax on a sale made outside of this state would be unconstitutional.
The prevailing opinion says
"If the defendant's contention were true, seasonal sales of crops, plants, and agricultural produce made within the state would be subject to the use tax since such sales, like isolated or occasional sales, are non-retail sales upon which the sales tax does not operate."
This statement does not answer the above argument that there is an apparent reason why the isolated sale should be excluded from the sales tax and still be subject to the use tax, which reason is one of convenience in making collections. But no attempt is made to point out any fallacy in that argument, nor to give any reason for concluding that a sale made out of this state should be subject to the use tax *Page 187 but that an isolated sale should not be subject to it. In the case of the sale of seasonal crops and many other sales of small articles there is no apparent reason why they should be exempted or excluded from the sales tax and then be made subject to the use tax. Such sales are readily distinguishable from the present situation.
The prevailing opinion relies very heavily on the previous administrative construction placed on this statute. It points to the 1949 amendment providing that "no sale of a motor vehicle shall be deemed isolated or occasional" as evidence of such construction. But this court is definitely committed to the doctrine that incorrect administrative constructions are not binding on this court. Utah Hotel Co. v. IndustrialCommission, 107 Utah 24, 151 P.2d 467, 153 A.L.R. 1176.
But the amendment above referred to makes it clear that the legislature intended to tax all property, whether the sale was isolated or not, where the sale would readily come to the attention of the commission. Such legislation was obviously necessitated by the incorrect construction of the Use Tax Act placed thereon by the commission.
Like the sale of a motor vehicle the sale of a business in bulk is such as would readily come to the attention of the commission and there would be no inconvenience in collection of the tax thereon whether the sale was made within or outside of this state. This is particularly true of the sale of a large business such as the one here involved.
Aside from the sales made outside of this state the prevailing opinion apparently recognizes no sales which are subject to the use tax. But the legislature clearly intended that sales made in this state should be subject thereto for it made elaborate arrangements for the collection of such by providing for a license to regular dealers in such sales within this state. If only sales made outside of this state were subject to this tax then all those provisions were a nullity.
Thus it is clear that the legislature intended a sale to be subject to the sales tax only when the sale was made in this *Page 188 state by a vendor regularly engaged in the selling business here because it adopted the policy of collecting only from the vendor. But the use tax, being levied largely against property sold outside this state must be collected in such cases from the purchaser. In that case, the convenience in collecting only from the vendor disappears and so the use tax was made to cover both occasional and isolated sales and sales made in the regular course of business. And since we could not constitutionally tax property sold by an occasional sale outside the state and not do the same with property so sold within this state the use tax must cover such occasional sales made within the state. Thus it is apparent why the legislature intended to make occasional sales subject to the use tax but not subject to the sales tax. I therefore submit that the sale here in question was subject to the use tax and that the decision of the commission was correct.