Dan River Mills, Inc. v. City of Danville

Hudgins, C. J.,

dissenting.

The City of Danville elected to adopt a system of license taxes to be measured by the gross receipts of businesses in respect of which the taxes are levied. The taxing ordinance defines “gross receipts” to be “the sales of merchandise and the gross receipts of the business, trade or occupation from all earnings, fees, commissions, brokerage charges and rentals, and from all income whatsoever arising from or growing out of the *659conduct of tlie business * * * during the license tax year immediately precedi/ng the license tax year for which the tax is being computed * * * (Emphasis is, the amount of the license tax liability for the year 1952 must be based on the total gross receipts from the business conducted during the calendar year 1951.

Section 9 of this ordinance provides that in the case of every person who is engaged in manufacturing businesses such as that engaged in by Dan Eiver Mills, and “conducts a part of his business or of the processes incident thereto within and part without the city, only that fraction of the total gross receipts shall be included in the measure of license tax liability in Danville that represents the share of the business conducted within the City, the said fraction in the case of textile manufacturers to be determined by the ratio of operative payrolls for service rendered in Danville to total operative payrolls.* * *.” (Italics supplied)

This provision applies to “every license to engage” in business. There is no exception. Dan Eiver Mills is a textile manufacturer and for many years prior to July 1, 1951, had conducted its business both within and without the city of Danville. That part of its business conducted within the city was known as the ‘ Eiverdale Division, ’ ’ and that part conducted outside of the city in the county of Pittsylvania, was known as the “Schoolfield Division.” The amount of the license tax for the year 1951 was determined by ascertaining the gross receipts from the business conducted within the city in 1950. The gross receipts from the conduct of the business conducted in 1949 was the measuring rod for determining the tax liability for the year 1950. The same measuring rod was used for determining the tax liability for 1949 and 1948.

The area known as Schoolfield, in which the taxpayer conducted a part of its business, was annexed to and became a part of the City of Danville as of July 1, 1951. Thereafter the taxpayer conducted that part of its business known as “Eiverside Division” and “Schoolfield Division” in the city of Danville. The taxpayer, in computing its license tax liability for the year 1952, included the gross receipts of its Eiverside Division from January 1 through December 31, 1951, plus its gross receipts from the Schoolfield Division from July 1,1951 through December 31, 1951. It did not include that part of its gross receipts from the Schoolfield Division (that part of the business *660conducted ont of the city), from January 1 through. June 30, 1951. This computation thus included all of its gross receipts from its business conducted within the city for the year 1951.

The Commissioner of Revenue rejected the formula set forth in the ordinance for determining the amount of tax liability for the year 1952, and assessed the tax upon the gross receipts of the business conducted both within and without the city for the year 1951, thereby increasing the license tax by the sum of $64,720.49, which was paid by the taxpayer under protest.

The majority adopts the view of the trial judge who held that the provisions in the ordinance for allocation of gross receipts as between operations within and operations without the city “have no application unless the divided operations of the taxpayer occur both on January first of the license year and in the year immediately preceding.” I see no significance to be attached to the date “January first” of either year, except that it is the date on which to begin to keep account of the gross receipts and the date for the beginning of the taxable year in order to determine the amount of license tax, as thus stated in the ordinance: “* * * there shall be paid a license tax of fifteen (15⅜5) for each one hundred dollars ($100) of gross receipts, as hereinabove defined, * * *” and “gross receipts” are “that fraction of the total gross receipts * * * that represents the share of the business- conducted within the city * * *during the license tax year immediately preceding the license tax year for which the tax is being computed

It is the duty of the court to construe tax statutes or ordinances as written and not extend the same by implication.

There is no language in the ordinance declaring that allocation of gross receipts as between operations within and without the city is to be made only when this divided operation exists on January 1 of the license tax year. Neither do I find -any language in the ordinance from which this conclusion is necessarily implied. The city had the power to adopt any reasonable formula for ascertaining the amount of the license tax it desired to impose. It elected to measure the license tax for the current year in all cases, except parties beginning business, by the amount of gross receipts from the business conducted within the city during the preceding year. The ordinance applies with-, out regard to the amount of business conducted during the preceding year, whether favorable to the city or to the taxpayer *661in the current or license tax year. Having selected this method of determining its license tax, the city should not be permitted to evade the standard of measurement that it has written into the ordinance by putting an unnatural and strained construction upon the language used.

Mr. Justice Eggleston, speaking for the court in Ceroli v. City of Clifton Forge, 192 Va. 118, 120, 63 S. E. 2d 781, said: “It is a well-settled and familiar principle that statutes imposing taxes are to be construed most strongly against the government and in favor of the citizen. ' They are not to be extended by implication beyond the clear import of the language used, and whenever there is a just doubt, that doubt should absolve the taxpayer from the burden * *

"We said in Williams v. City of Richmond, 177 Va. 477, 14 S. E. 2d 287: “Tax laws are always to be liberally construed in favor of the taxpayer and they are not to be extended by implication * * *.'’

It seems to me that the majority puts a strained construction upon the taxing ordinance, and in so doing, has ignored the well established principles stated above. The truth of the matter is that the city, in adopting its taxing ordinance, failed to provide for the specific contingency that has arisen, and has failed to make an appropriate amendment to its general taxing ordinance to cover the situation. It is not within the province of this court to do what the city has failed to do and extend the tax liability by implication. There is serious doubt as to whether the ordinance is so worded as to include that part of the gross receipts from the Schoolfield Division from January 1 through June 30, 1951. In measuring the liability for the 1952 license tax, this doubt should be resolved in favor of the taxpayer and the city required to refund that part of the tax paid under protest.