join, dissenting:
Mr. Justice Schaefer, Mr. Justice Goldenhersh and I do not agree with the basic concepts or the holding of the majority opinion and would affirm the judgment of the circuit court of Kane County which affirmed the Illinois Department of Revenue’s denial of the plaintiff’s claim for credit (Ill. Rev. Stat. 1969, ch. 120, par. 445) for an alleged overpayment of retailers’ occupation taxes.
The majority here has held that the legal and economic burden of the cigarette use tax is laid upon all Illinois users of cigarettes; that the retailer or distributor acts only as a collection agent for the State; and that the portion of the gross receipts representing the collection of the Illinois cigarette use tax is not “consideration” received by the retailer for the sale of cigarettes, and, therefore, is not a part of the “gross receipts” under the Retailers’ Occupation Tax Act (Ill. Rev. Stat. 1969, ch. 120, par. 440), and “Accordingly, it is not to be included in the base upon which the retailers’ occupation tax is computed.” Under this rationale, the majority decided that the portion of the sales receipts attributable to the collection of the cigarette use tax were not to be included in the plaintiff’s gross receipts which are subject to the retailers’ occupation tax, and that the plaintiff’s claim for refund should have been allowed.
It is our opinion that since the plaintiff in the case at bar is a retailer, not a user, the Cigarette Tax Act (Ill. Rev. Stat. 1969, ch. 120, par. 453.1 et seq.) and not the Cigarette Use Tax Act (Ill. Rev. Stat. 1969, ch. 120, par. 453.31 et seq.) is applicable.
In Johnson v. Halpin (1952), 413 Ill. 257, cited by the majority, the plaintiff, an Illinois resident, purchased by mail for her own use three cartons of cigarettes from a mail order vendor in Hammond, Indiana. The cigarettes were received and used by the plaintiff without the Illinois cigarette tax stamp being affixed thereto. The plaintiff thereupon instituted a class action for a declaratory judgment that the Cigarette Use Tax Act was unconstitutional, and for other relief. The lower court held that the Act was unconstitutional and upon appeal this court reversed the judgment of the lower court. Thus, Johnson v. Halpin pertained to a user of cigarettes who should have paid the use tax, and did not involve a retailer upon whom the cigarette tax is imposed, as in the case at bar.
In Mutual Tobacco Co. v. Halpin (1953), 414 Ill. 226, a cigarette distributor paid taxes incurred under the Cigarette Tax Act under protest, filed complaint in the superior court of Cook County wherein it was alleged that the Act was unconstitutional, and sought a temporary injunction to restrain the enforcement of the Cigarette Tax Act and to enjoin the State Treasurer from paying the protested payments into the general fund. In view of its decision in Johnson v. Halpin, and for other reasons stated in its opinion, this court there held that the Cigarette Tax Act was not invalid as lacking in uniformity and also held that the distributor was a proper party to maintain the action. At pages 229, 231 and 232, the court stated:
“* * * Section 2 of the act imposes the tax upon any person engaged in business as a distributor of cigarettes in this State. The tax is a burden on plaintiff as a distributor and plaintiff must pay it. Plaintiff is obligated to pay it whether it has a profit or not. The purchaser neither guarantees the tax nor in the event of plaintiff’s loss would the purchaser be obligated or expected to pay more. The tax is not charged as a separate item but, of necessity, is included along with other costs in arriving at the sales price. The fact that it was considered in arriving at the sales price does not make it any less a burden to the distributor. The title of the act shows that it deals with persons engaged in the business of selling cigarettes. The theory of the entire act is that it imposes a reasonable tax burden upon a certain class of business for the privilege of engaging in that business. The tax is an occupation tax. Johnson v. Daley, 403 Ill. 338.
* * *
The Illinois Cigarette Tax Act passed in 1941 is entitled ‘An Act in relation to a tax upon persons engaged in the business of selling cigarettes, and providing for collection of such tax and penalties for violations of the Act.’ An amendment raised the tax from 1 mill to 1½ mills per cigarette after January 1, 1947. Other amendments and changes are not pertinent to the issues here. For purposes of this case it is enough to state that the statute imposes the tax on persons engaged in business as distributors of cigarettes in this state. It is an occupation tax and does not apply to cigars or other tobaccos.”
Section 2 of the Cigarette Tax Act (Ill. Rev. Stat. 1969, ch. 120, par. 453.2) provides in pertinent part that:
“2.(a) A tax is imposed upon any person engaged in business as a retailer of cigarettes in this State at the rate of 4 mills per cigarette sold, or otherwise disposed of in the course of such business in this State.
* * *
The impact of the tax levied by this Act is imposed upon the retailer and shall be prepaid or pre-collected by the distributor for the purpose of convenience and facility only, and the amount of the tax shall be added to the price of the cigarettes sold by such distributor. Collection of the tax shall be evidenced by a stamp or stamps affixed to each original package of cigarettes, as hereinafter provided.
* * *
(c) The taxes herein imposed are in addition to all other occupation or privilege taxes imposed by the State of Illinois, or by any political subdivision thereof, or by any municipal corporation.” (Emphasis ours.)
The overall plan or device of taxation imposed by the cigarette tax enactments—the Cigarette Tax Act (Ill. Rev. Stat. 1969, ch. 120, par. 453.1 et seq.) and the Cigarette Use Tax Act (Ill. Rev. Stat. 1969, ch. 120, par. 453.31 et seq.)—is the same as that enacted under the Retailers’ Occupation Tax Act (Ill. Rev. Stat. 1969, ch. 120, par. 440 et seq.) and the Use Tax Act (Ill. Rev. Stat. 1969, ch. 120, par. 439.1 et seq.). The Retailers’ Occupation Tax Act imposes a tax upon persons engaged in the business of selling tangible personal property to purchasers for use and consumption, and the Use Tax Act imposes a tax upon the privilege of using such property in this State. The Cigarette Tax Act imposes a tax upon persons engaged in the business of selling cigarettes, and the Cigarette Use Tax Act imposes a tax upon the privilege of using cigarettes in this State. In fact, the language used in the Retailers’ Occupation Tax Act is substantially that used in the Cigarette Tax Act, and that of the Cigarette Use Tax Act (par. 453.33) follows almost verbatim the language of the Use Tax Act.
In Turner v. Wright (1957), 11 Ill.2d 161, this court upheld the constitutionality of the Use Tax Act and in so doing held that its purpose was to prevent the evasion of the retailers’ occupation tax when retail purchases are made outside the State; that the retailers’ occupation tax and the use tax were not identical taxes; and that the use tax complemented the retailers’ occupation tax. At page 167 the court stated:
“The statute provides for a use tax that falls alike on those who purchase at retail within the State and those who purchase outside of it. That tax is to be collected by the Illinois retailer, but to the extent that he remits the tax due under the Retailers’ Occupation Tax Act he is not required to remit the tax due under the Use Tax Act. The tacit assumption of the statute is that by this mechanism the tax advantage that was enjoyed by the buyer who purchased outside the State will be eliminated, without increasing the burden upon the buyer who purchases within the State. The accuracy of that assumption is not challenged.”
We believe that it was the intent of the legislature that the Cigarette Use Tax Act would complement the Cigarette Tax Act for the salutary purposes above enumerated with reference to the Use Tax Act and the Retailers’ Occupation Tax Act.
In Johnson v. Halpin (1952), 413 Ill. 257, this court considered the complementary nature of the cigarette use tax and at pages 261 and 262 stated:
“In determining the constitutionality of the Illinois Cigarette Use Tax Act, it is essential initially to review its salient provisions. The act is entitled: ‘An Act in relation to a tax upon the privilege of using cigarettes in this State.’ It provides for a tax on the privilege of using cigarettes in Illinois at the rate of one and one-half mills per cigarette, or three cents per package, or thirty cents per carton. Illinois distributors who are subject to the State’s jurisdiction are required to collect the cigarette use tax by adding it to the price of the cigarettes (Ill.
Rev. Stat. 1951, chap. 120, par. 453.33), and Illinois users who acquire cigarettes in tax free channels, in or out of Illinois, must remit the use tax directly to the Illinois Department of Revenue with a duplicate invoice. Ill. Rev. Stat. 1951, chap. 120, par. 453.42.
There are, in addition, certain offset provisions applicable to Illinois distributors in their capacity as tax collectors of the use tax. The purchase of stamps from the State is the means by which distributors remit cigarette taxes, and under the offset provisions the Illinois distributor is excused from purchasing and affixing a use tax stamp where he is required by the Illinois Cigarette Tax Act to affix a tax stamp in the like amount to the same cigarettes. The effect of this provision in operation is that a distributor liable for the Illinois cigarette tax with respect to a given sale is not required to pay over to the State the use tax which he is obligated to collect from the consumer, but may keep the use tax only to the extent of a like amount of tax which he must pay on the same cigarettes under the Cigarette Tax Act.”
Section 8 of the Use Tax Act (Ill. Rev. Stat. 1969, ch. 120, par. 439.8) provides:
“The tax herein required to be collected by any retailer pursuant to this Act, and any such tax collected by any retailer shall constitute a debt owed by the retailer to this State, except when such retailer is relieved of the duty of remitting such tax to the Department by virtue of his being required to pay, and is in fact paying, the tax imposed by the ‘Retailers’ Occupation Tax Act’ upon his gross receipts from the same transaction.”
It is not a fortuitous circumstance that section 3 of the Cigarette Use Tax Act (Ill. Rev. Stat. 1969, ch. 120, par. 453.33) provides in pertinent part:
“The tax hereby imposed shall be collected by a distributor maintaining a place of business in this State *** and the amount of the tax shall be added to the price of the cigarettes sold by such distributor.
* * *
Cigarette manufacturers who are distributors under this Act *** shall be required to remit the tax which they are required to collect under this Act to the Department by remitting the amount thereof to the Department by the 5th day of each month, *** but a distributor need not remit to the Department the tax so collected by him from purchasers under this Act to the extent to which such distributor is required to remit the tax imposed by the Cigarette Tax Act to the Department with respect to the same cigarettes.”
Thus, section 3 of the Cigarette Use Tax Act in no way excuses the retailer from the obligation imposed by section 2 of the Cigarette Tax Act (Ill. Rev. Stat. 1969, ch. 120, par. 453.2) which was heretofore quoted.
We agree with the majority that the Illinois user of a cigarette, purchased within or outside the State, is subject to the provisions of the Cigarette Use Tax Act, but such user is subject thereto in precisely the same manner and for the same purpose that any Illinois purchaser at retail, either within or outside the State, is subject to the provisions of the Use Tax Act. The tax imposed on the retailer under the Retailers’ Occupation Tax Act and under the Cigarette Tax Act is complemented by that provided for in the Use Tax Act and the Cigarette Use Tax Act for the salutary purpose of preventing the evasion of such taxes by making retail purchases outside of the State or in other tax-free channels.
In the case at bar the taxpayer was a distributor-retailer and consequently the Cigarette Tax Act was applicable. Section 3 of the Cigarette Use Tax Act was enacted to impose an identical tax in amount upon Illinois users who acquire cigarettes from outside the State (Ill. Rev. Stat. 1969, ch. 120, par. 453.33) or in tax-free channels in or outside of Illinois. (Johnson v. Halpin (1952), 413 Ill. 257.) Purchasers under such situation are governed by section 3, which in pertinent part provides:
“The tax hereby imposed and not paid pursuant to this Section shall be paid to the Department directly by any person using such cigarettes within this State ***.” Ill. Rev. Stat. 1969, ch. 120, par. 453.33.
Such was not the circumstance in the case at bar.
The obligation to pay the cigarette tax is imposed under the provisions of section 2 of the Cigarette Tax Act, which provides that it shall be collected by the retailer and that the amount of the tax shall be added to the price of the cigarettes sold by such retailer. (Ill. Rev. Stat. 1969, ch. 120, par. 453.2.) Such view is sustained by the recitation of the historical development of the Cigarette Tax Act set forth in Johnson v. Halpin (1952), 413 Ill. 257.
The opinion of the majority, without so stating, in effect either overrules Mutual Tobacco Co., which sustained the Cigarette Tax Act, or, in the alternative, holds that the Cigarette Use Tax Act supersedes the Cigarette Tax Act. We, in dissent, cannot agree to either of these results.
Under the Cigarette Tax Act, the tax is not levied upon the consumer, but rather is imposed on the retailer of cigarettes. Thus, as to the plaintiff retailer in the case at bar, the cigarette tax constituted part of the sales price of the cigarettes, and as such retailer, the plaintiff was not entitled to deduct from his gross receipts, subject to the retailers’ occupation tax, that portion of the amount of taxes paid under the Cigarette Tax Act. Consequently, the claim for credit should have been denied.
Apart from the reasons heretofore set forth, we do not believe that the plaintiff is entitled to a refund. It is a retailer, and its sales of cigarettes are taxable under section 2 of the Cigarette Tax Act, which imposes the tax on the added to the price of cigarettes sold by such retailer. Thus, the plaintiff did not pay the tax under section 2, but retailer and provides that the amount of the tax shall be rather passed it on to the consumer, and it has failed to meet the requirement of section 6 of the Retailers’ Occupation Tax Act (Ill. Rev. Stat. 1969, ch. 120, par. 445), which provides, among other things:
“No credit may be allowed for any amount paid by or collected from any claimant unless it appears (a) that the claimant bore the burden of such amount and has not been relieved thereof nor reimbursed therefor and has not shifted such burden directly or indirectly through inclusion of such amount in the price of the tangible personal property sold by him or in any manner whatsoever; and that no understanding or agreement, written or oral, exists whereby he or his legal representative may be relieved of the burden of such amount, be reimbursed therefor or may shift the burden thereof; or (b) that he or his legal representative has repaid unconditionally such amount to his vendee (1) who bore the burden thereof and has not shifted such burden directly or indirectly, in any manner whatsoever; (2) who, if he has shifted such burden, has repaid unconditionally such amount to his own vendee; and (3) who is not entitled to receive any reimbursement therefor from any other source than from his vendor, nor to be relieved of such burden in any manner whatsoever. No credit may be allowed for any amount paid by or collected from any claimant unless it appears that the claimant has unconditionally repaid, to the purchaser, any amount collected from the purchaser and retained by the claimant with respect to the same transaction under the ‘Use Tax Act’.”
For this additional reason, the plaintiff’s claim for refund should not be allowed since it has failed to comply with the foregoing requirements. The plaintiff did not bear the burden of the amount of its claimed refund.
The majority opinion did not consider this deficiency in the plaintiff’s claim for refund in that it followed the reasoning of American Oil Co. v. Mahin (1971), 49 Ill.2d 199, and held that the cirgarette use tax may not be considered a part of the sale price of the cigarettes and cannot be included in the base upon which the retailers’ occupation tax is computed.
We find the rationale of American Oil inapplicable here. In American Oil the tax which was excluded from such base was the motor fuel tax, a noncomplementary tax. In the case at bar, the tax sought to be excluded from such base under the theory of the majority is the cigarette use tax, which is complementary to the cigarette tax which was imposed on the plaintiff, a retailer-distributor.