Hardy v. State Tax Commission

CROCKETT, Justice:

The petitioners are dentists who attack the decision of the Tax Commission that they should pay sales tax on the materials which they purchase and use in rendering dental services to their patients.

The position of the Tax Commission is that the legislature has declared that there should be a sales tax paid on all personal property sold within this state.

Sec. 59—15-4(a), U.C.A.1953, provides for the levy of a sales tax

*1065. upon every retail sale of tangible personal property made within the state of Utah .

59-15-2(e) provides:

. the term “retail sale” means every sale within the state of Utah by retailer or wholesaler to a user or consumer, except sales defined as wholesale sales or otherwise exempted by the terms of this act; . . . . [Emphasis added]

The Commission further argues that in order to carry out the intent and purpose of those statutes in a way which is fair and equitable to all taxpayers, sales tax should be paid on the sale of any personal property in the state somewhere along the line between its production and consumption.

The materials in question consist of quite a variety of items which these petitioners (and other dentists) use in their practice of dentistry in connection with the treatment, repair, restoration and replacement of teeth, including various plastics, cements, metals, braces and retainers. No one has any doubt but that the materials are purchased, sold and used within the state of Utah. It is essential that this question be confronted and answered: where in the process from producer to consumer should the tax properly and fairly be imposed.

These facts are not in dispute: that the petitioners are rendering a professional service in which the training, skill and artistry so predominate that the cost of the materials used has very little to do with the charge made to their patients. Wherefore, it would be wholly impractical to bill separately, or to tax separately to their patients. The facts of critical and controlling importance are that petitioners themselves so state and assert that they are not engaged in selling any of such materials; that they are not itemized or sold separately, but the patient is billed a total sum for the services rendered; and that no sales tax is charged or collected by them.

If the above quoted statutes are to be given effect there seems to be only two alternatives: the petitioners either (1) itemize the materials and charge the sales tax thereon to their patients, or (2) pay the sales tax on the materials they purchase and use in rendering their professional services. It is apparent that unless the petitioners pay the sales tax on these materials they escape being taxed altogether and their share of the tax load is unfairly imposed on others.

Whatever else may be said about whether the petitioners are “selling” those materials, there can be no question but that in practicing their art of taking care of people’s dental problems, they are “users” of those materials and therefore their purchases come squarely within the language of 59-15-2(e) quoted above. Inasmuch as it is impractical for petitioners to charge sales tax on these materials to their patients, it is in conformity with the requirements of these statutes that they pay the tax themselves as the Tax Commission has ordered.

Numerous examples could be cited to illustrate the soundness of the Tax Commission’s position, but one should suffice: a grocer buys canned goods at wholesale, he does not pay sales tax because he is neither a user nor a consumer. He sells them at retail to his customer, who is a “user or consumer” and therefore does pay a sales tax; and the transaction so taxed fulfills the requirements of the statutes and bears its fair share of the tax burden.

A sound and well reasoned decision which cannot be distinguished in principle from this case is Utah Concrete Products Corporation v. State Tax Commission.1 It is explained therein that contractors who buy pipes, cinder blocks, culverts and similar materials to use in constructing roads or other structures are “users” of those materials within the meaning of the act because they are the last persons in the chain upon which the tax could be imposed; and that in order that such materials bear their fair share of the tax burden, the contractors should pay the tax thereon.

*1066A similar adjudication by this court is E. C. Olsen Co. v. State Tax Commission2 which holds that the tax is to be paid by the last user upon which the tax could be imposed. This same holding, squarely applicable in principle to the fact situation involved in this case, has been reiterated by this court in numerous cases, including Barrett Investment Co. v. State Tax Commission 3 and Sine v. State Tax Commission4 and Union Portland Cement Co. v. State Tax Commission,5 It will be seen that all of those cases are entirely consistent with the Tax Commission’s action in this case.6

The universally accepted rules of review of actions of administrative agencies require us to take into account the expertise of the agency in its particular field and therefore to give some deference to their determinations;7 to survey the evidence in the light most favorable thereto,8 and to refrain from upsetting such a determination unless it appears that the agency has acted capriciously, arbitrarily, or has acted in excess of its authority.9

In accordance with what has been said herein, it is our conclusion that, acting pursuant to the hereinabove quoted statutes, and the adjudications of this court thereon, the Tax Commission was justified in imposing sales tax on the materials purchased and used by the petitioners in rendering their dental services, which is in conformity with its responsibility to see that the laws are applied equally and without exemption or discrimination.

Affirmed. . No costs awarded.

ELLETT, C. J., and HALL, J., concur.

. 101 Utah 513, 517, 125 P.2d 408.

. 109 Utah 563, 168 P.2d 324.

. 15 Utah 2d 97, 387 P.2d 998.

. 15 Utah 2d 214, 390 P.2d 130.

. 110 Utah 135, 149, 170 P.2d 164.

. We so state and have decided in accordance with the above cited authorities in awareness of and notwithstanding what is said in the case of Western Leather & Finding Co., Inc. v. State Tax Comm., 87 Utah 227, 48 P.2d 526.

. Gilbertville Trucking Co. v. United States, 371 U.S. 115, 83 S.Ct. 217, 9 L.Ed.2d 177; Atlantic Refining Co. v. FTC, 381 U.S. 357, 85 S.Ct. 1498, 14 L.Ed.2d 443.

. See Vause v. Ind. Comm., 17 Utah 2d 217, 407 P.2d 1006; and authorities therein cited.

. See Skelton v. Lees, 8 Utah 2d 88, 329 P.2d 389; and authorities therein cited.