LASH'S PRODUCTS COMPANY
v.
UNITED STATES
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Lash's Products Company challenged a ten percent excise tax on soft drinks sold in bottles under the 1918 Revenue Act, arguing that because it separately itemized the tax to customers, the tax should be calculated on the price before the tax was added rather than on the total amount received. The Supreme Court affirmed that the tax must be calculated on the actual total price received by the manufacturer, including any amount added to cover the tax, because the price for purposes of taxation is the total sum paid for the goods, regardless of how it is itemized on the bill.
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Mr. Justice Holmes delivered the opinion of the Court:
This is a suit to recover the amount of certain taxes paid under the Revenue Act of 1918 (Act of February 24, 1919, c. 18, § 628, 40 Stat. 1057, 1116).
By § 628 there is imposed on “ soft drinks, sold by the manufacturer, ... in bottles or other closed containers, a tax equivalent to 10 per centum of the price for which so sold.” This tax was paid by the petitioner, calculated at ten per centum of the sum actually received by it for the goods sold. But the petitioner had notified its customers beforehand that it paid the ten per cent, tax and it contends that in this way it passed the tax on and that the true price of the goods was the sum received less the amount of the_tax. The phrase ‘ passed the tax on ’, is inaccurate, as obviously the tax is laid and remains on the manufacturer and on him alone. Heckman & Co. v.
I. S. Dawes & Son Co., 12 F. (2d) 154. The purchaser does not pay the tax. He pays or may pay the seller more for the goods because of the seller’s obligation, but that is all. Still the question as to the meaning of the statute remains.
The petitioner supports its position by a regulation of the Commissioner that when the tax is billed as a separate item it is not to be considered as ,an increase in the sale price. Naturally a delicate treatment of a tax on sales might seek to avoid adding a tax on the amount of the tax. But it is no less natural to avoid niceties and to fix the tax by the actual price received. Congress could do that as properly as it could have added one-tenth, to the tax on the price as fixed by the other items determining the charge to the buyer. The price is the total sum paid for the goods. The amount added because of the tax is paid to get the goods and for nothing else.
Therefore it is part of the price, and if the statute were taken literally, as there would be no reason for not taking it if it were now passed for the first time, there might be difficulty in accepting the Commissioner’s' distinction even if the tax. were made a separate item of the bill. But if, in view of the history in the Solicitor General’s brief, we assume with him that the practice of the Commissioner has been ratified by Congress, we agree -with his argument that the petitioner, must take the privilege as it is offered. It did not bill its tax as a separate item, and the-Commissioner’s Regulations notified it that ‘ if the sales price of a taxable beverage is increased to cover the tax, the tax is on such increased sales price ’. although they purported to make a different rule ‘ when the tax is billed as a' separate item.’ There has been some difference of opinion in the lower Courts but we regard the interpretation of the law as plain.
Judgment affirmed.
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Citator
Cited By (24 total)
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Indian Motocycle Co. v. United States, 283 U.S. 570 (U.S. 1931)…by the taxpayer would benefit directly the government supposed to be burdened; and the assumption of indirect benefit in the case of a tax of this type necessarily rests upon speculation rather than reality. See Lash’s Products Co. v. United States, 278 U. S. 175. It is significant that neither the federal nor any state government has appeared by intervention or otherwise to support this claim of immunity in cases in which the taxpayer has urged it upon us. The court has many times held, and as recently as…
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Gurley v. Rhoden, 421 U.S. 200 (U.S. 1975)…. Scurlock, 347 U. S. 110 (1954), at least under taxing schemes, as here, where neither statute required petitioner to pass the tax on to the purchaser-consumer. See Alabama v. King & Boozer, 314 U. S. 1 (1941); Lash’s Products Co. v. United States, 278 U. S. 175 (1929); Wheeler Lumber Co. v. United States, 281 U. S. 572 (1930); First [*205] Agricultural Nat. Bank v. Tax Comm’n, 392 U. S. 339 (1968); American Oil Co. v. Neill, 380 U. S. 451 (1965). A majority of courts that have considered the question have…
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Diamond Nat'l Corp. v. State Bd. of Equalization, 425 U.S. 268 (U.S. 1976)…. Scurlock, 347 U. S. 110 (1954), at least under taxing schemes, as here, where neither statute required petitioner to pass the tax on to the purchaser-ccnsumer. See Alabama v. King & Boozer, 314 U. S. 1 (1941); Lash’s Products Co. v. United States, 278 U. S. 175 (1929); Wheeler Lumber Co. v. United States, 281 U. S. 572 (1930); First Agricultural Nat. Bank v. Tax Comm’n, 392 U. S. 339 (1968); American Oil Co. v. Neill, 380 U. S. 451 (1965).”…
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- Heckman & Co., Inc. v. I. S. Dawes & SON Co., Inc., 12 F.2d 154 (D.C. Cir. 1926)