# Appendix — Dunn Bros. v. Stone

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1955
- **Citation:** 350 U.S. 878

## Text

APPENDIX A.
IN THE SUPREME COURT OF MISSISSIPPI

No. 39,731

A. H. STONE, CHAIRMAN, STATE TAX COMMISSION,
Revived as ALEX McKEIGNEY, CHAIRMAN OF

STATE TAX COMMISSION

LEE, JUSTICE:

This is an appeal by A. H. Stone, Chairman of the State
Tax Commission, from a judgment of the circuit court of
the First Judicial District of Hinds County, requiring him
to refund to Dunn Bros., Inc., the sum of $557.93.

The controversy arose in this way: The tax commis-
sion demanded of Dunn Bros., Inc., the payment of $557.93,
being a sales tax of two percent on its gross income of
$27,896.45, from its operation entirely within the State of
Mississippi. The corporation paid the assessment, under
protest, and then brought this action to recover, with the
above mentioned result.

After the case reached this Court, A. H. Stone died;
and Alex McKeigney has succeeded to the office, and the
cause has been revived in his name.

The statutes under which this tax was demanded and
collected are Sections 10,105 and 10,109, Code of 1942.
Section 10,105 is as follows: “There is hereby levied and
shall be collected annual privilege taxes, measured by the
amount or volume of business done, against the persons,

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on account of the business activities, and in the amounts
to be determined by the application of rates against values,
or gross income, or gross proceeds of sales, as the case may
be, as follows:”

The applicable part of Section 10,109 is as follows:
“Upon every person engaging cr continuing within this
state in the business of operating an express business,
transporting freight or passengers from one point to an-
other in this state, there is likewise hereby levied and shall
be collected a tax, on account of the business engaged in,
equal to two per cent of the gross income of the business.
* * * There shall be excepted from the gross income used
in determining the measure of the tax imposed in this sec-
tion so much thereof as is derived from the business con-
ducted in commerce between this state and other states
of the United States.”

The cause was tried upon an agreed statement of facts
in substance as follows: During the year 1951, Tennessee
Gas Transmission Company was constructing an extension
to its pipe line, which crossed several states, including the
State of Mississippi. It purchased the necessary pipe for
this purpose from a foundry in the State of California,
and desired to have the same delivered by common car-
riers on its right of way in Mississippi. To effectuate this
purpose, it made arrangements with a railroad company
to deliver the pipe from the foundry to certain depots, or
railheads, in the State of Mississippi, as near to its right
of way as was feasible. It also engaged Dunn Bros., Inc., a
Texas Corporation, holding a certificate of public con-
venience and necessity for interstate and foreign com-
merce from the Interstate Commerce Commission, but
without such certificate from the Mississippi Public Service
Commission for intrastate commerce in the State of Mis-
sissippi, to deliver the pipe, by motor truck, from the

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depots or railheads in Mississippi to its right of way and
string the same along the said right of way. The Trans-
mission Company, as consignor, shipped the pipe by rail-
road to itself as consignee to the several depots or rail-
heads in Mississippi. Bills of lading were issued accord-
ingly. The delivering railroad did not, of course, parallel
the Transmission Company’s right of way. The Transmis-
sion Company paid freight thereon; and when a shipment
arrived at its rail destination, one of the Transmission
Company’s agents inspected and accepted the same. Dunn
Brothers then took charge of the shipment, and after giv-
ing a receipt to the railroad company for and on behalf of
the Transmission Company as both consignor and con-
signee, unloaded the car and delivered the pipe along the
right of way, for which service the Transmission Company
paid them. In the agreed statement of facts, Dunn Brothers
said that the purpose of the inspection by an agent of the
Transmission Company was to determine whether there
had been any damage to the shipment in transit by the
railroad company. This hauling was done between March
and May, 1951. Dunn Brothers had no property in the
State except its equipment; and as soon as the job was
completed, it moved the equipment out of the state.

The question is whether or not this transportation was
interstate or intrastate; and in either event, whether or not
it was subject to the tax in question.

The Federal cases on this question are legion. There
are also a number of our own cases.

In the recent case of Coleman, Attorney General, v.
Trunkline Gas Company, (Miss.) 63 So. 2d 73, in recogni-
tion of the Federal rule, this Court held that a privilege
tax which was imposed upon a pipe line operator, whose
operations were wholly and exclusively in interstate com-

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merce, was violative of the commerce clause of the Fe
Constitution, and fell outside the field of legitimate

taxation. This decision involved a construction of Se
34, Chapter 138, Laws of 1934, as amended by Chapter
Laws of 1952, which undertook to levy a privilege

mileage basis on account of the state's protection.

record disclosed, however, that the gas company ps
franchise tax, an income tax, and an ad valorem tax
the Court held that, in so doing, it was already en
to the State's protection.

The Federal courts have repeatedly held that
taxes cannot be collected upon the privilege of carryit
a business that is exclusively interstate in character. .
tor Motor Service v. O'Connor, 340 U. S. 602, 71 S. Ct
95 L. Ed. 573; Alpha Portland Cement Co. v. Mass
setts, 268 U. S. 203, 69 L. Ed. 916, 45 S. Ct. 477; Ozark
Line Corp. v. Monier, 266 U. S. 555, 69 L. Ed. 439, 45 |
184.

It was pointed out in the opinion in the Spector !
Service case, supra, that “The objection to its validity
not rest on a claim that it places an unduly heavy b
on interstate commerce in return for protection giv
the State. The tax is not levied as compensation fc
use of highways or collected in lieu of an ad valorem
erty tax. Those bases of taxation have been disclaim
the highest court of the taxing State. It is not a f
an inspection or a tax on sales or use. It is a ‘tax «
cise’ placed unequivocally upon the corporation's fra
for the privilege of carrying on exclusively inte
transportation in the State.”

In Interstate Oil Pipe Line Company v. Ston
Miss. 715, 35 So. 2d 73, which had under conside
Sections 10,105 and 10,109, Code of 1942, Annc

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through a different paragraph of Section 10,109, supra, it
was held that the tax there involved was on income de-
rived from the transportation of oil by the pipe line from
wells to shipping points and for pumping the oil into tank
cars for shipment by rail out of the state. The opinion
quoted from 11 Am. Jur., Commerce, Section 28, p. 29, as
follows: “It is not within the power of the parties by the
form of their contract to convert what is exclusively a lo-
cal business, subject to state control, into an interstate
business, protected by the commerce ciause.”’

The quotation from the text was documented by Fet-
eral Compress & Warehouse Co. v. McLean, 291 U.S. 17, 78
L. Ed. 622, 54 S. Ct. 267; Superior Oil Co. v. Mississippi, 280
U.S. 390, 74 L. Ed. 504, 50 S. Ct. 267; Browning v. Waycross,
233 U. S. 16, 58 L. Ed. 828, 34 S. Ct. 578. The opinion also
cited 15 C. J. S., Commerce, Section 18, pp. 278-291; to the
same effect. The Court observed that “the oil was not
committed by the owner to this pipe line company for
transportation to another state, but to be transported to
the railroad and there loaded into tank cars.” The opinion
then cited Coe v. Errol, 116 U. S. 517, 29 L. Ed. 715, 6 S.
Ct. 475, 479, to show that the carrying of articles in carts
or other vehicles to the depot, where the journey is to
commence, is no part of the journey; and likewise the
carrying of articles from the farm or forest to the depot is
only an interior movement.

On the Pipe Line’s appeal the Supreme Court of the
United States affirmed Interstate Oil Pipe Line v. Stone,
337 U. S. 662, 93 L. Ed. 1613, 69 S. Ct. 1264.

Four of the Justices in an opinion written by Justice
Rutledge said: ‘We do not pause to consider whether
the business of operating the intrastate pipe lines is inter-
State commerce, for, even if we assume that it is, Missis-

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sippi has power to impose the tax involved in this |
Further, we do not find it necessary to dispute that
Supreme Court of Mississippi construed the statute as
posing a tax on the privilege of operating a pipe line w1
within the state, and not a tax solely upon the ‘loca
tivities of “maintaining, keeping in repair, and other
in manning facilities”’ situated in Mississippi, Mem
Natural Gas Co. v. Stone, 335 U. S. 80, 92, 93, 92 L.
1832, 1842, 1943, 68 S. Ct. 1475, or upon the gross rec
themselves, Central Greyhound Lines v. Mealey, 334 |
653, 92 L. Ed. 1633, 68 S. Ct. 1260. While we are of co
bound by the construction given a state statute by
highest court of the State, we are concerned with the
tical operation of challenged state tax statutes, not

their descriptive labels.” The opinion also said: “Sinc
the activities upon which the tax is imposed are ca
on in Mississippi, there is no due process objection tc
tax. The tax does not discriminate against interstate |
merce in favor of competing intrastate commerce of
character. The nature of the subject of taxation m
apportionment unnecessary; there is no attempt to ta
terstate activity carried on outside Mississippi’s bor
No other state can repeat the tax. For these reason:
commerce clause does not invalidate this tax.” Ju
Burton concurred in the result on the ground that the
position “was a tax on the privilege of operating a
line for transporting oil in Mississippi in intrastate |
merce and that, as such, it was a valid tax.” Justice.
in the dissenting opinion, among other things, obse
that “An interstate journey must have a beginning
an end. Common sense rejects an extension of the jou
to the traveler’s front door or the producer’s farm or fa
when no through order for carriage is in effect. The:
limits of interstate commerce in such fringe situation

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uncertain. * * * This Court has interpreted the commerce
clause to permit state nondiscriminatory taxation for the
use of state faci’ities, upon the property used in interstate
commerce, upon production for commerce and upon net
proceeds therefrom. Through such taxes, the states may

exact payment for their protection and encouragement of
commerce. Joseph v. Carter & W. Stevedoring Co., 330 U.

S. 422, 429, 91 L. Ed. 993, 1001, 67 S. Ct. 815, and cases
cited.”

The only factual difference between the case of Inter-
state Oil Pipe Line v. Stone, supra, and the case now before
the Court is that, in that case, the tax on income was de-
rived from the transportation of oil from wells to the ship-
ping points and pumping the same into the tank cars for
shipment by rail out of the state—at the beginning of the
journey—whereas, the tax here was imposed on income
which was derived from hauling pipe from the railhead to
the right of way—at the end of the journey.

In Stone v. Memphis Natural Gas Co., 201 Miss. 670, 29
So. 2d 268, the appellee was held to be liable for the state
franchise tax, although its business was solely and ex-
clusively interstate, and it was not engaged in any intra-
state business. The Court said that the franchise tax was
not one upon “doing business” as that term is ordinarily
understood. The opinion pointed out that there was “no
attempt to tax interstate commerce as such, but the levy
is an exaction which the State requires as a recompense
for its protection of lawful activities carried on in this State
by the corporation, foreign or domestic, activities which are
incidental to the powers and privileges possessed by it by
the nature of its organization—here the local activities in
maintaining, keeping in repair, and otherwise in manning
the facilities of the system throughout the 135 miles of its
line in this State.”

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On the Gas Company’s appeal, the decision of this
Court was affirmed by the Supreme Court of the United
States. Memphis Natural Gas Co. v. Stone, 336 U.S. 80, 92
L. Ed. 1832, 68 S. Ct. 1475. Three of the Justices held that
the tax, under the construction of this Court, was addi-
tional recompense for protection of the pipe line’s local
activities, and could not therefore be regarded as one of
the privileges of doing interstate business; that the activities
taxed were not under the protection of the commerce clause;
and that the burden of such tax was no more unreasonable
than the permissible ad valorem tax. A fourth Justice held
that the tax was within the territorial limits of the state’s
taxing power; that it placed no greater burden upon inter-
state commerce than the state places upon competing intra-
state commerce of like character; that it did not undertake
to tax interstate activities carried on outside of the state’s
border; and that it could not be repeated by another state.
The fifth Justice concurred in the result.

The language of Justice Reed, in his dissenting opinion
in Interstate Oil Pipe Line Company v. Stone, supra,
namely, that “an interstate journey must have a beginning
and an end,” must be kept in mind; likewise the opinion of
the Supreme Court in Coe v. Errol, supra, that the carrying
of articles in cars or other vehicles to the depot, where the
journey is to commence, is no part of the journey; and
, that the carrying of articles from the farm or forest to the
depot is only an interior movement. Again, the language
of Justice Reed, in his dissenting opinion, supra, should be
recalled, namely, that ‘common sense rejects an extension
of the journey to the traveler's front door or to the pur-
chaser’s farm or factory when no through order for carriage
is in effect.” He again well said that “the exact limits of
interstate commerce in such fringe situations are uncer-
tain.”

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If the above reasoning is followed, the journey in inter-
state commerce in this case began at the railroad’s depot
in the State of California. The transportation of the pipe
from the foundry to the depot was only an interior move-
ment. The Transportation Company was the shipper. It
consigned the shipment from a point in California to itself
at a point in Mississippi. The railroad company, the inter-
state carrier, issued its bill of lading to the Transmission
Company, as both consignor and consignee, showing its
agreement to deliver the shipment from a depot in Cali-
fornia to a railroad depot, or railhead in the State of Missis-
sippi. When the shipment arrived at its destination, the
Transmission Company, by an agent, inspected and accepted
it. Following this acceptance, Dunn Brothers took over the
shipment from the railroad. This was, in effect, a delivery
to the Transmission Company. The interstate journey was
then at an end. The railroad Company, the interstate car-
rier, had agreed to deliver the shipment from a point in
California to a point in Mississippi, and this agreement of
carriage had been gully performed. The Transmission Com-
pany then engaged another carrier, a motor carrier, Dunn
Brothers, to deliver the shipment from the depot, or rail-
head, along its right of way; and the fact that this pro-
cedure had been agreed upon, prior to the railroad’s de-
livery, did not change the essential features of the activity.
Nor did the fact that Dunn Brothers held a certificate as a
carrier for interstate commerce grant it immunity, when it
was carrying intrastate commerce exclusively. It is only
for the carriage within Mississippi that the tax is demanded.
A local drayman or an intrastate carrier would have been
obliged to pay the tax here demanded. If, under the cir-
cumstances of this case, appellee should prevail, then by
reason of its claim of interstate commerce, it would escape
the burdens which fall on its competitors in intrastate com-
merce. Evidently equality for, not favoritism to, interstate

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commerce was the underlying purvose of Article I, Section
VIII, cl. 3, of the U. S. Constituuon.

The case of Gross Income Tax Division v. J. L. Fox &
Son, 86 N. E. 2d 693, from the Supreme Court of Indiana,
is directly in point.

The case of American Express Co. v. Miller, 104 Miss.
247, 61 So. 306, is not in point. In that case, the packages
were delivered by the liquor dealers in Louisiana to the
boats, and the masters issued bills of lading for the entire
journey, across the state line, to the customers in Missis-
sippi, collecting at the time the charge for the completed
transportation, with no opportunity or right of the original
shipper thereafter to accept or control the shipment. The
transportation was continuous from the shipper to the con-
signee.

There is this additional reason to uphold this tax:
The agreed statement of facts showed that Dunn Brothers
made its deliveries between March and May of 1951; and
that, as soon as the work was completed, it moved its equip-
ment out of the state. Taxable property is assessed for
ad valorem taxes, and the lien thereon attaches as of Jan-
uary Ist. Sections 9744-5, Code of 1942. Consequently
Dunn Brothers was not liable for, and could not be re-
quired to pay, ad valorem taxes for 1951. There was no
agreement or proof that it paid to the State of Mississippi
any tax whatever. It had the protection of the laws of
Mississippi in its operations and yet it is not shown to have
paid the state anything ‘‘as a recompense for its protec-
tion of lawful activities carried on in this state by the cor-
poration.” Stone v. Memphis Natural Gas Co., supra. Inter-
state transportation should bear a fair share of the cost
of the local government whose protection it enjoys. Many
decisions of the Supreme Court of the United States show

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that, so far as the commerce clause is concerned, state
taxes may be validly laid on corporations who carry on
local activities sufficiently separate from interstate com-
merce, even though such taxes amount to the same as if
levied on the interstate business itself. Independent Ware-
houses v. Scheele, 331 U.S. 70, 91 L. Ed. 1346, 67 S. Ct. 1062;
McGoldrick v. Berwind-White Coal Min. Co., 309 U. S. 33,
84 L. Ed. 565, 60 S. Ct. 388, 128 A. L. R. 876; Ford Motor Co.
v. Beauchamp, 308 U. S. 331, 84 L. Ed. 304, 60 S. Ct. 273;
Southern P. Co. v. Gallagher, 306 U. S. 167, 83 L. Ed. 586, 59
S. Ct. 389; Coverdale v. Arkansas-Louisiana Pipe Line Co.,
303 U. S. 604, 82 L. Ed. 1043, 58 S. Ct. 736; Utah Power & L.
Co. v. Pfost, 286 U. S. 165, 76 L. Ed. 1038, 52 S. Ct. 548; West-
ern Cartridge Co. v. Emmerson, 281 U.S. 511, 74 L. Ed. 1004,
50 S. Ct. 383; Hump Hairpin Mfg. Co. v. Emmerson, 258 U,
S. 290, 66 L. Ed. 622, 42 S. Ct. 305; and American Mfg. Co.
V. St. Louis, 250 U. S. 459, 63 L. Ed. 1084, 39 S. Ct. 522. See
also Stone v. Stapling Machines Co., (Miss.) 71 So. 2d 205,
which the Supreme Court of the United States refused to
review. See also Mavar Shrimp & Oyster Co., Ltd., (Miss. )
73 So. 2d 109.

So, the service by Dunn Brothers in carrying the pipe,
after its acceptance by the Transmission Company, from
the depot or railhead in Mississippi to the right of way also
in Mississippi, was an activity wholly within the State of
Mississippi, was therefore intrastate, and the gross income
therefrom was subject to the tax of two per cent. How-
ever, if it may be said that this was a fringe situation and
therefore uncertain, nevertheless the appellee is still liable
for this tax as a recompense for the protection which it was
afforded by the state as it engaged in this activity. Thus,
for both reasons, as above Stated, the tax was properly
assessed and collected. Hence the judgment of the trial
court is reversed, and a judgment will be entered here
for the appellant.

REVERSED AND JUDGMENT HERE FOR APPEL-
LANT.

ROBERDS, P. J., AND HOLMES. ARRINGTON, AND
ETHRIDGE, JJ., CONCUR.

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Monday, June 13th, 1955, Court Sitting
No. 39,731

Alex. McKeigney, Chairman State Tax Commission
vs.
Dunn Brothers, Inc.,

This cause having been submitted at a former day of
this term on the record herein from the Circuit Court of
Hinds County and this court having sufficiently examined
and considered the same and being of the opinion that
there is error therein doth order and adjudge that the
judgment of said Circuit Court rendered in this cause at
the November 1954 Term—be and the same is hereby
reversed and this court now, here, proceeding to render
and enter the judgment that should have been entered
in the court below doth order and adjudge that the ap-
pellee take nothing by its suit and that the appellant do
have and recover of and from the appellee all of the costs
in this court and in the court below to be taxed, etc.

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IN THE SUPREME COURT OF MISSISSIPPI

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No. 39,731

A. H. STONE, CHAIRMAN, STATE TAX COMMISSION,
REVIVED AS ALEX McKEIGNEY, CHAIRMAN
OF STATE TAX COMMISSION

vs.
DUNN BROTHERS, INC.

On Suggestion of Error.
HOLMES, JUSTICE:

The original opinion in this case held, first, that the
service by Dunn Brothers, in carrying the pipe from the
depot or railhead in Mississippi to the right of way, also
in Mississippi, was intrastate, and that the gross income
therefrom was subject to the tax of 2%; and, secondly,
that, even if such service was in fact not intrastate, never-
theless Dunn Brothers was liable for the tax as a recom-
pense for the benefit and protection which the State af-
forded to the taxpayer while it was engaged in this activ-
ity.

The appellee has filed a vigorous suggestion of error.
Due consideration has been given to it; and the Court
deems it necessary to respond only to some of the reasons
which are urged in connection with the second ground of
the opinion.

It is contended that the Court erred in assuming that
the taxpayer had in fact paid no taxes to the State, when
the stipulation was silent about this matter. The original
declaration charged that the plaintiff had “promptly paid
any and all lawful taxes levied by the State of Mississippi
against its property * * *”. The Tax Commission answered

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that it “does not know what taxes, if any, plaintiff has
paid to the State of Mississippi, but specifically denies
that plaintiff has promptly paid any and all lawful taxes
levied by the State Tax Commission against its property
* * *” In the stipulation, which contained the agreed
statement of facts, there was no reference whatever to tax
payments.

Since the suit by Dunn Brothers was for the purpose
of recovering taxes which it had paid under protest, it of
course had the burden of showing that it was entitled to
a recovery. In Coleman, Attorney General, v. Trunk Line
Gas Company, Miss., 63 So. 2d 73, the gas company proved
that it had paid a franchise tax, an income tax, and an ad
valorem t ~. ‘1:.e Court, in that case, held that the com-
pany, by e~ °n of the payment of these taxes, was already
entitled tu .ise State’s protection, and that the privilege tax
there invulved could not be imposed for such purpose.
Thus evidence of payment of other ‘axes was relevant on
the question as to whether or not Dunn Brothers was en-
titled to recover the taxes which it had previously paid
under protest. But, as stated, it offered no proof as to
payment of other taxes. So even if the appellee had in
fact paid other taxes, still in the absence of proof thereon,
it was not a violent inference that the appellee had paid
no taxes. Cases must be reviewed on the record before
the appellate court.

As stated in the original opinion, the tax was collected
under Sections 10105 and 10109, Code of 1942 annotated.
The latter section is comprised of nine paragraphs, the
last of which contains a provision for certain exceptions
or limitations. None of the paragraphs are numbered. It
it true that the argument for and against the imposition
of this tax revolves around the paragraph which reads as
follows: ‘Upon every person engaging or continuing

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within this state in the business of operating an express
business, transporting freight or passengers from one point
to another in this state, there is likewise hereby levied and
shall be collected a tax, on account of the business engaged
in, equal to two per cent of the gross income of the busi-
ness.” Obviously, this paragraph was very pertinent in
dealing with the intrastate feature.

But in the same section and subsequent to the above
quotation is another paragraph which reads as follows:
“Upon every person engaging or continuing within this
state in the business of operating motor vehicles on the
public highways of this state for the transportation of per-
sons or property for compensation or hire, there is likewise
hereby levied and shall be collected a tax, on account of
the businesss engaged in, equal to two per cent of the gross
income of the business; but such tax shall not apply to
persons engaged in transporting school children under
contract with counties or school districts.” This paragraph
applies to the operation of motor vehicles for the transpor-
tation of persons or property for compensation or hire on
the public highways of the State, and is not limited merely
by such transportation from one point in the State to an-
other. Consequently it is more far reaching than the first
quoted paragraph.

The last paragraph of Section 10109, the exception or
limitation paragraph, is as follows: “There shall be ex-
cepted from the gross income used in determining the
measure of the tax imposed in this section so much thereof
as is derived from the business conducted in commerce
between this state and other States of the United States, or
between this state and foreign countries which the State
of Mississippi is prohibited from taxing under the consti-
tution of the United States of America. And nothing con-
tained in this section shall be construed to levy a tax upon

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the operation by municipal corporations of any electric,
gas or water system owned by the municipality operating
it.’ The evident purpose of the Legislature was to tax all
gross income, in the enumerated instances, except so much
thereof as is derived from interstate commerce between
this State and other states or foreign countries, which the
State is prohibited from taxing under the Constitution of
the United States. But the tax here in question is not pro-
hibited by the Constitution of the United States. See the
many citations in the original opinion.

The mere fact that the parties confined their argu-
ment to the first quoted paragraph does not preclude the
Court from considering the entire section.

We adhere to the views expressed in the original opin-
ion, and it follows that the suggestion of error should be,
and is, overruled.

SUGGESTION OF ERROR OVERRULED.

ROBERDS, P. J.. AND LEE, ARRINGTON AND
ETHRIDGE, JJ., CONCUR.

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Friday, July 15, 1955, Court Sitting
No. 39,731

A. H. Stone, Chairman, State Tax Commission,
Revived as Alex McKeigney, Chairman of
State Tax Commission

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Lunn Brothers, Inc.,

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This cause this day came on to be heard on the sug-
gestion of error filed herein and this court having suf-
ficiently examined and considered the same and being of
the opinion that the same should be overruled doth order
and adjudge that said suggestion of error be and the same
is hereby overruled.

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IN THE CIRCUIT COURT, FIRST DISTRICT
HINDS COUNTY, MISSISSIPPI

No. 13,522.

DUNN BROS., INC.
V
A. H. STONE, CHAIRMAN, STATE TAX COMMISSION.

Written Ruling of Circuit Court Judge.

Dunn Bros. paid certain sales taxes to the State Tax
Commission and brought this suit against A. H. Stone,
Chairman, to recover the same. The taxes were paid un-
der and by virtue of section 10109 Mississippi Code 1942,
which levied sales tax upon every person engaged in busi-
ness of transporting freight or passengers from one point
to another in this State. Dunn Bros. claim their business
was interstate and foreign commerce and under the pro-
tection of the Commerce Clause of the Constitution they
were not liable for payment of the tax, which is admittedly
a privilege tax.

The Tennessee Gas Transmission Company was en-
gaged in building a large pipe line across the State, orig-
inating in the Southwest and crossing several states, ter-
minating at some point in the East. The pipe originated
at its point of manufacture in California, and from there
was shipped by rail to certain convenient rail spots near
the right of way in this State where the plaintiff's trucks
took over and hauled the pipe and strung it along the pipe
line right of way, at convenient places to be integrated into
the pipe line by Tennessee Gas Transmission Company.

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There was no through bill of lading. It appears that
it is contrary to the practice of commerce that through

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bills of lading be issued where different forms of transpor-
tation are adjunct to each other, such as rail-water trans-
portation, or rail-truck transportation.

The pipe was loaded at the scene of its manufacture
in California and shipped by rail to Tennessee Gas Trans-
mission Company to the various rail points in Mississippi.
At these points a new bill of lading was issued, the Ten-
nessee Gas being the consignor and consignee therein; the
destination being the ultimate resting place of such pipe
along the right of way. The plaintiff furnished the facil-
ities for hauling from the various rail points in Mississippi
to the actual location of pipe line right of way.

Plaintiff insists that this was an interstate shipment
in that the movement of the pipe had every character and
incident of the interstate shipment from its point of origin
to its point of destination.

Plaintiff quotes numerous decisions of the United
States Supreme Court and of other federal courts and cer-
tain Interstate Commerce Commission holdings, sustain-
ing him in this position. It appears from the federal cases
quoted in plaintiff's brief that a through bill of lading is
not necessary to characterize the shipment as being in
interstate or foreign commerce; that acceptance or passage
of title is not necessarily the controlling feature; and even
that the integration of the produce with other products of
similar kind or charge of form through certain manufactur-
ing processes will not

page 3

destroy its character as interstate commerce. Shipments
from within a state to a point such as a coastal point with-
in the same state, where the ultimate destination is inter-
state or foreign commerce will preserve the interstate char-

A20

acter of the shipment. The court applies what is known
as “‘The essential character of the movement” theory.

Throughout these decisions of the federal courts in-
volving the commerce clause there runs the following con-
sistent theme. What was the bona fide and true intent and
purpose of the parties in initiating the shipment? If the
true intent and purpose of the shipper and consignee is
that if ultimate destination is originally conceived to be
without the originating state it is in interstate commerce.
The manner and method of handling does not seem to be
important.

Some of the leading cases quoted and relied upon by
the plaintiff are: So. Pac. Terminal Co. v ICC, 219 US
498, 55 L ed. 310; Baltimore & O S W R Co v Settle, 260
US 166; Railroad Commission of Ohio v Worthington, 56
L. ed. 1008; United States v Erie Railroad Co. 280 U S 98;
Texas & N O R Co v Sabine Tram Co, 227 U S 111; and
Hughest Brothers Company v Minnesota, 272 U S 469.
Also the C C A case Texas v Anderson, Clayton & Co., 92
F (2) 104.

The defendant’s demurrer having been overruled and
answer filed, this case was submitted on agreed statement
of facts. It appears to me that the defendant, Tax Com-
mission, in the agreed statement of facts has agreed that
this shipment had the essential character of a shipment
in interstate and foreign commerce, as I have described
the same above. I note from the _

page 4

agreed statement of facts, on page 4 thereof, where it is
agreed by the parties as follows:

“It was the intent and purpose of Tennessee Gas _
Transmission Company in originally ordering the |

A21

shipment from the steel companies located outside
the State of Mississippi for all of said Pipe to be trans-
ported from the point of manufacture directly to the
pipeline right of way within the State of Mississippi,
by the most direct route available. The various rail-
heads within the State of Mississippi to which the
pipe moved via railroad were never intended by the
: Tennessee Gas Transmission Company to be the ul-
3 timate destination of the pipe, but, on the contrary,
it was the intent of the shipper at all times that the
pipe be transported by common carriers from the
point of manufacture outside of Mississippi to the
pipeline right of way within Mississippi.”

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i

It appears thus that the defendant admits that the
character of the shipment was essentially one in interstate
and foreign commerce, as the same is admeasured by the
accepted rules and principles laid down by the Supreme
Court of the United States.

Farther on in the agreed statement of facts the defend-
ant agrees to the following:

Page 5

“* * * Prior to the time the shipments originally
Started from the pipe manufacturer, arrangements
were made between the Tennessee Gas Transmission
Company and Dunn Bros., Inc., plaintiff herein, under
which the plaintiff agreed to transport the pipe from
the railheads in Mississippi to the pipeline right of
way in Mississippi.”

Furthermore in the agreed statement of facts the de-
fendant agreed to the following:

“From the time the pipe left the manufacturer in
California until the pipe arrived at the right of way,
the pipe was at all times under the care and super-
vision of the aforementioned common carriers, either
railroad or the plaintiff. It is understood, however,

A22

that the defendant reserves the right to take the posi-
tion and argue that, as a matter of law, the legal pos-
session of the pipe passed to Tennessee Gas Transmis-
sion Company upon the completion of the railroad
portion of said transportation.”

It is observed from the above quotation from the
agreed statement of fact that the defendant reserves the
right to argue as a matter of law that the legal possession
of the pipe passed to Tennessee Gas Transmission Com-
pany upon completion of the rail portion of the said trans-
poration. But as plainly stated in the quoted cases, it has
been specifically held by the Supreme Court of the United
States that the passage

page 6

or vestiture of title is not an element that changes the char-
acter of an interstate shipment to an intrastate one.

So, it would appear to me that in view of the admis-
sions that it was the bona fide and actual intent and pur-
pose that the destination of this shipment was the pipe-
line right of way in Mississippi, and that it should move
by common carrier from its origin in California to its des-
tination, it is a practical admission that shipment was
purely in interstate commerce and protected by the Com-
merce Clause of the Constitution.

It is further significant to me that the plaintiff's cer-
tificate of convenience and necessity, granted by the Inter-
state Commerce Commission contains the following re-
striction:

“RESTRICTION: The service authorized herein

is restricted to traffic moving to or from pipeline
rights of way.”

The declaration states, and it is not denied or ad-
mitted, that this plaintiff corporation was organized on

vee ety

A23

the 2d of June, 1950, and that it is a Texas corporation,
and domiciled in the City of Dallas. It appears that since
its business is thus restricted to hauling pipe to pipeline
rights of way, and in consideration of the recent organiza-
tion of the corporation and its domicile in the Southwest,
the corporation was actually created at and about the time
the numerous pipe lines were being constructed and pushed
across the continent from the Southwest to the Eastern
markets. In other words, it appears reasonably deducible
that this corporation had its

page 7

inception and founding for the purpose of handling this
type of services for the construction of these transconti-
nental gas lines. The process of construction of which
had its inception in the last decade.

Purpose and intent is subjective in its nature and
sometimes must be deduced upon the facts and circum-
stances. However, in this case it is not necessary to re-
sort to deduction in view of the plain admissions made by
this defendant. If it were the true intent and purpose of
the shipper in California, the place of origin, that the
place of destination would be at and beside the pipe lines
in Mississippi, then this is truly an interstate shipment and
under the protection of the Commerce Clause. I do not
see how any other conclusion could be drawn under the
decisions of the Supreme Court of the United States.

The defendant Tax Commissioner seems to rely
mainly upon certain statements that have appeared in a
few very recent decisions of the United States Supreme
Court to the effect that “interstate commerce should be
made to pay its way.” The expression seems to have be-
come a kind of slogan for the state taxing authorities
throughout the country.

od ee oe . ——

It certainly could not have been the intent of the Su-
preme Court in infect the settled law with uncertainty by
the use of such a phrase.

It is difficult to understand what the meaning of the
phrase is. It appears that any shipment would either be
in interstate or intrastate commerce and would be tax-
able or

page 8
not taxable, according to the plain facts of the case.

Therefore, judgment will be for the plaintiff.
/s/ M. M. McGowan

Circuit Court Judge.

A25

IN THE CIRCUIT COURT OF THE FIRST JUDICIAL
DISTRICT OF HINDS COUNTY, MISSISSIPPI

No. 13522

DUNN BROS., INC.
VS
A. H. STONE, CHAIRMAN, ETC.

Judgment.

This day came on for hearing the above styled and
numbered cause on the declaration, as amended, answer
filed thereto, and agreed statement of facts filed herein,
and the Court having heard the argument of counsel for
the parties, and having read the briefs filed herein by the
parties hereto, a jury having been waived, and being of
the opinion that the plaintiff should have the relief sought;

It is, therefore, ordered and adjudged that the plain-
tiff, Dunn Bros., Inc., do have, and is hereby granted, a
judgment of and from the defendant, A. H. Stone, Chair-
man, State Tax Commission, in the amount of Five Hun-
dred Fifty-Seven and 93/100 Dollars ($557.93), with six
per centum interest thereon, compounded annually, from
May 14, 1953, to the date hereof, together with all costs
of this suit.

It is further ordered that the opinion of this Court
rendered in this cause be made a part of the record in this
cause, as a part of this order.

Leon F. Hendrick

Circuit Judge

A26

APPENDIX B.
SALES TAX LAW

Chapter 119, Laws of 1934, As Amended

AN ACT to provide for the raising of additional public
revenue by imposing a tax upon the privilege of en-
gaging in certain businesses in Mississippi, to provide
for the ascertainment, assessment and collection of
said taxes; to provide penalties for the violation of
the terms of this Act and to repeal Chapters 90 and
91 of the Laws of Mississippi of 1932.

Section 1. (10103 Miss. Code 1942) Title—Be it
enacted by the Legislature of the State of Mississippi,
the* this Act may be cited as the Emergency Revenue Act
of 1934.

(10104 Miss. Code 1942) Definitions—(1) When used
in this Act, the term “person” or the term “company”
herein used interchangeably, includes any individual,
firm, co-partnership, joint adventure, association, corpora-
tion, estate, trust, or any other group or combination act-
ing as unit, and the plural as well as the singular number,
unless the intention to give a more limited meaning is
disclosed by the context.

(2) The term ‘Tax Commission” means the State
Tax Commission of the State of Mississippi.

(3) The word “Commissioner” when used in this
Act, means the chairman of the State Tax Commission.

(4) The term “tax year” or “taxable year” means
either the calendar year, or the taxpayer’s fiscal year
when permission is obtained from the Commission to use
same as the tax period in lieu of the calender year.

A27

(5) The term “sale” or “sales” includes the barter
or exchange of properties as well as the sale thereof for
money, every closed transaction by which the title to tax-
able property passes shall constitute a taxable event
whether the compensation is by money or service, or other
thing of value, constituting a sale.

(6) The word “taxpayer” means any person liable
for any tax hereunder.

(7) The classification of “wholesaler” of “jobber”
shall apply only to a person doing a regular organized
wholesale or jobbing business known to the trade as such,
selling only to licensed retail merchants or jobbers, for
purposes of resale. The classification of “wholesale sale”’
shall apply only to a sale of tangible personal property
when made to a dealer or jobber, licensed under section 3
of this act, for the purpose of resale in the regular course
of business; a sale of tangible personal property which is
to become a component part of a structure or improve-
ment erected, constructed, repaired, or made, when such
sale is made to a contractor who is taxable under section
2-e of this act on the contract under which the material is
to be used; a sale of tangible personal property used or
to be used or consumed in the furtherance of interstate
transportation or interstate commerce and a sale of tan-
gible personal property which is to be used as a container
or covering for the protection or preservation of merchan-
dise sold, or property upon which service has been ren-
dered.

Sales of tangible personal property to manufacturers
or processors, of machinery and machine parts which are
exclusive necessities to processing within this state shall
be construed to be wholesale sales, and the gross proceeds
from such sales shall be taxable at the wholesale rate.

A28

Provided, further, that sales of industrial materials to
manufacturers only which go directly into the manufactur-
ing process may be reported by the seller as wholesale
sales, taxable at the wholesale rate. Provided, however,
that such sales may be classed as wholesale sales only if
evidenced by proper and adequate invoices and records.

(8) The classification of “retail merchant” shall
apply only to a person doing a regularly organized retail
business known to the trade as such and who maintains
a store, open at reasonable hours or who operates as a
transient vendor, as defined in the privilege tax law, for
sale to the public of such goods, wares or merchandise
as may be handled.

(9) Sales to “farm commissaries” shall be regarded
as retail sales unless such farm commissaries do a regu-
larly organized retail business with the general public by
maintaining a store, as defined in the privilege tax law,
open at reasonable hours for sale to the public of such
goods, wares or merchandise as may be handled.

(10) Provided that, upon resale by such commissaries,
of merchandise on which the tax has been paid to the
wholesaler, no additional tax under the provisions of Sec-
tion 2-c of this act shall be paid or collected by the seller
or owner of such commissaries or by the commissioner
against the owner thereof.

(11) The term “gross income”’ means the gross re-
ceipts of the taxpayer derived from trades, business,
commerce or sales and the value proceeding or accruing
from the sale of tangible personal property, and all receipts,
actual or accrued, by reason of the investment of the
capital of the business engaged in, and without any deduc-
tions on account of the cost of property sold, the cost of
materials used, labor costs, interest or discount paid or

—

A29

any other expense whatsoever; and without any deduc-
tion on account of losses.

(12) The term “business” when used in this act shall
include all activities or acts engaged in ( personal or cor-
porate) or caused to be engaged in with the object of gain,
benefit, or advantage either direct or indirect, and not
exempting subactivities producing marketable commodi-
ties used or consumed in the main business activity each
of such subactivities shall be considered business engaged
in, taxable in the class in which it falls.

(13) The term “gross proceeds of sales” means the
value proceeding or accruing from the full sale price
of tangible personal property including carrying charges
or any other addition to the selling price, on account of
deferred payments by the purchaser, without any deduc-
tion on account of the cost of property sold, the amount
allowed for a trade-in taken as part payment, expenses
of any kind, or losses. Provided, that the term “gross
proceeds of sales” shall include the value of any goods,
wares, merchandise or property withdrawn or used from
an established business or from the stock in trade for con-
sumption or use in the business or by the owner. But the
words “gross income” and “gross proceeds of sales” shall
not be construed to include goods, wares or merchandise.
or the value thereof, returned by customers when the sale
price is refunded either in cash or by credit; nor cash dis-
counts allowed and taken on sales.

Section 2. (10105 Miss. Code 1942) Tax Levied—
There is hereby levied and shall be collected annual privi-
lege taxes, measured by the amount or volume of business
done, against the persons, on account of the business activ-
ities, and in the amounts to be determined by the applica-
tion of rates against values. or gross incom, or gross pro-
ceeds of sales, as the case may be, as follows:

Ay,
ot

A30

Section 2-a. (10106) Mining, ete—Upon every per-
son engaging or continuing within this state in the busi-
ness of mining, quarrying, drilling or otherwise produc-
ing for sale, profit, or commercial use, limestone, sand,
gravel, or other mineral or natural resource products, ex-
cept oil and natural gas, the amount of such tax to be
equal to the value of the articles produced, and shown
by the gross proceeds derived from the sale thereof by
the producer (except as hereinafter provided) multiplied
by the respective rates as follows: Limestone, sand, gravel,
or other mineral products, except oil and natural gas,
two per cent.

The measure of this tax is the value of the entire pro-
duction in this state, regardless of the place of sale or the
fact that delivery may be made to points outside of the
state.

All privilege taxes levied upon persons engaged in
the production of natural resource products by this act
shall be a lien upon all such products so produced and such
lien shall be entitled to preference over all judgments,
executions, encumbrances or liens, whensoever created. Al!
persons to or through whom the title to such products pass
shall be jointly and severally liable for such tax until the
same is paid in full.

If any person liable for any tax under this section
shall ship or transport his products, or any part thereof,
out of this state without making sale of such products, the
value of the products in the condition or form in which
they existed immediately before transportation out of
the state shall be the basis for the assessment of the tax
imposed in this section. The Commissioner shall prescribe
equitable and uniform rules for ascertaining such value;
and the tax imposed in this section shall be due and pay-

2 AG CE eo eania te

A31

able as of the date of such removal from the state,
whether said products have been sold or not.

In computing the tax levied under this section, where
the gross proceeds of sales of such natural resource prod-
ucts are taken as the measure of the value of such prod-
ucts for the purpose of computing the tax, if such products
shall have been sold on a delivered price, the actual freight
charge prepaid by the taxpayer or included in the invoice
price, on such natural resource products, to the place of
delivery, shall be deducted from the gross proceeds of
sales used in determining the amount of the tax.

The tax imposed in this section upon persons engaged
in the business of mining or producing, for sale, profit
or commercial use, shall be collected by the Commissioner,
in the manner provided in this act, from the person in
charge of the production operations, and the Commis-
sioner is hereby authorized to make such investigations
and inspections of the production operations, from time
to time, as he may deem necessary for the purpose of as-
certaining the correct amount of tax due.

Section 2-b. (10107) Manufacturing—That Section
2-b of Chapter 119, Laws of 1934, and all amendments
thereof are hereby repealed.

See Section 2-c regarding retail sales made by manu-
facturers.

Section 2-c. (10108) Selling, ete—Upon every per-
son engaging or continuing within this state in the busi-
hess of selling any tangible personal property whatsoever,
(not including, however, bonds or other evidence of in-
debtedness, or stocks), there is likewise hereby levied, and
Shall be collected, a tax equivalent to two per cent of the
8ross proceeds of sales of the business; provided, how-
ever, that in the case of a wholesaler or jobber, the tax

A32

shall be equal to one-eighth of one per cent of the gross
proceeds of sales of the business. Provided further, that
in the case of farm tractors which are adapted solely to
agricultural purposes, and when sold to farmers, the tax
shall be equivalent to one percent of the gross proceeds
of sales.

Provided, further, that in the case of dealers in fluid
milk that is perishable in twenty-four hours and com-
monly known as pasteurized milk, the tax shall be equiv-
alent to one per cent of the gross proceeds of the sale
of said milk.

Provided, however, that any person engaging or con-
tinuing in the business as a retailer and a wholesaler or
jobber shall pay the tax required on the gross proceeds
of sales of each such business at the rates specified, when
his books are kept so as to show separately the gross pro-
ceeds of sales of each business; and when his books are
not so kept he shall pay the tax as a retailer; and pro-
vided, further, that any such person engaging or continu-
ing in business as a retailer and as a wholesaler or jobber
shall pay the tax as a retailer on the gross proceeds of
sales derived from all sales made by him to any person
other than a licensed merchant purchasing for resale in
the regular course of business.

A person exercising any privilege taxable under Sec-
tion 2-a of this Act and engaging in the business of sell-
ing his natural resource products at retail in the state shall
be required to make returns of the gross proceeds of such
retail sales and pay the tax imposed in this section, for
the privilege of engaging in the business of selling such
natural resource products at retail in this state; and the
value, or gross proceeds of sales, of such natural resource
products thus sold by the producer at retail and in-

wrx
=

ESE OPT MER Mei ALN fe iin ws Gh OF

A33

cluded in the measure of the tax imposed in this sec-
tion, shall be deducted from the gross income, or gross
proceeds of sales, used in determining the measure of the
tax imposed upon such producer in said Section 2-a of
this Act.

But any person exercising any privilege taxable under
Section 2-a of this Act and engaging in the business of sell-
ing his natural resource products to manufacturers, whole-
salers, jobbers, or licensed retailers, shall not be required
to pay the tax imposed in this section for the privilege of
selling such natural resource products at wholesale. Nor
shall any person exercising any privilege taxable under
Section 2-a of this Act be required to pay the tax imposed
in this section for the privilege of selling his natural re-
source products for delivery outside of this state. But
the gross income derived from the sale of such natural re-
source products to manufacturers, wholesalers, jobbers, or
licensed retailers, and the gross income derived from all
sales of such natural resource products for delivery out-
side of this state, shall be included in determining the
measure of the tax imposed upon such producer in said
Section 2-a of this Act.

That, notwithstanding the repeal of Section 2-b of
Chapter 119, Laws of 1934, as amended, same being Sec-
tion 10107 of the Mississippi Code of 1942, by House Bill
311, of the 1946 Regular Session of the Legislature, a per-
son engaging or continuing within this State in the busi-
ness of manufacturing, compounding, or preparing for
sale, profit, or commercial use, either directly or through
the activity of others, in whole or in part, any article or
articles, substance or substances, commodity or commod-
ities, and engaged in the business of selling his manufac-
tured products, at retail in the State, shall be required to
make returns of the gross proceeds of such retail sales

A34

and pay the tax imposed in Section 2-c of said Chapter
119, Laws of 1934, as amended, same being Section 10108
of the Mississippi Code of 1942, for the privilege of en-
gaging in the business of selling such manufactured prod-
ucts at retail in this state.

But notwithstanding the repeal of said Section 2-b of
said Chapter 119 by said House Bill 311, of the 1946 Reg-
ular Session of the Legislature, any person engaging in
this state in the business of manufacturing, compounding,
or preparing for sale, profit, or commercial use, either di-
rectly or through the activity of others, in whole or in part,
any article or articles, substance or substances, commodity
or commodities, and engaging in the business of selling his
manufactured products to manufacturers, wholesalers, job-
bers, or licensed retailers, shall not be required to pay the
tax imposed in said Section 2-c of said Chapter 119 for the
privilege of selling such manufactured products at whole-
sale. Nor shall such person be required to pay the tax
imposed in said Section 2-c of said Chapter 119 for the
privilege of selling his manufactured products for delivery
outside of this state.

Section 2-d. (10109) Public Utilities, ete.—Upon
every person engaging or continuing within this state in
the business of owning or operating a water or public
sewerage system, or owning or operating a street rail-
way for the transportation of freight or passengers for
hire, there is likewise hereby levied and shall be collected
a tax, on account of the business engaged in, equal to two
per cent of the gross income of the business.

Upon every person engaging or continuing within
this state in the business of furnishing to consumers,
electricity, electric lights, current, power or gas, natural
or artificial, there is likewise hereby levied and shall be ©

A35

collected a tax on account of the business engaged in,
equal to one per cent of the gross income of the busi-
( ness, when such electricity, electric lights, current,
: power or gas is sold for industrial purposes, and a tax
on account of the business engaged in, equal to two per
cent of the gross income of the business when such elec-
; tricity, electric lights, current, power or gas is sold for
any other purpose.

Upon every person engaging or continuing within this
state in the business of Owning or operating a telegraph
business, or owning or op®érating a telephone business for
the transmission of messages or conversations between
points within this state, there is likewise hereby levied
and shall be collected a tax, on account of the business
engaged in, equal to two per cent of the gross income of
the business.

Upon every person engaging or continuing within
this state in the business of operating a railroad for the
transportation of freight or passengers for hire between
points within this state, there is likewise hereby levied

» and shall be collected a tax, on account of the business

engaged in, equal to two per cent of the gross income of
the business.

Upon every person engaging or continuing within
this state in the business of operating a sleeping or palace
car business, carrying passengers from one point to an-
other in this State, there is likewise hereby levied and
Shall be collected a tax, on account of the business en-

8aged in, equal to two per cent of the gross income of the
business.

Upon every person engaging or continuing within
this state in the business of operating an express busi-
hess, transporting freight or passengers from one point

Nig
War Ske:

eee
pio: ti

A36

to another in this state, there is likewise hereby levied
and shall be collected a tax, on account of the business en-
gaged in, equal to two per cent of the gross income of the
business.

Upon every person engaging or continuing within
this state in the business of operating a pipe line for
transporting for compensation or hire from one point to an-
other in this state oil or natural gas or artificial gas through
pipes or conduits in this state, there is likewise hereby
levied and shall be collected a tax, on account of the busi-
ness engaged in, equal to two per cent of the gross in-
come of the business.

Upon every person engaging or continuing within
this state in the business of operating motor vehicles on
the public highways of this state, for the transportation
of persons or property for compensation or hire, there is
likewise hereby levied and shall be collected a tax, on ac-
count of the business engaged in, equal to two per cent
of the gross income of the business; but such tax shall
not apply to persons engaged in transporting school chil-
dren under contract with counties or school districts.

There shall be excepted from the gross income used
in determining the measure of the tax imposed in this
section so much thereof as is derived from the business
conducted in commerce between this state and other states
of the United States, or between this state and foreign
countries which the State of Mississippi is prohibited
from taxing under the constitution of the United States
of America. And nothing contained in this section shall
be construed to levy a tax upon the operation by munici-
pal corporations of any electric, gas or water system owned
by the municipality operating it.

A37

Section 2-e. (10110) Contracting, ete.—Upon every
person engaging or continuing in this state in the busi-
ness of contracting for a fixed price, commission, fee or
wage, to build, erect, construct, repair, grade, excavate,
drill, explore, test, survey, mine, install in or add to any
highway, street, sidewalk, bridge, culvert, sewer or water
system, drainage, or dredging system, levee, levee system,
or any part thereof, electric or steam railway, reser-
voir, or dam, hydraulic or power plant, electric lighting
or power system, steam heating plant or system, trans-
mission line, pipe line, tower dock, storage tank, wharf,
excavation, grading, water wells, gas wells, oil wells, or
any part thereof, when the gross amount of the total con-
tract price or the gross amount received as compensation
exceeds the sum of three thousand dollars ($3,000.00),
there is hereby levied and shall be collected a tax on
account of the business engaged in equal to one per cent
of the total of the contract price, or the compensation re-
ceived. The tax imposed in this section is levied upon
the prime contractor and shall be paid by him.

Provided, however, that a contractor performing
contracts to erect any building, the contract price of which
amounts to twenty five thousand dollars ($25,000) or
more, shall also operate under the provisions of this sec-
tion when building, erecting, repairing, installing in or
adding to any such building or structure not listed here-
in.

Provided, that where the work to be performed is
sublet by the prime contractor to different persons, or in
Separate contracts to the same person, each person per-
forming any part of said work shall be liable for the
amount of the tax which accrues on account of the work
performed by such person, when the tax heretofore im-

Sah

me

dE Sac GMB thd BE aaa Db Sab PEE A, eh PRN a AAG? ii tpt! IG SAP hte aa aE pte Rhine 8 I te ERA RA. eh clei ti

A38

posed has not been paid upon the whole contract by the
prime contractor.

Provided, further, that where any person engaged in
any business on which a tax is levied in Section 2-f of this
act, also qualifies as a contractor, and contracts with the
owner of any project to perform any services herein taxed,
where the contract price or the compensation received
exceeds the sum of three thousand dollars ($3,000.00),
such person shall likewise pay the tax imposed by
this section on account of said contract, in lieu of the tax
imposed by Section 2-f of this Act.

It is hereby declared to be the purpose of this section
to impose a tax on the business of contracting within this
state, in all instances where the total contract price or
the compensation received amounts to more than three
thousand dollars ($3,000.00), when the price to be paid
or the compensation received for any services required
or has required the use of equipment or tools of any kind,
or the supplying of any material which has become an
integral part of such contract. And to the end that the
state may receive the tax due in every instance, any per-
son entering into any contract, as defined in this section,
where the total contract price, or the compensation re-
ceived amounts to more than ten thousand dollars ($10,-
000.00) shall, before entering into the performance of such
contract, execute and file with the chairman of the State
Tax Commission a good and valid bond in a surety ceom-
pany authorized to do business in this state, or with suf-
ficient sureties to be approved by the commissioner, con-
ditioned that all taxes which may accrue to the State of
Mississippi under this section on account of the execution
of such contract will be paid when due, and the execu-
tion and filing of said bond shall be a condition precedent
to commencing work on any contract in the State of Mis-

PRIOR & We WL ~r

—

sissippi. Provided, however, that any taxpayer may pay
the tax in advance on any contract in lieu of furnishing
bond.

Every person failing either to procure the permit re-
quired by this act, or to execute the bond herein pro-
vided, or to pay the tax in advance, before beginning the
performance of any contract shall be denied the right to
perform such contract until he complies with such require-
ments, and the attorney general is hereby authorized to
proceed by injunction, when requested by the commis-
sioner so to do, to prevent by injunction any activity in
the performance of such contract until either such per-
mit is secured, or such bond is executed and filed, or such
tax is paid in advance, and any temporary injunction en-
joining the execution of such contract shall be granted
without notice by any judge or chancellor now authorized
by law to grant injunctions.

A39

Provided, that where any person engaged in any busi-
ness which is subject to the taxes levied in Section 2-f of
this act, and who performs service for a contractor as de-
fined in this section, may report the gross income from
such services at the rate of one-eighth of one per cent in
lieu of the two per cent rate levied in Section 2-f. Pro-
vided, however, such services must be on the structure or
improvement being erected or repaired and the contract
must be taxable under this section.

Section 2-f. (10111) Miscellaneous Businesses—( 1 )
Upon every person engaging or continuing within this
State in any of the following businesses, there is likewise
hereby levied and shall be collected a tax on account of
the business engaged in equal to 2% of the gross income
of the business:

A40

Aeroplane repair and service shops
Automobile repair shops
Automobile garages

Automobile fender and body repair shops
Automobile service stations
Battery stations

Motorcycle repair shops

Billiard, pool, and domino parlors
Bowling and ten pen alleys
Cleaning, pressing, and dyeing

Cold storage plants

Cold storage lockers

Cotton compresses

Cotton gins

Cotton warehouses

Custom creosoting, custom planing, custom sawing,
and any other custom processing for a fee.

Electricians and all repairs of electrical equipment
=» not elsewhere taxed.

Foundries, machine or general repair shops not else-
where taxed.

Hotels

Jewelry and watch repairing
Laundries

Mattress renovators

Meat curing plants

Plumbers or pipe fitters
Refrigerator repair shops

Radio repai: shops

Shoe repair shops

Tourist camps, or courts

Tin and sheet metal repair shops
Vulcanizing and recapping of tires
Transfer business

Storage warehouses.

A4l

Welding shops
Woodworking and wood turning repair shops
Renting or leasing of tangible personal property
Furniture repairs and upholstery shops

Office and business machine repairs

Repairs to air conditioning

Elevator repairs

Photographers and film developers

Termite and pest control service

Storage lockers

Grading, excavating or landscaping

Services performed in connection with the surveying,
exploring, developing, producing, distributing or
testing of oil, gas, and other mineral resources,
not elsewhere taxed.

Provided, however, that in computing the tax levied
under this section, if the taxpayer is a natural person,
and employs no assistant in rendering the service taxed,
there shall be deducted from the gross income of the tax-
payer, so as to be taxed, so much thereof as has been re-
ceived by him as compensation for personal services ren-
dered by him in person to others, regardless of whether
or not such personal service includes the incidental use of
machinery, for a consideration (as distinguished from
gross income received by the taxpayer as a result of the
activities of his employees or other persons or services in
connection with the operation of machines, or gross in-
come or gross proceeds of sales derived from the produc-
tion or sale of tangible personal property). Provided,
however, that if any person exercising any privilege tax-
able under this section Shall engage in any business ac-
tivities which are taxable under any of the preceding sec-
tions of this act and shall be liable on account of such
business activities for the payment of a tax under any such

A42

preceding section, no deduction for personal services shall
be allowed in determining the measure of the tax im-
posed in such preceding section.

Section 2-g. (10112) Consolidated Returns—When
any person is engaged in two or more forms of business
activities taxable under the provisions of this act, which
are inter-related, or which are of like character, such
person shall file a consolidated return covering all busi-
ness activities, which are thus inter-related or of like
character.

Section 2-h. (10113) U.S. Gov’t. Sales, ete.—In com-
puting the amount of tax levied under this act, there shall
be excepted from the gross proceeds of sales, so much
thereof as is derived from sales of tangible property to
the United States Government or the State of Mississippi,
its departments and institutions, counties, and municipal-
ities and upon the business of transporting sand or gravel
when consigned to the United States Government, the
State of Mississippi, its departments and institutions, a
county, municipality, or sub-division thereof, and used
for road construction or maintenance, or from business
which the State of Mississippi is prohibited from taxing
under the constitution of this state or the constitution of
the United States, and all freight shipments of commercial
fertilizers moving on intrastate rates within the state are
hereby exempted from all taxes levied and assessed by
Section 2-d of Chapter 119 of the General Laws of Missis-
sippi of 1934. Provided further in computing the amount
of tax levied under this act against persons taxable un-
der Section 2-f of said act, as amended, there shall also
be excepted from the gross income of such businesses, so
much thereof as is derived from charges for labor to the
United States Government or the State of Mississippi, its
departments and institutions, counties, and municipalities.

A43

Section 2-i. (10114) Taxon Gas, Tobacco, Beer, ete.—
And in computing the amount of tax levied under this
act, there shall also be excepted from the gross income of
the business, or gross proceeds of sales, as the case may
be, all sums received or coliected as taxes, on the sale of
gasoline and oils; and all sums received or collected as
taxes levied by the State of Mississippi on tobacco, beer,
wine and malt; and all sums received or collected as Fed-
eral Retailers’ Excise Taxes.

Section 3. (10115) Must Obtain License From the
Commissioner.—If any person shall engage or continue in
any business for which a privilege tax is imposed by this
act, as a condition precedent to engeging or continuing in
such business, he shall apply for and obtain from the Com-
missioner a license to engage in and to conduct such busi-
ness, upon the condition that he shall pay the tax accruing
to the State of Mississippi under the provisions of this act;
and shall keep adequate records of such business as re-
quired by Section 8 of this act, including invoices and
other records of all purchases and sales; and such invoices
and records shall be open for inspection by the Commis-
sioner or any of his authorized agents, at any reasonable
time; and failure to keep, produce and allow such inspec-
tion of said invoices and other records shall be the cause
for revoking such license. Upon receipt of such license,
the applicant shall thereby be duly licensed to engage in
and conduct such business. Said license shall continue in
force so long as the person to whom it is issued shall con-
tinue in the same business at the same location, unless re-
voked by the Commissioner for failure to keep and pre-
serve and allow inspection of the records and invoices
herein required. The Commissioner is hereby authorized
to revoke the license of any person failing to comply with
the requirements hereof, after giving to the person hold-
ing such license, ten days notice of the intention of the

A44

Commissioner to revoke such license. And unless good
cause be shown within said ten days why such license
should not be revoked, the Commissioner may revoke such
license, and may for good cause shown, grant a new li-
cense under such conditions as the commissioner may pre-
scribe; and upon revocation of such license, or engaging
or continuing in business after such license is revoked, or
without procuring such license, shall subject such person
to all the penalties imposed by Section 15 of this act. Pro-
vided further that any person now holding a license here-
tofore issued under the provisions of this act, before this
amendment, shall not be required to obtain a new license
unless he shall change the nature or location of his busi-
ness. But the provisions with reference to keeping and
exhibiting the invoices and records herein required shall
apply to all persons who continue in business under li-
censes heretofore issued.

Section 4. (10116) Exemptions—The tax levied by
this act shall not be collected in the following instances:

(a) All sales on which a tax is paid under the Sea
Foods Act and the gross income subject to an amusement
tax under Chapter 124, Laws of 1934, and amendments
thereto; and all sales to manufacturers of natural resource
products in the original state or condition of sale on which
a severance tax is paid under the provisions of Chapter
192, Laws 1946, and amendments thereto.

(b) All sales made by agricultural or cooperative
associations organized under Chapter 5, Code of Missis-
sippi of 1942, of agricultural products, or the by-products
thereof produced in the preparation or processing of such
agricultural products for market for the benefit of the
producer thereof, and the products of farm, grove or gar-
den.

A45

(c) The gross income of cemetery associations.

(d) Sales of tangible personal property to and the
gross income of hospitals or infirmaries owned and oper-
ated by a corporation or association, no part of the net
earnings of which inures, or may lawfully inure, to the
benefit of any private shareholder, group, or individual,
and which are subject to and governed by Section 6 of
Chapter 363, Laws of 1946, as amended.

(e) The gross proceeds of sales of cotton, whether
lint cotton or seed cotton, baled cotton, whether compres-
sed or not, and cotton seed in its original condition.

(f) Amounts received from the sale of school books.

(g) Sales of all fertilizers, bagging and ties for bal-
ing cotton, insecticides, seeds, boxes, crates, hay baling
wire, bags, cotton sacks, and syrup cans used in growing
and preparing agricultural products for market.

(h) The gross proceeds of sales made by persons
who produce livestock, poultry and other products of farm,
grove or garden, when said sales are made by the pro-
ducer, or members of his immediate family, or employees
selling such products for the producer, in the original state
or condition of preparation for sale at the place of produc-
tion, and before such products are subjected to any other
process coming within a class of business, the privilege of
conducting which is taxed by the provisions of this act.

(i) Amounts received from sales to public schools,
when such schools are Supported wholly or in part by
funds provided by the State of Mississippi.

(j) The gross proceeds of retail dealers in mules,
horses and other livestock.

(k) The gross proceeds of sales of coffins, caskets,
and other materials used in the preparation of human
bodies for burial.

MLN,
Rat

A46

(1) The gross proceeds of sales of vessels or barges
of fifty (50) tons load displacement and over, when sold
by the manufacturers or builders thereof.

Section 5. (10117) Returns, Monthly, etc.—-The taxes
levied hereunder shall be due and payable on or before
the 15th day of the month next succeeding the month in
which the tax accrues. The taxpayer shall, on or before
the 15th day of each month, make out and ma‘i a return,
showing the amount of the tax for which he is liable for
the preceding month, together with a remittance in the
form required by Section 13 of this act, for the amount of
the tax, to the office of the Commissioner. Such monthly
return shall be signed by the taxpayer or a duly authorized
agent of the taxpayer, but need not be verified by oath.
Providing that persistent or wilful failure to make any re-
turn and pay the tax shown thereby to be due, by the time
specified herein, there shall be added to the amount of
tax shown to be due, ten per cent damages.

Provided, however, that when the total tax for which

any person is liable under this act, does not exceed the
sum of ten dollars ($10.00) for any month, a quarterly re-
turn and remittance in lieu of the monthly return may
be made on or before the 15th day of the month next suc-
ceeding the end of the quarter for which the tax is due.

Provided further that when any taxpayer whose lia-
bility for taxes exceeds $10.00 per month, desires to make
quarterly returns in lieu of the monthly returns herein
required, if such taxpayer shall make application to the
Commissioner for such privilege, the Commissioner may
grant such privilege upon the execution and filing by the
taxpayer with the Commissioner a good and solvent bond
with some surety company authorized to do business in
Mississippi as surety thereon in an amount double the ag-

A47

—— een "7

gregate tax paid by such taxpayer for any previous three
months period within the last calendar year. Said bond
to be conditioned for the prompt payment of such taxes
as may be due for each such quarterly period.

Provided, however, that any person taxable under this
act, having cash and credit sales, may report such cash
and credit sales separately, and upon making application
therefor may obtain from the Commissioner an extension
of time for the payment of taxes due on account of such
credit sales. Such extension shall be granted by the Com-
missioner, under such rules and regulations as the Com-
missioner may prescribe. When such extension is granted,
the taxpayer shall thereafter include in each monthly re-
port all collections made during the month next preceding,
and shall pay the taxes due thereon at the time of filing
such report.

Provided, however, that any person taxable under this
act, having cash and credit Sales, and who reports such
credit sales before collection thereof has been made, may
take credit on subsequent returns or reports for bad debts
actually charged off, if such amounts charged off have
previously been included in gross income or gross pro-
ceeds of sales, as the case may be, and the tax paid thereon.
Provided, however, that any amounts subsequently col-
lected on accounts that have been charged off as bad debts,
shall be included in the subsequent reports.

Provided, however, that in cases where an extension
of time for the payment of taxes due on account of such
credit sales shall be granted by the Commissioner and the
taxpayer shall thereafter discontinue the business in re-
lation to which such extension of time shall have been
granted, such taxpayer shall be required to file with the
Commissioner within ten days, or such further time as
the Commissioner may direct, from the date of the dis-

A48

continuance of such business, a special report showing the
amounts of such credit sales which have not been included
in determining the measure of the tax theretofore paid and
such other information with reference to such credit sales
as the Commissioner may require; and the Commissioner
shall thereupon investigate the fact with reference to such
credit sales and the condition of the accounts therefor, and
shall determine, from the best evidence available, the value
of all notes, open accounts or other evidence of debt aris-
ing out of such credit sales; and the value of such notes,
open accounts and other evidence of debt, as thus deter-
mined by the Commissioner, shall be used in determin-
ing the amount of the tax for which such taxpayer shall
be deemed to be liable on account of such credit sales.
When the amount of such tax shall have been ascertained
in the manner herein provided the taxpayer shall be re-
quired to pay the same within ten days or such further
time as the Commissioner may allow, notwithstanding the
fact that such notes or accounts may still remain uncol-
lected.

The monthly, quarterly, and annual returns required
under this act shall be made upon forms to be prescribed
by the Commissioner.

The Commissioner for good cause may extend the time
for making any return required under the provisions of
this act, and may grant such reasonable additional time
within which to make such return as he may deem proper,
but the time for filing any such return shall not be ex-
tended beyond the 15th of the month next succeeding the
regular due date of such return.

Section 6. (10118) Annual Returns, When, How Made
—On or before thirty days after the end of the tax year,
each person liable for the payment of a privilege tax un-

i
t
;
;

aa

der Section 2 and succeeding sections of this act shall make
a return showing the gross proceeds of sales, or gross in-
come of business, and compute the amount of tax charge-
able against him in accordance with the provisions of this
act, and deduct the amount of monthly or quarterly pay-
ments (as hereinbefore provided), and transmit with his
report a remittance in the form required by Section 13 of
this act covering the residue of the tax chargeable against
him to the office of the Commissioner; such return shall
be verified by the oath of the taxpayer, if made by an in-
dividual, or by the oath of the president, vice-president,
secretary or treasurer of a corporation, if made on behalf
of a corporation. If made on behalf of a partnership, joint
adventure, association, trust, estate, or in any other group
or combination acting as a unit, any individual delegated
by such firm, co-partnership, joint adventure, association,
trust, estate, or any other group or combination acting as
a unit shall make the oath on behalf of the taxpayer. If
for any reason it is not practicable for the individual tax-
payer to make the oath, the same may be made by any duly
authorized agent. The Commissioner for good cause shown
may extend the time for making the annual return on the
application of any taxpayer and may grant such reasonable
additional time within which to make the same as May,
by him, be deemed advisable.

A49

Section 7. (10119) Commissioner to Correct Error—
As soon as practicable after the return is filed the Com-
missioner shall examine it; if it then appears that the cor-
rect amount of tax is greater or less than that shown in
the return, the tax shall be recomputed. If the amount
already paid exceeds that which should have been paid on
the basis of the tax so recomputed, the excess so paid shall
be credited against the subsequent liability; and if the
amount already paid exceeds the correct amount of the tax,

A50

and the taxpayer has discontinued business, and there is no
subsequent liability upon which such excess may be cred-
ited, or if the amount of the excess so paid shall exceed
the subsequent liability for a period of twelve months, the
excess shall be refunded to the taxpayer in accordance
with the provisions of this act.

If the amount already paid is less than the amount
which should have been paid, the difference to the extent
not covered by any credits under this act shall be paid
upon notice and demand by the Commissioner.

If any part of the deficiency is due to negligence or
intentional disregard of authorized rules and regulations
with knowledge thereof but without intent to defraud,
there may be added as damages ten per cent for the first
offense, twenty-five per cent for the second offense, and
fifty per cent for any subsequent offense of the total
amount of the deficiency in the tax, and said damages
shall become due and payable upon notice and demand
by the Commissioner.

If any part of the deficiency is due to fraud with in-
tent to evade the tax, then there shall be added as dam-
ages twenty-five per cent for the first offense and fifty
per cent for any subsequent offenses of the total amount
of the deficiency in the tax, and in such a case the whole
amount of tax unpaid, including charges so added, shall
become due and payable upon notice and demand by the
Commissioner and an aditional one per centum per month
on the tax may be added from the date such tax was due
until paid.

The amount of taxes due under any return made here-
under or any return made or due under this act or any
amendments thereto shall be determined and assessed
within three years from the date such return was filed,

—

j and no suit or other proceedings for the collection of any
taxes due shall be begun after the expiration of three years
from the date such return was filed; but nothing herein
i shall affect or defeat any claim, assessment, suit, appeal,
right or cause of action for taxes due prior to the adop-
tion of this act, whether the assessment, suit, appeal or
claim therefor shall have been begun before its adoption
or shall hereafter be begun; provided, that in the case of
a false or fraudulent return with the intent to evade tax
or a failure to file a required return, the amount of tax
due may be determined, assessed and collected, and suit
or proceedings for the collection of such an amount may
be begun at any time after it becomes due.

A51

A taxpayer may apply to the Commissioner for re-
vision of the tax assessed against him, or paid by him, at
any time within three years from the date of the assess-
ment, or from the time of filing of the return. Unless a
claim for credit or refund is filed by the taxpayer within
three years from the time the return was filed, or assess-
ment made, no credit or refund shall be allowed.

Section 8. (10120) Taxpayer Must Keep Records—
Failure to Make Returns—Duty and Power of Commis-
sioner—It shall be the duty of every person engaging or
continuing, in this state, in any business for which a priv-
ilege tax is imposed by this act to keep and preserve ade-
quate records of the gross income, gross receipts or gross
proceeds of sales of such business and such other books or
accounts as may be necessary to determine the amount
of tax for which he is liable, under the provisions of this
act, which said records shall be adequate in substance
rather than form, to conform to the requirements and reg-
ulations promulgated by the Commissioner; and all of such
records shall be written in the English language. And it
sha’! be the duty of every such person to keep and pre-

A52

serve, for a period of two years, all invoices of goods and
merchandise purchased or sold for resale, and all such
books, invoices and other records shall be open for exam-
ination at any time, by the Commissioner or his duly auth-
orized agent.

The records provided for in this section shall be kept
at the taxpayer’s principal place of business within this
state, and failure to keep such records shall subject the
person so failing to all the penalties of this act.

If adequate records of the gross income, gross receipts
or gross proceeds of sales are not maintained or invoices
preserved as provided herein, or if an audit of the records
of a taxpayer discloses that additional taxes are due and
unpaid the Commissioner may make additional returns
‘and assessments from the best information available, and
shall give notice by registered mail of such returns and
assessments, and such returns and assessments shall be
prima facie correct for the purpose of this act, and the
amount of tax shown due thereby shall be a lien against all
the property of the taxpayer until discharged by payment
and if such tax be paid within ten days after notice by the
Commissioner, then there shall be added ten per centum
as damages for the first offense, twenty-five per cent for
the second offense and fifty per cent for any subsequent
offense, and interest at the rate of one per centum per
month from the time such tax was due until paid. If pay-
ment be not made within ten days after demand therefor
by the Commissioner, there may be added twenty-five per-
cent for the first offense and fifty per cent for subsequent
offenses as damages together with interest at the rate of
one per centum per month on the tax from such time such
tax was due. Provided, however, in the event such tax-
payer, within ten days from the date of such notice, shall
by petition in writing state that said return is incorrect, the

os Ea

Mes SLs

A53

Commissioner shall grant a hearing on such petition and
investigate that question fully before proceeding further
under this section.

If no return is made by any taxpayer required to make
returns as provided herein, the Commissioner shall give
written notice by registered mail to such taxpayer to make
such returns within ten days from the date of such notice
and if such taxpayer shall fail or refuse to make such re-
turns as he may be required to make in such notice, then
such returns shall be made by the Commissioner from the
best information available, and such returns shall be prima
facie correct for the purposes of this act, and the amount
of tax shown due thereby shall be a lien against
all the property of the taxpayer from the date the amount
thereof is determined to be due until discharged by pay-
ment, and if such tax be paid within ten days after notice
by the Commissioner, then there shall be added ten per
centum as damages for the first offense, twenty-five per
cent for the second offense, and fifty per cent for any
subsequent offense, and interest at the rate of one per
centum per month from the time such tax was due until
paid. If payment be not made within ten days after de-
mand therefor by the Commissioner there shall be added
twenty-five per cent for the first offense and fifty per cent
for subsequent offenses, as damages together with interest
at the rate of one per centum on the tax from the time
such tax was due. Provided, however, in the event such
taxpayer in answer to said notice from the Commissioner
shall state by petition in writing that he is not required
under the law to make such returns, the Commissioner
shall grant a hearing on such petition and investigate that
question fully before proceeding further under this section.

Section 9. (10121) Tax Shall Be Lien—The tax im-
posed by this act shall be a lien upon the property of any

A54

person subject to the provisions hereof, who shall sell out
his business or stocks of goods, or shall quit business, and
such person shall be required to make out the return
provided for under Section 6 within ten days after the
date he sold out his busimess or stock of goods, or quit busi-
ness, and pay the tax imposed by Section 2-c, and the
purchaser or his successor in business shall be required
to withhold sufficient of the purchase money to cover the
amount of said taxes due and unpaid until such time as
the former owner shall produce a receipt from the Com-
missioner showing that the taxes have been paid, or a cer-
tificate that no taxes are due. If the purchaser of a busi-
ness or stock of goods shall fail to withhold purchase
money as above provided and the taxes shall be due and
unpaid after the ten days period allowed, he shall be per-
sonally liable for the payment of the taxes accrued and
unpaid on account of the operation of the business by the
former owner. And the property sold or transferred may
be proceeded against in the hands of the purchaser or
transferee as though no sale or transfer had been made;
and where premises are equipped with permanent fixtures
so that no other commodity than that sold by the owner
of said premises can be so'd or handled thereat; and the
nature of the commodity sold is such that an amount
thereof sufficient to cover the tax accrued for one month
is not kept on hand at any one time; and such premises
are leased or rented by the owner to persons who do not
pay all taxes accrued on account of the business conducted
on such premises when due; then such place of business,
including fixtures used in such business, shall be liable
to seizure and sale under a warrant issued by the Com-
missioner, when such taxes accrued upon business con-

ducted upon such premises becomes due and unpaid.

Section 10. (10122) Aggrieved Person May File Peti-
tion. If any person having made a return and paid taxes

thereon feels aggrieved by the additional assessment made
Re upon him for any year by the Commissioner he may ap-
ply to the Tax Commission by petition, in writing, within
ten days after notice is mailed to him, for a hearing and
a correction of the amount of the tax assessed upon him
by the Commissioner, in which petition he shall set forth
the reasons why such hearing should be granted and the
amount in which such tax should be reduced. The Tax
Commission shall promptly consider such petition, and
shall grant such hearing notifying the petitioner of the
time and place fixed for such hearing. After such hear-
| ing, the Tax Commission may make such order in the mat-
ter as may appear to it just and lawful, and shall furnish
a copy of such order to the petitioner. Any person im-
properly charged with any tax and required to pay the
same, may recover the amount paid, together with interest,
in any proper action or suit against the Commissioner,
and the Circuit Court of the county in which the taxpayer
resides or is located shall have original jurisdiction of

any action to recover any tax improperly collected.

A55

Provided, however, that in any such suit, the plaintiff
must allege and prove that he alone bore the burden of
the tax sued for, and did not directly or indirectly collect
the tax from his customers. It being the declared pur-
pose of this section to make certain that any taxes re-
funded will go to the one who has borne the burden of the
illegal tax, and therefore is entitled in justice and good
conscience to such relief, and is therefore the real party
in interest. It shall not be necessary for the taxpayer to
protest against the payment of the tax or to make any de-
mand to have the same refunded in order to maintain
such suit. In any suit to recover taxes paid or to collect
taxes the court shall adjudge costs to such extent and in
such manner as may be deemed equitable.

.

A56

Provided, further, that all suits to recover taxes un-
der this section, shall be filed within three years next
after the time of payment of such taxes.

Either party to such suit shall have the right to appeal
to the Supreme Court of Mississippi as now provided by
law. In the event a final judgment is rendered in favor
of the taxpayer in a suit to recover illegal taxes, then it
shall be the duty of the State Auditor, upon receipt of a
certified copy of such final judgment to issue a warrant
directed to the State Treasurer in favor of such taxpayer
to pay such judgment, interest and costs. It shall be the
duty of the State Treasurer to honor such warrant and
pay such judgment out of any funds in the state treasury.

No injunction shall be awarded by any court or judge
to restrain the collection of the taxes imposed by this act,
or to restrain the enforcement of this act. The provisions
of Section 420, Code of 1930, shall not apply to taxes im-
posed by this act.

It shall be the duty of an attorney for the commission
or Commissioner or the Attorney General to represent the
commission, the Commissioner, or any agent or employee,
or the State of Mississippi in all legal matters relating to
the enforcement, construction, application and administra-
tion of this act, and in any litigation which may be in-
stituted by the commission or Commissioner and in which
they or either of them may become involved, upon the
order and under the direction of the Commissioners.

Section 11. (10123) Warrant for Collection of Tax.—
If any tax imposed or any portion of such tax be not paid
within ten days after the same has been determined to be
due by the Commissioner, and the taxpayer has been
given ten days written notice by registered mail of such
determination of the taxes due, the Commissioner may

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7
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A57

issue a warrant under official seal directed to the sheriff
of any county of the state commanding him to levy upon
and sell the real and personal property of the person own-
ing the same found within his county, for the payment of
the amount thereof, with damages, to the amount of ten
per cent of the tax, in addition to the penalties imposed
for failure to make a proper return, or for making a fraud-
ulent return and interest, and cost of executing and en-
rolling the warrant, and to return such warrant to the
Commissioner and pay to him the money collected by vir-
tue thereof by a time to be therein specified not more than
sixty days from the date of the warrant. The sheriff shall
within five days after the receipt of the warrant, file with
the circuit clerk of his county a copy thereof, and there-
upon the circuit clerk shall enter in the judgment roll in
the column for judgment debtors, the name of the tax-
payer mentioned in the warrant, and in appropriate col-
umn, the amount of the tax, or portion thereof and dam-
ages for which the warrant is issued; and the day w! en
such copy is filed; and thereupon the amount of such war-
rants so docketed shall be and remain a lien upon the
title to and interest in real and personal property, includ-
ing choses in action, except negotiable instruments not
past due, of the person against whom it is issued in the
Same manner as a judgment duly enrolled in the office of
such clerk. The sheriff thereupon shall levy upon any
property of the taxpayer, including negotiable instru-
ments, in all respects, with like effect, and in the manner
prescribed by law in respect to executions issued against
Property ‘upon judgments.or attachment proceedings, of
@ court of record and the remedies by garnishment shall
apply and the officer shall be entitled to the same fees for
his services in executing the warrant as now allowed by
law for like Services, to be collected in the same manner
as now provided by law for like services.

A58 ‘

(10124) Jeopardy Assessment and Warrant.—If the !
Commissioner has just cause to believe and believes the :
collection of taxes due by any taxpayer will be jeopard- |
ized by delay, he may assess such taxes immediately,
together with interest or other amounts provided by this
act, and may immediately issue a jeopardy warrant under
official seal directed to the sheriff of any county of this
state. The sheriff shall immediately upon receipt of the
warrant file with the circuit clerk of his county a copy
thereof, and thereafter both the circuit clerk and the
sheriff shall proceed in accordance with the provisions of
paragraph 1 of this section.

If any sheriff shall fail to execute, file with the cir-
cuit clerk of the county for enrollment on the judgment
roll, and return any warrant directed to him as herein
provided on the return day thereof, the State of Missis-
sippi shall be entitled to recover judgment against the
sheriff and the sureties on his official bond for the amount
of the warrant, and all costs, with lawful interest thereon
until paid, together with ten per cent of the full amount
of judgment for damages, to be recovered by a suit against
the sheriff and his sureties by the Attorney General at
the request of the Commissioner.

er

Se Re ee ee Oe Tee

The tax due and unpaid under the provisions of this
act shall constitute a debt due the state and it shall con-
stitute a lien upon all the property of the taxpayer, and
the same may be collected by an action in debt or other
appropriate judicial proceeding, which remedies shall be
in addition to all other existing remedies.

Pe ee eee |

Any person liable for a tax under the provisions of
this act on account of engaging or continuing in this state
in any business who failed to obtain a license from the
Commissioner as provided in Section 3 of this act, or after

A59

such license has been revoked, or who fails to make his
returns for taxation as provided in Section 6 of this act,
or who fails to keep adequate records and invoices pro-
vided by Section 8 of this act, or fails or refuses to per-
mit inspection of such records, or who fails to pay any
taxes when due under the provisions of this act, shall for-
feit his rights to do business in this state until he com-
plies with all the provisions of this act and until he en-
ters into a bond, with sureties, to be approved by the Com-
missioner, in an amount not to exceed all taxes estimated
to become due by said person under the provisions of
this act for any three months period, conditioned to com-
ply with the provisions of this act, and pay all taxes leg-
ally due by him, and it shall be the duty of the Attorney
General, when he shall have received notice from the
Commissioner that any person is engaged in or continuing
in this state in any business without obtaining such li-
cense, or after such license has been revoked, or without
keeping and allowing inspection of all records required
by this act, or without making such return, or returns, and
without paying all taxes due by him under the provisions
of this act, to proceed by injunction to prevent the con-
tinuance of said business, and any temporary injunction
enjoining the continuance of such business shall be granted
without notice by any judge or chancellor now authorized
to grant injunctions,

Section 12. (10125) Calendar or Fiscal Year Annual
Return—The assessment of taxes herein made and the
returns required therefor shall be for the year ending on
the 31st day of December; provided, however, that if the
taxpayer in transacting his business, keeps the books re-
flecting the same on a basis other than the calendar year,
he may, with the assent of the Commissioner, make his
annual returns and pay taxes for the year covering his

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A60 3

accounting period, as shown by the method of keeping the |
books of his business. ‘

Section 13. (10126) Is Additional Tax.—The tax im-
posed by this act shall be in addition to all other licenses
and taxes levied by law as a condition precedent to en-
gaging in any business taxable hereunder, except as in
this act otherwise specifically provided. But no municipal-
ity or levee district shall be authorized to levy any tax by
virtue of the provisions of this act.

Remittances—How Made. All remittances of taxes
imposed by this act shall be made to the Commissioner by
bank draft, check, cashier’s check, money order, or money,
who shall issue his receipts therefor to the taxpayer, when
requested, and shal' deposit all moneys received in some
bank or banks in this state, qualified as a state depository;
provided, no remittance other than cash shall be final dis-
charge of liability for the tax herein assessed and levied
unless and until it has been paid in cash to the Commis-
sioner.

Section 13-A. (10127) Settlement With Treasury. On
or before the fifteenth day of each month the amount re-
ceived from taxes levied under the provisions of this act
during the preceding month shall be paid and distributed
as follows:

(a) One-tenth (1/10) of the total amount of taxes
collected under the provisions of this act during the pre-
ceding month shall be deposited in the state treasury to
the credit of a special fund designated as the “Division of
State Aid Road Construction” created by Senate Bill No.
1 of the extraordinary session of the legislature of 149. | —
It being the purpose of this act to pay into said special
fund the approximate amount of sales taxes collected on
the sales of automobiles, trucks and tractors.

A61

(b) An additional amount which shall be equivalent
to one-half cent (14¢) per gallon upon the total net gal-
lonage of gasoline (or motor vehicle fuel other than gaso-
line) upon which the state gasoline or motor vehicle fuel
tax is paid during the preceding month as shown by re-
ports filed with the motor vehicle comptroller as required
by Section 7, Chapter 264, Laws of 1946, as now or here-
after amended, shall likewise be deposited in the state
treasury to the credit of said special fund designated as
the “Division of State Aid Road Construction.” For the
purpose of this subsection the motor vehicle comptroller
shall furnish the commissioner with a monthly certificate
showing the total net gallonage of gasoline or other motor
vehicle fuel upon which the state tax was paid during the
preceding month, which certificate shall be furnished on
or before the fifth day of each month.

The term ‘“‘net gallonage” as used in this subsection
shall mean the total number of gallons of gasoline or other
motor fuel reported to the Motor Vehicle Comptroller dur-
ing the preceding month as being liable for the state tax
less the number of gallons upon which the state tax is
refunded in whole or in part during such month, either by
direct refund or by credit on tax liability.

(c) The remainder of the amounts collected under the
provisions of this act shall be paid into the state treasury
to the credit of the general fund.

From said amount of taxes paid into said special fund
under subsections (a) and (b) hereof, there shall first be
deducted and paid the amounts necessary to pay the ex-
penses of the Division of State Aid Road Construction,
such expenses not to exceed $50,000.00 per annum.

From the remainder of said funds there shall first be
allocated to each county monthly the sum of eight hundred

COE Re Es Cod <a

A62

thirty-three dollars and thirty-three cents ($833.33) and
the balance remaining shall be allocated to the several
counties in the following percentages:

County Per Cent County Per Cent
Adams ; — 0.89 Lowndes 0.96
Alcorn 0.94 Madison . 1.47
Amite _. 1.71 Marion 1.38
Attala i ae Marshall 0.92
Benton 0.84 Monroe 1.03
Calhoun es Montgomery 1.08
Carroll , 1.29 Neoshoba 1.62
Chickasaw ..- 0.97 Newton . 1.22
Choctaw _. 0.98 Noxubee 1.36
Claiborne 1.03 Oktibbeha _. 0.4
Clarke. ee Clay 0.87
Hinds ey Coahoma 1.46
Holmes _- ince Copiah .................. 1.90
Humphreys .... 0.93 Covington 1.12
Issaquena _.. 0.45 DeSoto 0.87
Itawamba — 1.36 Forrest 1.15
Jackson ................. 0.99 Franklin 1.71
ioe ........... 1 George 0.86
Jefferson _.. 0.95 Greene 1.77
Jefferson Davis 0.85 Grenada 0.85
Jones . 1.79 Hancock 0.77
Kemper ...... 1.64 Harrison . . 1.45
Lafayette . 1.22 Panola 1.55
Lamar 0.93 Pearl River . 1.30
Lauderdale ~ 1.80 Perry 1.23
Lawrence. 1.12 Pike . 1.30
Leake pcaoona 1.25 Pontotoc 0.80
ee Prentiss 1.14
Leflore _.. 1.29 Quitman 0.85
Lincoln ...... 1.86 Rankin ...... : 1.46

A63

County PerCent County Per Cent
SE 1.20 Vaion 1.03
Sharkey _... (0.63 Walthall 1.00
Simpson 1.41 Warren... 0.85
es Washington .._ 1.62
mom ...... OS Wayne. 1.76
Sunflower _... 1.77 Webster sd.
Tallahatchie ss: 1.27 Wilkinson _____—s— 0.96
Tate etietes 0.72 Winston _. 1.25
Tippah - 1.24 Yalobusha - 0.75
Tishomingo . 0.98 Yazoo ___. < oan
Tunica _. . 1.04

Section 13-b. (10128) Auditor to Check Books—At
the end of each month the Auditor Shall carefully check
the books and records of the Commissioner and his accounts
with the bank or banks and shall verify the amounts paid
or to be paid into the state treasury. Any duty herein re-
quired of the Auditor may be performed by an inspector
employed under the provisions of Section 3747 of the Mis-
sissippi Code of 1930.

Section 13-c. (10129) Records—The Commissioner
shall keep full and accurate records of all moneys received
by him, and how disbursed; and shall preserve all returns
filed with him under sections 5 and 6 of this act for a pe-
riod of three years.

Section 14. (10130) Information In Files Not To Be
Divulged.—Unless in accordance with the judicial order or
as herein provided, the members of the State Tax Com-
mission, its agents, clerks or Stenographers, shall not di-
vulge the gross income, gross proceeds of sales or the
amount of tax paid by any person as shown by the re-
ports filed under the provisions of Sections 5 and 6 of
this act, except to members and employees of the State

A64

Tax Commission and the income tax department thereof,
for the purpose of checking, comparing and correcting re-
turns, or to the Governor or to the Attorney General, or
any other legal representative of the State in any action
in respect to the amount of tax due under the provisions
of this act.

Section 14-a. (10131) Duty of Secretary of State—
The Secretary of State shall withhold the issuance of any
certificate of dissolution or withdrawal in the case of any
corporation organized under the laws of this state or or-
ganized under the laws of another state and admitted to do
business in this state until the receipt of a notice from
the Commissioner to the effect that the tax levied under
this act against any such corporation has been paid, if
any such corporation is a taxpayer under the law, or until
he shall be notified by the Commissioner that the ap-
plicant is not subject to pay a tax hereunder.

Section 15. (10132) Unlawful to Refuse to Make Re-
turns—Penalty.—It shall be unlawful for any person to
engage or continue in any business for which a tax is
imposed by this act without procuring a license as re-
quired by Section 3 of Chapter 119, Laws of 1934, as
amended herein, or after such license has been revoked, or
who shall fail or refuse to make the return provided to be
made in Sections 5 and 6 of this act or to make any false
or fraudulent return or false statement in any return,
with intent to defraud the state or to evade the payment
of the tax or any part thereof, imposed by this act; or for
any person to aid or abet another in any attempt to evade
the payment of the tax, or any part thereof, imposed by
this act; or for the president, vice-president, secretary or
treasurer of any company to make or permit to be made
for any company or association any false return, or any

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A65

false statement in any return required by this act with
the intent to evade the payment of any tax hereunder;
or for any person to fail or refuse to permit the examina-
tion of any book, paper, account, record, or other data
by the Commissioner, or his duly appointed agent, as re-
quired by this act; or to fail or refuse to permit the in-
spection or appraisal of any property by the Commissioner
or his duly appointed agent, or to refuse to offer testi-
mony or produce any record as required by this act; or
for any person using the public roads and highways of
this state for the transportation of merchandise for sale,
other than a common carrier having a permanent office
in this state where proper records of merchandise trans-
ported are kept, and produced for inspection by the Com-
missioner or his agents, to fail to have in his or her pos-
session at all times while such merchandise is being trans-
ported, and allow inspection of, the invoices or sales
tickets required by Section 18 of this act. Any person
violating any of the provisions of this act shall be guilty
of a misdemeanor and on conviction thereof shall be fined
not more than five hundred dollars ( $500.00) or imprisoned
not exceeding six months in the county jail, or punished
by both such fine and imprisonment, at the discretion of
the court within the limitations aforesaid. In addition to
the foregoing penalties, any person who shall knowingly
Swear to or verify any false or fraudulent Statement, with
the intent aforesaid shall be guilty of the offense of per-
jury and, on conviction thereof, shall be punished in the
manner provided by law. Any company for which false
return, or return containing a false statement as aforesaid
shall be made, shall be guilty of a misdemeanor and may
be punished by a fine of not more than five hundred dol-
lars ($500.00).

A66

Section 16. (10133) Administration of Act Vested in
Chairman of the State Tax Commission. The administra-
tion of this act is vested in and shall be exercised by the
chairman of the State Tax Commission, except as other-
wise herein provided, and the enforcement of any of the
provisions of this act in any of the courts of the state shall
be under the exclusive jurisdiction of the chairman of the
State Tax Commission who may require the assistance of
and act through the Attorney General, prosecuting attor-
ney of any county, or any district attorney, or any at-
torney for the commission, and may with the assent of the
Governor, employ special counsel in any county to aid the
prosecuting attorney, the compensation of whom shall be
fixed by and paid only upon the approval of the Governor;
but the Attorney General, district attorney or prosecuting
attorney of any county shall receive no fees or compensa-
tion for services rendered in enforcing this act in addition
to the salary paid to such officer. The chairman of the
State Tax Commission shall appoint, as needed, such depu-
ties, agents, clerks and stenographers as authorized by
law, who shall serve under him and shall perform such
duties as may be required by the Commissioner, including
the signing of notices, warrants and such other documents
as may be specifically designated by the Commissioner,
not inconsistent with this act, and they are hereby au-
thorized to act for the Commissioner, as he may prescribe
and as provided herein. Each such agent shall execute a
bond in the sum of five thousand dollars ($5,000.00) for the
faithful discharge of his duties. All of such agents, clerks
and stenographers may be removed by the Chairman of
the State Tax Commission for cause of which the Com-
missioner shall be the final judge.

In case of violation of the provisions of this act the
Commissioner may decline to prosecute for the first of-

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A67

fense, if in his judgment such violation is not wilful or
flagrant.

Section 17. (10134) Commissioner to Make Regula-
tions—The Commissioner shall from time to time promul-
gate such rules and regulations not inconsistent with this
act for making returns and for the ascertainment, assess-
ment and collection of the tax imposed hereunder as he
may deem necessary to enforce its provisions; and upon
request shall furnish any taxpayer with a copy of such
rules and regulations.

All forms, necessary for the enforcement of this act,
shall be prescribed, printed and furnished by the Com-
missioner.

The Commissioner may adopt rules and regulations
providing for the issuance of permits to manufacturers to
purchase tangible personal property without the payment
to the vendor of the Sales tax and/or Use tax, and pro-
viding for such manufacturer to report and pay such tax
directly to the Commissioner, in instances where the Com-
missioner determines that such provisions will facilitate
and expedite the collection of the tax at the proper rates
which may be due on such purchases by the manufacturer.

Section 18. (10135) Commissioner or Agent May
Examine Books, Etc.—The Commissioner or his authorized
agent may examine any books, papers, records, or other
data bearing upon the correctness of any return, or all re-
turns, or for the purpose of making a return, or returns,
where none has been made as required by Sections 5 and 6
of this act, including the records of any common carrier,
bank, wholesale or retail dealer in any kind of merchan-
dise, doing business in this State, whether in regard to his
own or another’s return, and may require the attendance
of any person and take his testimony with respect to any

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A68

such matter, with power to administer oaths to such per-
son or persons. Any person using the public roads and
highways of this state for the transportation of merchan-
dise of any kind to be sold in this state, whether such per-
son is operating as a common carrier, contract carrier or
operating a private vehicle, while so engaged in the trans-
portation of such merchandise, must have in his or her
possession while so engaged, invoices or delivery tickets
correctly disclosing the nature and quantity of such mer-
chandise, the consignor and consignee of each and every
item of such merchandise being transported. Provided,
that common carriers operating under the supervision of the
Interstate Commerce Commission, or the Mississippi Su-
pervisors of Common Carriers, and having and maintain-
‘ing a permanent office or place of business in this state,
where correct and complete records of all merchandise
transported into this state are kept, shall not be required
to have in the immediate possession of the person in charge
of the vehicle in which such merchandise is being trans-
ported, such invoices or delivery tickets, but the records
of such common carriers shall be open to the inspection
of the Commissioner, or his authorized agents, at all rea-
sonable times, for the purpose of obtaining information
with reference to all merchandise transported into the
state for sale. In the case of any vehicle engaged in the
transportation of merchandise for sale, not belonging to
nor operated by common carriers so supervised, nor keep-
ing complete records in this state open to inspection by the
Commissioner, the Commissioner or his authorized repre- _
sentatives or agents, may examine any invoices or sales
tickets carried by the person in charge of such vehicle, and |
compare same with the merchandise being transported, |
for the purpose of ascertaining whether or not the provi-
sions of law are being complied with, the character and |
quantity of merchandise being so transported, and the con-

A69

signor and consignee thereof, in aid of the proper admin-
istration of this act. The absence of such invoices or de-
livery or sales tickets indicating to whom said merchan-
dise belongs, or is to be delivered, in the hands of such
person so engaged in transporting of merchandise, shall be
prima facie evidence that such person is so transporting
such merchandise in violation of this act and liable to a
penalty of $25.00 for each such offense, which said penalty
may be assessed and collected by the Commissioner or his
duly authorized agent, and subject to all the provisions of
this act. If any person summoned as a witness shall fail
to obey any summons to appear before the Commissioner
or his authorized agent, or shall refuse to testify or answer
any material question or to produce any book, record,
paper or other data when. required to do so, such failure
or refusal shall be reported to the Attorney General, the
district attorney or county attorney, who shall thereupon
institute proceedings in the circuit court of the county
where such witness resides to compel obedience to any
summons of the Commissioner, or his authorized agent.
Said proceedings to be by petition for citation to such per-
son refusing to obey such summons, to show cause why
such person should not be required to obey such sum-
mons; and the circuit judge of the district may hear such
petition in term time or vacation upon two days’ notice to
the person sought to be cited; and the circuit judge may
enter such order as he may deem proper, and punish any
failure to comply with such order as for any other con-
tempt of said court. Officers who serve summonses or sub-
poenas, and witnesses attending, shall receive like compen-
sation as officers and witnesses in the justice of the peace
courts; to be paid from the proper appropriation for the
administration of this act.

se - .

A70

Section 19. (10137) Excess Payment May Be Re-
funded—If upon examination of any monthly or quarterly
return made under this act, it appears that an amount of
tax has been paid in excess of that properly due, then the
amount in excess shall be credited against any tax or in-
stallment thereof then due from the taxpayer, under any
subsequent monthly or quarterly return; and if upon ex-
amination of any annual return it appears that an amount
of tax has been paid in excess of that properly due, such
excess may be credited upon any amount due under any
subsequent return of such taxpayer, during any succeeding
years, or in the event that the taxpayer does not continue
in business and has no subsequent liability for such tax, or
prefers to obtain a refund of such excessive payment of
taxes before any subsequent liability for such taxes ac-
crues, such overpayment may be refunded as provided by
Section 3276 of the Mississippi Code of 1930; and the Com-
missioner shall issue to such taxpayer, upon request, a
certificate of overpayment, which certificate shall be suf-
ficient evidence to support a claim for the refund of such
amount of overpayment. Any taxes recovered by suit by
any taxpayer may be refunded in like manner, but such
claim shall be accompanied by a copy of the order, judg-
ment or decree of the court in which such recovery was
had by the taxpayer.

Section 20. (10138) Prior Rights or Actions Not Af-
fected by This Act—Nothing in this act shall affect or
defeat any claim, assessment, appeal, suit, right or cause
of action for taxes due, under the Emergency Revenue
Act of 1932, or the Revenue Act of 1930, prior to the date
on which this act becomes effective, whether such assess-
ments, appeal, suits, claim or action shall have been begun
before the date on which this act becomes effective, or shall
thereafter be begun; and the sectio

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385610_0801%3A2. Public record. Not legal advice.