135 F.2d 456 affirmed.
Certiorari, 320 U.S. 722, to review the affirmance of a judgment
for the Government, 48 F. Supp. 453, in a suit brought by the
taxpayer for a tax refund.
MR. JUSTICE BLACK delivered the opinion of the Court.
This is a suit for refund of a portion of the manufacturers'
excise tax on tires paid by the Pacific Goodrich Rubber Company,
petitioner's wholly owned subsidiary, pursuant to Section 602 of
the Revenue Act of 1932. [
Footnote
1] The District Court's judgment was for the Government, 48 F.
Supp. 453, and the Circuit Court of Appeals affirmed.
Page 321 U. S. 127
135 F.2d 456. Certiorari was granted on a petition which alleged
that the Circuit Court's affirmance rested on its erroneous
decision of procedural questions. 320 U.S. 722. We were asked in
the petition to pass upon these issues: (1) whether there was a
material variance between the claim which had been denied by the
Commissioner and that sued upon in the District Court.
See
R.S. § 3226, as amended;
United States v. Andrews,
302 U. S. 517. (2)
Whether, if there was such a variance, it had been, or could have
been, waived by the Government in the proceedings in the District
Court.
See United States v. Garbutt Oil Co., 302 U.
S. 528. Argument at the bar and in the briefs of both
parties was not, however, limited to these narrow procedural
problems, but also dealt with the merits of the claim for refund.
This argument has disclosed that, regardless of the procedural
questions, the judgment in favor of the Government can be supported
on the ground that, under the controlling tax statutes,
petitioner's claim has no merit.
See Helvering v. Gowran,
302 U. S. 238,
302 U. S. 245.
We pass at once to a consideration of that decisive issue.
Petitioner claims it is entitled to the tax refund under
provisions of the Agricultural Adjustment Act. [
Footnote 2] Section 9(a) of that Act authorized
the imposition of a "processing tax" on the "first domestic
processing" of basic agricultural commodities, including cotton. A
proviso at the end of the section granted to manufacturers of
certain products, including tires, a deduction from the excise tax
on those products because of the payment of the "processing tax" on
the cotton used in them. [
Footnote
3] Another section
Page 321 U. S. 128
of the Act, § 16, imposed a different tax, equal to the
processing tax, on articles held in floor stocks on a certain date
for sale or other disposition which articles had been "processed
wholly or in chief value" from a basic agricultural commodity.
[
Footnote 4] This latter
section did not grant any deduction from the manufacturers' excise
tax because of the floor stocks tax. Nevertheless, when the Pacific
Goodrich Rubber Company computed its manufacturers' excise tax on
tires, it claimed deduction on account of the tax which it had paid
on floor stocks of cotton fabrics. The Commissioner disallowed the
deduction on the ground that, while deductions were allowable for
cotton on which a "processing tax" had been paid under § 9(a),
they were not allowable for cotton on which a tax on floor stocks
had been paid under § 16. This suit is based on the premise
that the deduction proviso of § 9(a) should be read into
§ 16.
Page 321 U. S. 129
Within the literal meaning of the Agricultural Adjustment Act, a
tax on floor stocks was not a "processing tax," and therefore the
proviso in § 9(a) which spoke only of a "processing tax" on
cotton was not literally applicable to the tax on floor stocks
imposed under § 16. The tax on floor stocks, though
complementing the processing tax, was not a tax upon the
"processing" of an agricultural commodity, but upon articles
already processed from such a commodity and held for sale or other
disposition on the date when the processing tax on the commodity
went into effect. Although the literal language of the Act does not
authorize the deduction which it claims, petitioner contends that
the purpose of Congress to relieve tire manufacturers from
so-called "double taxation" on cotton contained in tires will be
defeated [
Footnote 5] unless we
read into § 16 the proviso of § 9(a).
With this contention, we cannot agree. In the form in which the
Agricultural Adjustment Act was introduced in Congress, neither
§ 9(a), which authorized the "processing tax," nor § 16,
which authorized the floor stocks tax, contained a proviso granting
a deduction from the manufacturers' excise tax. [
Footnote 6] But § 16 of the bill did
provide that, under specified circumstances, taxpayers subject to
the floor stock tax would be entitled to a tax adjustment in the
nature of a refund. [
Footnote
7] When the bill was under consideration in the Senate, §
9(a) was amended by adding a proviso [
Footnote 8] which authorized an adjustment on account of
the "processing tax" in the nature of a deduction from the
manufacturers' excise tax. Thus, the bill, as finally enacted,
provided one type of adjustment for the floor stocks tax in §
16 and a different type of adjustment for the processing tax in
§ 9(a). We have been pointed to nothing in the Act as a whole
or its legislative history which shows that Congress considered
these separate methods of adjusting the two taxes insufficient to
prevent the burden of "double taxation" on the tire manufacturers
so far as Congress wanted to prevent it. We cannot say, therefore,
that the expressed intention of Congress is defeated by a literal
interpretation of the Act which declines to read the proviso of
§ 9(a) into § 16. [
Footnote 9] The judgment of the Circuit Court is
accordingly
Affirmed.
[
Footnote 1]
"Sec. 602. Tax on Tires and Inner Tubes."
"There is hereby imposed upon the following articles sold by the
manufacturer, producer, or importer, a tax at the following
rates:"
"(1) Tires wholly or in part of rubber, 2 1/4 cents a pound on
total weight. . . ."
Revenue Act of 1932, c. 209, 47 Stat. 169, 261.
[
Footnote 2]
48 Stat. 31.
[
Footnote 3]
"
Provided, That upon any article upon which a
manufacturers' sales tax is levied under the authority of the
Revenue Act of 1932 and which manufacturers' sales tax is computed
on the basis of weight, such manufacturers' sales tax shall be
computed on the basis of the weight of said finished article less
the weight of the processed cotton contained therein on which a
processing tax has been paid."
48 Stat. 36. Although the coverage of this proviso was not
specifically limited to the excise tax on tires, the proviso came
into § 9(a) as a Senate floor amendment introduced "to avoid
an unduly burdensome tax on automobile tires." 77 Cong.Rec.1959.
The view was expressed on the floor of the Senate that, except for
the proposed amendment, the cotton used in tires would be twice
taxed by weight; once by the processing tax on cotton, and again by
the excise tax on tires. 77 Cong.Rec.1960.
See Note 1 supra.
[
Footnote 4]
Section 16, entitled "Floor Stocks," read in part as
follows:
"Sec. 16. (a) Upon the sale or other disposition of any article
processed wholly or in chief value from any commodity with respect
to which a processing tax is to be levied, that, on the date the
tax first takes effect . . . with respect to the commodity, is held
for sale or other disposition . . . by any person, there shall be
made a tax adjustment as follows:"
"(1) Whenever the processing tax first takes effect, there shall
be levied . . . a tax to be paid by such person equivalent to the
amount of the processing tax which would be payable with respect to
the commodity from which processed if the processing had occurred
on such date."
48 Stat. 40.
[
Footnote 5]
See Note 3
supra.
[
Footnote 6]
Senate Hearings on H.R. 3835, 73d Cong., 1st Sess., pp. 1, 3,
6.
[
Footnote 7]
Section 16(a)(2) of the original bill, subsequently enacted
without amendment, provided that,
"Whenever the processing tax is wholly terminated, there shall
be refunded to such person a sum . . . in an amount equivalent to
the processing tax with respect to the commodity from which
processed."
In reporting on § 16, the House Committee on Agriculture
stated that "[a] corresponding refund is provided on floor stocks
when the processing tax finally terminates." H.R.Rep. No. 6, 73d
Cong., 1st Sess., 6.
[
Footnote 8]
The proviso originally introduced as an amendment to § 9(a)
authorized an adjustment to be computed by deducting from the
manufacturers' excise taxes on certain articles, including tires,
"an amount equal to the processing tax paid on the cotton contained
therein." 77 Cong.Rec.1959. Subsequently, the method of computing
the permissible deduction was altered.
See Conference
Report accompanying H.R. 3835, printed as H.R. Report No. 100, 73d
Cong., 1st Sess., 3;
see also Note 3 supra.
[
Footnote 9]
Cf. Moore, Collector of Internal Revenue v. Goodyear Tire
& Rubber Coo, 141 F.2d 328.