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Klein v. Comptroller of Treasury

Decided: February 7, 1964.

FRANK J. KLEIN & SONS, INC.
v.
COMPTROLLER OF THE TREASURY



Appeal from the Baltimore City Court; Carter, J.

Brune, C. J., and Henderson, Prescott, Horney and Sybert, JJ. Henderson, J., delivered the opinion of the Court.

Henderson

This case presents the narrow question whether under the Maryland sales and use tax law, the tax is properly collectible

upon "cash discounts" granted to the taxpayer by its suppliers for payment of the purchase price of various articles of personal property within a stated period of time.

The appellant is engaged in business as a contractor supplying and installing heating and plumbing equipment in newly constructed residential and commercial buildings within the State of Maryland. Under Code (1957), Art. 81, sec. 324 (f) (3) the appellant is the taxpayer. It is clear that title to the items in question passed to the appellant upon delivery, but that a 2% discount from the invoice price was allowed if paid within thirty days from the date of purchase.

Code (1957), Art. 81, sec. 325 provides: "For the privilege of selling certain tangible personal property at retail as defined above and for the privilege of dispensing certain selected services defined as sales at retail by § 324 (f) of this subtitle, a vendor shall collect from the purchaser a tax at the rate specified in this section on the price of each separate retail sale made in this State on or after the date of this act. The tax imposed by this section shall be paid by the purchaser and shall be computed subject to the terms and conditions of § 334 of this subtitle as follows: * * *." For a parallel provision with respect to the use tax, see sections 373 and 372. Section 327 of Art. 81 provides that "[u]pon each taxable sale or service the tax to be collected as provided in this subtitle shall be stated and charged separately * * *. The tax shall be paid by the purchaser to the vendor as trustee * * *." See also sec. 379, relating to use tax.

Code (1957), Art. 81, sec. 324 (d) defines a "sale" as "* * * any transaction whereby title or possession, or both * * * is or is to be transferred by any means whatsoever for a consideration * * *. Such consideration may be either in the form of a price in money, rights or property or by exchange or barter, and may be payable immediately, in the future, or by installments. * * *." Cf. sec. 372 (d) defining "use." Sec. 329 provides that "[t]he tax hereby imposed shall apply and be collected by the vendor from the purchaser at the time the sale is made regardless of the time when the purchase price is paid * * *." Cf. sec. 381 as to the use tax.

Code (1957), Art. 81, sec. 324 (i) defines "price" to mean:

"* * * the aggregate value in money of any thing or things paid or delivered, or promised to be paid or delivered by a purchaser to a vendor in the consummation and complete performance of a retail sale without any deduction therefrom on account of the cost of the property sold, cost of materials used, labor or service cost, or any other expense whatsoever. * * *." This section further provides that price "* * * shall be deemed to be the amount received exclusive of the tax hereby imposed provided the vendor shall establish to the satisfaction of the Comptroller that the tax was added to the price. * * *." Cf. sec. 372 (g) as to the use tax.

Pursuant to the rule-making authority granted by sec. 365 (a), the Comptroller in 1947, when the Act was first adopted, promulgated Rule 16, reading in pertinent part as follows: "Where tangible personal property is sold subject to a cash discount, the tax applies to the total selling price of the property without any allowance for said cash discount, except in cases of cash sales, where the discount is deducted from the selling price and the net amount due thereon is paid at the time of the sale."

The appellant contends that the rule is invalid, in that it seeks to impose a tax not levied by the Legislature, citing Comptroller v. Rockhill, Inc., 205 Md. 226. We recognize in that case, however, that an interpretation placed upon the Act is entitled to great weight as an administrative interpretation acquiesced in by the Legislature. Cf. Liss v. Goodman, 224 Md. 173. In the ...


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