Appeal from the Circuit Court for Wicomico County; Taylor, J.
Brune, C. J., and Henderson, Hammond, Prescott and Marbury, JJ. Prescott, J., delivered the opinion of the Court.
After the trial judge reversed a decision of the Comptroller of the Treasury, denying a petition of the appellee protesting a sales tax assessment, he appealed.
Two questions are presented for decision: (1) does the failure of a vendor to secure, from the vendee, a certificate that a purchase is made for resale create an absolute liability on the part of the vendor to pay a sales tax, or does the statutory requirement of a resale certificate merely create a rebuttable presumption, which may be overcome by a showing that, in fact, the sale was for resale; and (2) under the facts of this case, is the Comptroller estopped from making a tax assessment based on the failure of appellee to secure resale certificates?
Marvil Package Company, a division of Atlas General Industries, the appellee, is engaged in the business of manufacturing baskets and crates used in the packaging of vegetables, chickens, seafood, and other food stuffs. During the period 1954 to 1961, appellee failed to collect retail sales taxes, or, in the alternative, to secure resale certificates from some of its customers upon the sale of various shipping containers.
Certain of the packaging sold by appellee was used by farmers and vegetable packers to hold tomatoes, cucumbers, chickens, oysters, and other food products for shipment to various markets. The farmers and packers who purchased these crates filled them with the various commodities mentioned above and then sold them at market. As indicated above, no resale certificates were secured by appellee from the farmers and packers
who purchased these containers, nor was any sales tax collected on these sales.
In 1954, auditors for the Retail Sales Tax Division conducted an audit of appellee's records at their Salisbury Warehouse Division and determined that a small amount of tax was due on certain retail sales of baskets. This assessment was levied and paid by appellee without protest. At that time, the auditors for the Retail Sales Tax Division did not challenge other sales wherein no resale certificates had been received. There is, however, nothing in the evidence to indicate that the auditor was ever concerned with this latter problem and there is no indication that the question of the failure of appellee to seek such resale certificates was ever discussed with the auditor or called to his attention.
As early as 1952, the Retail Sales Tax Division had sent out releases to various segments of the industry calling their attention to the provisions of the sales tax law and attendant regulations requiring that resale certificates be obtained in the event a sale was made to a purchaser for resale. On some occasions these releases were mailed to all taxpayers holding Retail Sales Tax Licenses. The testimony also indicates that the sales tax return forms used by appellee in 1954 and thereafter contained an instruction pointing out the necessity of obtaining resale certificates.
Subsequent to the audit in 1954, a new audit was made by the Retail Sales Tax Division in 1960 and at that time the lack of resale certificates was challenged and an assessment, originally far in excess of the amount presently in contention, was levied against the appellee. This assessment related to taxes alleged to be due on those sales to farmers and food packers where no resale certificates had been furnished. The appellant seems to concede that the purchases here involved were, in fact, for the purpose of resale.
Immediately following this assessment the Baltimore City Court (Prendergast, J.) on March 16, 1961, decided the case of Bagby Furniture Company v. Comptroller (reported in the Daily Record, May 10, 1961) in which it was determined that the requirement of resale certificates imposed ...