Webre Steib Co., Ltd. v. Commissioner
324 U.S. 164 (1945)

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U.S. Supreme Court

Webre Steib Co., Ltd. v. Commissioner, 324 U.S. 164 (1945)

Webre Steib Co., Ltd. v. Commissioner of Internal Revenue

No. 148

Argued December 13, 1944

Decided February 12, 1945

324 U.S. 164




1. In a proceeding under Title VII of the Revenue Act of 1936 for a refund of processing taxes paid under the Agricultural Adjustment Act of 1933, the presumption from margin evidence that the claimant bore the burden of the tax requires, in the absence of opposing evidence, a refund pro tanto. P. 324 U. S. 169.

2. The presumption arising from margin evidence favorable to the claimant places upon the Commissioner the burden of going forward with evidence sufficient to support a finding that the claimant did not bear the burden of the tax. P. 324 U. S. 170.

3. The Commissioner's evidence in this case was sufficient to support a finding that the claimant had not borne the burden of any part of the tax, and the presumption from the claimant's margin evidence was thereby rendered inoperative. P. 324 U. S. 171.

4. On review of administrative decisions, this Court must determine whether there is evidence legally sufficient for administrative action, but may not weigh it. Dobson v. Commissioner,320 U. S. 489. P. 324 U. S. 173.

5. Although the Commissioner's rebuttal evidence rendered the presumption inoperative, the record -- the margin evidence being still in the case for whatever it might be worth apart from the presumption -- is not devoid of rational support for a finding that the claimant absorbed some of the tax, and the cause must be remanded to the Tax Court for a weighing of the evidence, including such further evidence as that court may properly admit. P. 324 U. S. 174.

6. Evidence as to margins in a period later than the base period, though irrelevant to the presumption created by § 907(a), was admissible for whatever probative value it might have independently. P. 324 U. S. 175.

140 F.2d 768 modified.

Certiorari, 323 U.S. 686, to review a judgment which, reversing a decision of the Processing Tax Board of

Page 324 U. S. 165

Review, held that a claim for refund of processing taxes should have been disallowed in its entirety.

MR. JUSTICE JACKSON delivered the opinion of the Court.

This is a proceeding brought for recovery of sugar processing taxes paid under the Agricultural Adjustment Act of 1933. The Commissioner having denied in entirety the taxpayer's claim for $8,167.97, the total tax paid by it, taxpayer petitioned for review by the Processing Tax Board of Review, as provided by statute. 49 Stat. 1749. The Board awarded refund in the amount of $3,655.82, and motions for rehearing made by both parties were denied by the Tax Court, which had succeeded to the jurisdiction of the Processing Tax Board of Review. 56 Stat. 798, 967, § 510(a). On appeal, the Court of Appeals for the Fifth Circuit reversed and held that the claim should be denied. 140 F.2d 768. We took the case to review questions of application of the "prima facie evidence" and "presumption" sections of Title VII, Revenue Act of 1936, on which there was conflict in the circuits. Commissioner v. Bain Peanut Co., 134 F.2d 853, cert. granted, 320 U.S. 721, dismissed on motion of petitioner, 321 U.S. 800; Helvering v. Insular Sugar Refining Corp., App.D.C. 141 F.2d 713; cf. E. Regensburg & Sons v. Helvering, 130 F.2d 507.

A new administrative procedure for recovery of taxes paid under the Agricultural Adjustment Act was provided

Page 324 U. S. 166

by Title VII of the Revenue Act of 1936, § 901-917, 49 Stat. 1747, 7 U.S.C. § 644-659, repealing § 21(d), (e), and (g) of the 1935 amendments to the Agricultural Adjustment Act, 49 Stat. 771-773. The provisions were reviewed at length, and their constitutionality upheld, in Anniston Mfg. Co. v. Davis,301 U. S. 337. In outline, so far as relevant to this case, they are as follows: the claimant is required to prove that he bore the burden of the tax. § 902. Average "margins" per unit of the commodity processed, consisting of the difference between cost of the commodity (plus tax paid, if any) and gross sales value of the articles resulting from the processing, are to be computed for the tax period and a base period; the base period is the period two years preceding imposition of the tax and the six months thereafter (February to July, 1936). § 907(b), (c). If the margins for the tax period are lower than those for the base period, it is "prima facie evidence" that, to that extent, the claimant bore the burden of the tax; if they are not lower, it is "prima facie evidence" that none of the burden was borne by the claimant. § 907(a). But this "presumption" may be rebutted, either by the claimant or by the Commissioner, by proof of "the actual extent" to which the claimant shifted the tax to others. Such proof may include, but is not limited to, certain types of evidence described by the statute. § 907(e).

For our purposes, the material facts must be gleaned from the findings and memorandum of the Board of Review and a stipulation filed by the parties in the Court of Appeals.

Petitioner is a grower and purchaser of sugar cane, which it processes into direct consumption sugar and edible molasses. [Footnote 1] It operates during the months of October,

Page 324 U. S. 167

November, and December of each year. The tax went into effect on June 8, 1934, and petitioner paid taxes until November 8, 1935, so that it paid processing taxes -- $7,067.12 on sugar and $1,102.85 on molasses -- for the months of October, November, and December, 1934, and October and November, 1935. Its average statutory margin for this period was $.01192, and the total number of units processed was 2,256,676 pounds of sugar. Petitioner's base period consisted only of the two years prior to the tax, because it did no processing in the six months February to July, 1936. Its average statutory margin per unit for the base period was $.01354. Thus, the margin during the tax period was $.00162 per unit lower than that during the base period, creating "prima facie evidence" that petitioner had borne the tax to the extent of $3,655.82, the amount of refund allowed by the Board. Petitioner contends that this amount should have been increased by including in the margins its first processing after invalidation of the Agricultural Adjustment Act, which was its processing of the 1936 crop, October, 1936, to January, 1937. The average margin per unit for this period, computed as for the base period, was $.01582, or $.00228 more than the base-period margin.

Evidence that the tax was not borne by petitioner was as follows: universal increases in the sale price of sugar were effected on the date of imposition of the processing tax in the amount of $.55 per hundred pounds, to cover the amount of the tax. All of the accounts stated between petitioner and its broker, E. A. Rainold, Inc., respecting sales of molasses made through that broker included the processing tax as a separate item and as an addition to the sale price of the article. "An account sale, typical of all such accounts, respecting the sale of sugar, made through

Page 324 U. S. 168

its said broker" bore the notation, "Golden Ridge, 100 Pkts. 10,000# at 3.71

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