1. The tax imposed by § 628 of the Revenue Act of 918 on soft
drinks sold by the manufacturer in bottles, etc., "equivalent to 10
percentum of the price for which so sold," is a tax on the
manufacturer alone which, accurately speaking, cannot be "passed
on" to the purchaser. P. 278 U. S.
2. Where a manufacturer sold such goods at his regular prices
plus 10% added to cover the tax and not separately billed, and the
purchasers, being notified of the arrangement, paid the whole, the
tax payable by the manufacturer was properly computed on the total
amount so paid by the purchasers. Id.
64 Ct.Cls. 252 affirmed.
Certiorari, 277 U.S. 581, to a judgment of the Court of Claims
rejecting a claim for overpayment of taxes.
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a suit to recover the amount of certain taxes paid under
the Revenue Act of 1918 (Act of February 24, 1919, c. 18, § 628, 40
Stat. 1057, 1116). By § 628, there is imposed on "soft drinks, sold
by the manufacturer, . . . in bottles or other closed containers, a
tax equivalent to ten percentum of the price for which so sold."
This tax was paid by the petitioner, calculated at ten percentum of
the sum actually received by it for the goods sold. But the
petitioner had notified its customers beforehand that it
Page 278 U. S. 176
paid the ten percent tax, and it contends that, in this way, it
passed the tax on, and that the true price of the goods was the sum
received less the amount of the tax. The phrase "passed the tax on"
is inaccurate, as obviously the tax is laid and remains on the
manufacturer, and on him alone. Heckman & Co. v. I. S.
Dawes & Son Co.,
12 F.2d 154. The purchaser does not pay
the tax. He pays or may pay the seller more for the goods because
of the seller's obligation, but that is all. Still, the question as
to the meaning of the statute remains.
The petitioner supports its position by a regulation of the
Commissioner that, when the tax is billed as a separate item, it is
not to be considered as an increase in the sale price. Naturally, a
delicate treatment of a tax on sales might seek to avoid adding a
tax on the amount of the tax. But it is no less natural to avoid
niceties and to fix the tax by the actual price received. Congress
could do that as properly as it could have added one-tenth to the
tax on the price as fixed by the other items determining the charge
to the buyer. The price is the total sum paid for the goods. The
amount added because of the tax is paid to get the goods, and for
nothing else. Therefore it is part of the price, and if the statute
were taken literally, as there would be no reason for not taking it
if it were now passed for the first time, there might be difficulty
in accepting the Commissioner's distinction even if the tax were
made a separate item of the bill. But if, in view of the history in
the Solicitor General's brief, we assume with him that the practice
of the Commissioner has been ratified by Congress, we agree with
his argument that the petitioner must take the privilege as it is
offered. It did not bill its tax as a separate item, and the
Commissioner's Regulations notified it that, "if the sales price of
a taxable beverage is increased to cover the tax, the tax is on
such increased sales price," although they purported to make a
different rule "when the tax is billed as a separate item."
Page 278 U. S. 177
There has been some difference of opinion in the lower Courts,
but we regard the interpretation of the law as plain.