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.
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.
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.
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
324 U. S.
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.
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.
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
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.
320 U.S. 721, dismissed on motion of
321 U.S. 800; Helvering v. Insular Sugar
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
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
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.
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.
] 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
Page 324 U. S. 168
its said broker" bore the notation, "Golden Ridge, 100 Pkts.
10,000# at 3.71� $371.00. F.O.B. Pltn. Tax Pd. Tax O.526�," $.526
being the prevailing rate of processing tax at the time the
particular account was rendered. A letter from the broker Rainold
to petitioner, dated January 17, 1936, contained the following:
"According to memorandum you furnished us on processing tax, you
paid on 298,017 pounds of sugar, and we have accounted to you for
there [three] cars of 800 pockets and part car of 300 pockets, and
when we get paid for balance of this part car, or 500 pockets, it
will total 3,200 pockets or 320,000# on which the processing tax
was included in the price. Therefore you have not paid any more tax
than you collected, and these sugars in warehouse here and
elsewhere, that is Chicago, or [are] really tax-free."
On the foregoing facts, the Board of Review found that
"The extent to which the processing tax [was] paid and borne by
the petitioner and not shifted to others in any manner whatsoever
and it awarded refund in that amount. This award was based, the
Circuit Court of Appeals thought, "upon the theory that the
claimant had established facts sufficient to invoke the statutory
presumption that it had borne the burden of the tax" to that
extent. In the view of the Court of Appeals, however, the
"clearly was sufficient to dissolve the presumption, and, since
there was no other proof to support any refund, the claim should
have been disallowed in its entirety."
Our first question is whether the Board was entitled to base an
award upon the statutory "prima facie
"presumption," or whether the Government's evidence removed the
presumption from the case as a matter of law. For, although the
Board did not state how it arrived at its award, it seems likely
that it relied upon the prima facie
and not upon a weighing of the
Page 324 U. S. 169
evidence; petitioner does not assign error to the contrary,
although it contends that the evidence supports the Board's
The statute, unfortunately, is beset by the ambiguity and the
imprecision of definition which are not uncommon with respect to
presumptions. But the difficulties of the subject will not excuse
us from the duty to apply as best we may a statute Congress has
seen fit to enact. At one point, it speaks only of "prima
evidence," and, at another, it refers to the prior
section as creating a "presumption." "Prima facie
evidence" alone might be taken to signify only a permissive
inference, indicating that the Commissioner or the courts might, if
they saw fit, permit a recovery solely on the basis of the margin
evidence. See Crane v. Morris'
6 Pet. 598, 31 U. S. 621
Bailey v. Alabama, 219 U. S. 219
219 U. S. 234
9 Wigmore on Evidence (3d ed.1940) § 2494. But the statute's later
use of the word "presumption" and the careful detail with which the
margin evidence and rebuttal evidence are described argue against
such an interpretation, as does the legislative background. A
committee report on Title VII, explaining the necessity for
amending the existing refund provisions, stated:
"It has been contended that, while that section [§ 21(d) of the
Agricultural Adjustment Act] states the conditions under which the
Commissioner may deny a refund of taxes paid, it does not establish
affirmatively any conditions compliance with which will enable the
claimant to secure a refund."
Sen.Rep. 2156, 74th Cong., 2d Sess., p. 33. From this, it seems
clear that the new provision was meant to prescribe a minimum of
proof which would require refund in the absence of opposing
evidence. Therefore, the inference arising from the margin evidence
must be a compelled one.
The statute does not tell, however, on what event the existence
of the presumed fact must cease to be assumed
Page 324 U. S. 170
by the trier. Does the presumption cease to operate as soon as
the Commissioner has met the burden of going forward with evidence
to show shifting of the tax, or does it place on him the burden of
proof? The Government and the court below, taking the former view,
support it with the contention that "[i]t is never the function of
a rebuttable presumption to shift the burden of proof."
Commissioner v. Bain Peanut Co.,
134 F.2d 853, 857. It is
unnecessary for us to take so broad a ground, even if it is
correct. [Footnote 2
only with the particular presumption now before us, we find nothing
to indicate that Congress attached exceptional probative value to
the margin evidence, or that it desired for any other reason to
tilt the scales sharply against the Commissioner, rather than
merely to even them somewhat in behalf of claimants. There is, for
example, no reason to suppose that the Commissioner is better able
than the processor to prove where the tax burden fell. On the other
hand, the special problem here of preventing unjust enrichment,
added to the usual strict examination of claims against the
Government, convinces that Congress probably intended to leave the
burden of proof on the claimant. Cf. United States v. Jefferson
Electric Mfg. Co., 291 U. S. 386
In the absence of any clearer statement in the statute,
therefore, we think the presumption is given adequate effect if the
burden is placed on the Commissioner of going
Page 324 U. S. 171
forward with evidence sufficient to support a finding that the
claimant did not absorb the tax. Once such evidence is presented,
the presumption becomes inoperative, and the issue is to be
determined as if there had never been a presumption. The statute
declares, however, that the presumption may be rebutted by proof of
"the actual extent" to which the burden of the tax was shifted.
This language appears to mean that the presumption may be rebutted
and not necessarily all at once or not at all.
Thus, it does not cease to operate on introduction of evidence
merely sufficient to support a finding that some of the tax was
shifted. It must be evidence sufficient to support a finding that
the entire tax was shifted. Short of that, the presumption is not
eliminated, but only diminished to the extent that the rebuttal
evidence will support a contradictory finding. See E.
Regensburg & Sons v. Helvering,
130 F.2d 507, 509. When
the margins are unfavorable to the taxpayer and favorable to the
Commissioner, it is unnecessary, of course, to place a burden of
going forward with evidence on the claimant, for he has that burden
anyway, as well as the burden of proof. Whether this means that the
statute's language making the presumption operate in favor of the
Commissioner is superfluous, or that, in such a case, the
presumption must be given a different effect than when in favor of
the claimant, we do not now decide. Cf. E. Regensburg &
Sons v. Helvering, supra.
On the view we take of the statute, the proof introduced by the
Commissioner made the presumption inoperative. We certainly could
not say that, viewed by itself, the Commissioner's evidence would
not permit a finding that petitioner shifted the entire burden of
the tax. It tended to show that, in all dealings with its broker,
the petitioner added the amount of the tax to the sale price and
itemized it separately. That this was true as to all sales of
Page 324 U. S. 172
seems to be conceded. It was also true, or so it might be found,
as to a substantial part of the sugar sales, and therefore
inferentially as to all such sales. Petitioner raises some question
as to the proper inference to be drawn from the sugar account and
the broker's letter quoted above. But at least the broker's remarks
that "the processing tax was included in the price" and
"[t]herefore you have not paid any more tax than you collected" are
unmistakable in their meaning. All of this evidence is among the
kinds expressly mentioned by the statute as tending to rebut the
presumption. More important, the statute appears specifically to
provide that introduction of any evidence of this particular kind
shall be sufficient to rebut the entire presumption. It states that
the presumption may be rebutted by proof that the claimant modified
sales contracts to reflect the initiation, termination, or change
in amount of the tax, or "at any such time" changed the sale price
of the article, or "at any time" billed the tax as a separate item,
or indicated "by any writing" that the sale price included the
amount of the tax. It then declares, "but the claimant may
establish that such acts . . . do not represent his practice at
other times." § 907(e)(2). This seems clearly to mean that, when
any examples of the named practices are proved, it may be inferred
that they represent the uniform practice of the claimant, and the
burden becomes his to prove that they do not. Since the
Commissioner proved that, not only in a few cases, but in a great
number, the tax was indicated in writing to be included in the sale
price, we think there is no doubt that he fully rebutted the
presumption within the meaning of the statute.
The second question is whether, with the presumption out of the
case, there is evidence from which the Tax Court would be entitled
to award a refund to petitioner in any amount. The court below,
although it remanded the
Page 324 U. S. 173
cause, apparently meant for it to be dismissed, for it said,
"since there was no other proof to support any refund, the claim
should have been disallowed in its entirety." Literally, of course,
this cannot be true, for the margin evidence remained in the case
for whatever it might be worth apart from the presumption. With
this, the Government agrees, and it concedes that, unless we can
say that the evidence would not rationally support a finding in
favor of petitioner, the case must go back to the Tax Court for
decision on the evidence, rather than on the presumption. We must
determine whether there is evidence which is legally sufficient for
administrative action, but we may not weigh it. Dobson v.
Commissioner, 320 U. S. 489
The fact that margins for the tax period are lower than those
for the base period has some logical tendency to establish that the
burden of the tax was borne by the processor. See Anniston Mfg.
Co. v. Davis, 301 U. S. 337
301 U. S. 354
There are, to be sure, other and conflicting inferences which may
also be drawn. As the margins are defined, the drop might be due to
a decline in the demand for the processed goods, or to a decrease
in the yield of the raw commodity, or to an increase in the price
of the raw commodity. But we have no basis for saying that the
margin thus defined does not tend to be comparatively stable, and
that a fall coincident with imposition of a tax would not more
likely reflect the tax than a change in other factors. We suppose
the taking of average margins over a base period has some tendency
to produce that result. And the Tax Court's special experience
might support such an inference. Cf. Dobson v. Commissioner,
Congress apparently believed that the rational
connection was strong enough to justify basing a finding of
absorption on the margin evidence alone. For, as we have seen,
Congress intended that, in a case where the margins were
Page 324 U. S. 174
favorable to the claimant and no other evidence was introduced,
the claimant should be entitled to a refund, and there appears no
reason of convenience or policy which would lead to such a rule in
the absence of rational connection. For all these reasons, we think
a finding of absorption which was based solely on the margin
comparisons would not be irrational.
Nor is the Commissioner's evidence so conclusive as to deprive
the margin evidence of all significance. It permits, but does not
require, a finding that petitioner had a uniform practice of
billing the tax as a separate item. Even though such a practice be
inferred, there is no evidence to show how far petitioner succeeded
in its effort to pass the tax on, except for the evidence that
there was a general rise in the market on a date some months before
petitioner's processing began. The margins are some evidence that
the price may not have responded continuously to the effort to
shift the tax. The fact may be that neither side's evidence goes
very far toward demonstrating where the burden of the tax fell;
] the inquiry is, at
best, a difficult one. But we do not think it can be said that the
record is devoid of rational support for a finding that petitioner
absorbed some of the tax. Accordingly, we must remand the case for
a weighing of the evidence, including, of course, such further
evidence as the Tax Court may think it proper to receive in view of
the way in which the case has been tried. In doing so, we intimate
no opinion, of course, as to whether petitioner has sustained the
burden of proof placed upon it by the statute.
Since the case must go back, it is necessary to pass upon a
further question raised by petitioner. Petitioner, as we have
noted, was not processing during the six months,
Page 324 U. S. 175
February to July, 1936, designated by the statute for computing
margins after the tax period. For such a case, the statute
"If, during any part of such period, the claimant was not in
business . . . , the average prices paid or received by
representative concerns engaged in a similar business and similarly
circumstanced may, with the approval of the Commissioner, where
necessary for a fair comparison, be substituted in making the
§ 907(c). Contending that there were no similarly circumstanced
concerns, petitioner sought to use the figures of a later period --
that of its own 1936 production -- in computing the base period
margins, which would have made those margins higher. We think the
Board and the court below were correct in holding that the
statutory method of making a prima facie
exclusive, and that the 1936 evidence might not be so used. The
statute's restrictions, however, have reference only to the
presumption; they do not exclude other evidence generally relevant
on the issue of whether the tax burden was shifted. The 1936
experience, though it could not help petitioner to create a
favorable presumption, was entitled to be given whatever probative
value it might independently have had, and, subject to the usual
principles of admissibility, was therefore admissible. Anniston
Mfg. Co. v. Davis, 301 U. S. 337
301 U. S.
The judgment below is modified, and the cause is remanded to the
Circuit Court of Appeals with directions to remand to the Tax Court
for proceedings in conformity with this opinion.
This processing was subjected to tax by the Act of May 9, 1934,
c. 263, 48 Stat. 670, amending the Agricultural Adjustment Act.
§ 9(d)(6)(A) and (B) of the Act as amended,
7 U.S.C. § 609(d)(6)(A), (B).
But see, e.g., Morrison v. California, 291 U. S.
, 291 U. S. 88
Page v. Phelps,
108 Conn. 572, 143 A. 890; Weber v.
Chicago, R.I. & P. R. Co.,
175 Iowa 358, 151 N.W. 852;
Bond v. St. Louis-San Francisco R. Co.,
315 Mo. 987, 288
S.W. 777; Holzheimer v. Lit Brothers,
262 Pa. 150, 105 A.
73; Morgan, Instructing the Jury upon Presumptions and Burden of
Proof (1933) 47 Harv.L.Rev. 59, 77-83, Some Observations Concerning
Presumptions (1931) 44 Harv.L.Rev. 906; Bohlen, Studies in the Law
of Torts (1926) 636, 637, 648-653; American Law Institute, Model
Code of Evidence, Rule 703.
Johnson, AAA Refunds: A Study in Tax Incidence
(1937), 37 Col.L.Rev. 910.
MR. JUSTICE RUTLEDGE, dissenting.
I doubt that Congress intended to involve the award of refunds
of processing taxes in the abstruse learning of "disappearing
presumptions." In my opinion, the terms "prima facie
evidence" and "presumption" may be taken
Page 324 U. S. 176
to have been used interchangeably in the statute. I think no
more was intended than to authorize a finding in accordance with
the margin evidence, if no other were presented, and, in case
opposing evidence should be offered, to allow inference either way
according to the weight of the proof, taking into account the
margin evidence. Hence, in this aspect of the case, I would rest on
the decision of the Processing Tax Board of Review, which, on the
record, reasonably may be considered to have been reached in this
I also think the statute forbids going outside the base periods
prescribed for comparative data. To hold otherwise would nullify
the base period provisions of the Act, which I think are valid. The
cause of action here rests on a waiver of the sovereign immunity to
suit which Congress may make upon such conditions as it chooses.
Nichols v. United
7 Wall. 122; Luckenbach S.S. Co. v.
United States, 272 U. S. 533
272 U. S. 536
Minnesota v. United States, 305 U.
, 305 U. S. 388
Allowing in the evidence concerning other periods, though not for
the purpose of computing margins, accomplishes indirectly what the
base period provisions were designed to prohibit.
Accordingly, I think the judgment of the Circuit Court of
Appeals should be reversed, with directions to affirm the decision
of the Processing Tax Board of Review.
MR. JUSTICE BLACK concurs in these views.