Handler, Meanor and Kole. The opinion of the court was delivered by Kole, J.s.c., Temporarily Assigned.
Appellant individually owns and operates a retail gasoline station. He challenges on this appeal a judgment by the Division of Tax Appeals based on a determination that the federal and state excise taxes on gasoline must be included in the computation of gross receipts for the purposes of the Unincorporated Business Tax Act, N.J.S.A. 54:11B-1 et seq.
That statute, enacted in 1966, imposes a tax on gross receipts. When it was passed there already existed a federal excise tax on gasoline sold by the producer or importer thereof (Internal Revenue Code of 1954, 26 U.S.C.A. § 4081), and a state statute imposing a motor fuel tax on gasoline sold or used by a distributor in the State (N.J.S.A. 54:39-27). Both of these taxes will be sometimes referred to as gasoline taxes.
Appellant filed his Unincorporated Business Tax return for the year 1967 in which he deducted, as "receipts not subject to tax," the motor fuel tax imposed by the State and the excise tax imposed on the sale of gasoline by the Federal Government. The deduction was disallowed by the Division of Taxation and, as indicated, by the Division of Tax Appeals.
The federal and state gasoline taxes are collected by the distributor or producer of the gasoline from the retail dealer by means of a billing invoice whereby the amount of the tax is listed separately from the actual price of the motor fuel itself. The amount of these taxes is collected by the retailer
from the consumer. The retailer remits it to the distributor or producer, which pays it to the appropriate state or federal authority.
The New Jersey Unincorporated Business Tax Act imposes
"Gross receipts" is defined to "mean and include all receipts, of whatever kind and in whatever form, derived by an unincorporated business, without any deduction therefrom on account of any item of cost, expense or loss, except that gross receipts shall not include the sales price of property returned by customers to the extent that the sales price thereof is refunded either in cash or by credit." N.J.S.A. 54:11B-2(b), emphasis added.
If the state and federal gasoline taxes are imposed on the producer or distributor and thus merely constitute an element of its cost passed down to the retailer and finally to the consumer in the form of a higher retail selling price, then these taxes are an "item of cost" or "expense" that must be included within appellant's "gross receipts" under the act. On the other hand, if, as appellant contends, the gasoline taxes are not part of the cost of production or distribution but, rather, taxes imposed on the consumer at the time of the retail sale, then the producer, distributor and retailer would be, in effect, agents of the taxing government, charged with the responsibility of collecting the consumer taxes. In that event the dollar increase for gasoline at retail caused by the imposition of the taxes would not be an "item of cost" or "expense"; it would be money collected by the retailer not as part of the retail selling price but rather as a separate fund to be passed along through the marketing chain to the government. It would thus not be includible in the retailer's
gross receipts for the purposes of the Unincorporated Business Tax.
The resolution of the issue of whether the gasoline taxes are merely elements of the cost of production or distribution, or separate charges arising only at the retail sale, involves a determination of the time at which and upon whom in the marketing chain the gasoline taxes are imposed, rather than who eventually bears the economic burden. See Dow Jones & Co. v. United States, 128 F. Supp. 748, 130 Ct. Cl. 696 (Ct. Claims 1955); Lash's Products Co. v. United States, 278 U.S. 175, 176, 49 S. Ct. 100, 73 L. Ed. 251 (1929); Agron v. Illinois Bell Telephone Co., 449 F. 2d 906, ...