The opinion of the court was delivered by: Juergens, District Judge.
Plaintiff filed his complaint for injunction asking this Court
to enjoin the defendant and all those acting in concert with him,
or as his agent or servant, from collecting the assessment
heretofore made against him until a final determination is had as
to the liability of plaintiff in connection with alleged cabaret
tax due and that this Court determine the question of plaintiff's
liability with respect to mechanical music in his place of
business and the liability, if any, due under the provisions of
the cabaret tax (Section 1700(e), Internal Revenue Code, 1939;
Section 4231, Internal Revenue Code, 1954, 26 U.S.C.A. § 4231).
The defendant filed his motion to dismiss the complaint for
lack of jurisdiction of this Court because it appears on the face
of the complaint that this is a suit to restrain the collection
of internal revenue taxes, the maintenance of which is prohibited
by Section 7421(a) of the Internal Revenue Code of 1954,
26 U.S.C.A. § 7421(a); that the complaint fails to state a claim
upon which relief may be granted in that the relief prayed is
specifically prohibited by Section 7421(a) of the Internal
Revenue Code of 1954; that this is in the nature of a declaratory
judgment action to determine the question of a taxpayer's
liability with respect to taxes assessed, the maintenance of
which is prohibited by Section
2201, Title 28, U.S.C. and for other reasons.
The complaint alleges that the plaintiff is now and has been
for a substantial period of time since November, 1952, engaged in
the business and occupation of operating a tavern, night club, or
dramshop near Belleville, Illinois; that the defendant is a duly
authorized director of Internal Revenue in the district in which
plaintiff resides and is an authorized agent of the United States
Government for the purpose of assessing and collecting Federal
taxes, including the cabaret tax; that for some period prior to
filing this complaint a dispute has existed regarding the
liability of the plaintiff for certain alleged penalties due
under the provisions of the Internal Revenue Code known as the
Cabaret Tax Act; that since July, 1953, plaintiff has offered at
various times entertainment consisting of live music in the form
of small bands, orchestras, or combos; that during the period of
this entertainment a cabaret tax has been collected by the
plaintiff from his patrons; that this tax has been paid; that the
plaintiff has in his place of business mechanical or "juke box"
music which is used when live entertainment is not provided; that
the plaintiff has not permitted dancing to the mechanical music
but has directed patrons against dancing through the use of signs
and through instructions to his agents and servants; that the
defendant has arbitrarily and capriciously taken the position
that dancing was permitted to the mechanical music and has
assessed a tax on plaintiff's gross sales.
Under the provisions of Section 7421 of the Internal Revenue
Code, 1954, suits to restrain assessment or collection of any tax
Section 7421 provides in pertinent parts as follows:
"§ 7421. Prohibition of suits to restrain
assessment or collection.
"(a) Tax. — Except as provided in sections 6212(a)
and (c), and 6213(a), no suit for the purpose of
restraining the assessment or collection of any tax
shall be maintained in any court."
Sections 6212(a) and (c) and Section 6213(a), 26 U.S.C.A. §§
6212(a, c), 6213(a), do not apply in any manner to the question
here presented. The prohibition against suit for the purpose of
restraining assessment or collection of any tax is, therefore,
pertinent to the present situation.
The plaintiff asserts that Section 7421 of the Internal Revenue
Code of 1954 does not prohibit suits to enjoin the collection of
a tax in all situations; that there are exceptions to the rule
and where exceptional circumstances exist a court may enjoin the
collection of a tax notwithstanding the provisions of said
In Miller v. Standard Nut Margarine Co., 284 U.S. 498, 52 S.Ct.
260, 76 L. Ed. 422, the court enjoined the collection of a tax on
the grounds that the complaint in that case showed that there
existed special and extraordinary circumstances, sufficient to
bring the case within equity jurisprudence and enjoin the
collection of the tax.
An examination of the Miller case and the case here in suit
shows that there is no similarity as concerns the extraordinary
circumstances. A court of equity may not grant an injunction
contrary to the statute unless there exists simultaneously an
illegal tax and special and extraordinary circumstances. If
either element is lacking, injunctive relief will be denied.
Homan Mfg. Co. v. Long, 7 Cir., 242 F.2d 645. Huston v. Iowa Soap
Co., 8 Cir., 85 F.2d 649, 108 A.L.R. 173. Gehman v. Smith, D.C.,
76 F. Supp. 805.
The plaintiff alleges that the assessment is not a tax but
rather a penalty and that the attempted collection thereof is
illegal, which is the first requirement necessary to bring into
play the waiver of prohibition.