APPEAL from the Circuit Court of Cook County; the Hon. F.
EMMETT MORRISSEY, Judge, presiding.
MR. PRESIDING JUSTICE SULLIVAN DELIVERED THE OPINION OF THE COURT:
Defendants appeal from a judgment in a class action ordering a refund of the Illinois use tax (use tax) and the municipal retailers' occupation tax (occupation tax) attributable to that portion of the Federal gasoline tax which is refunded by reason of the fuel being consumed for off-highway use.
It appears that a purchaser of gasoline in Illinois pays the following: a pretax base price, State and Federal fuel taxes, and the use and occupation taxes with both of the latter being figured as a percentage of the sum of the base price and the Federal tax. When the gasoline is used for nonhighway purposes, the purchaser may obtain from the Federal Government a refund of its tax and, from the Illinois Department of Revenue (the Department), a refund of the State fuel tax. The Department, however, does not refund that portion of the use and occupation taxes which were paid on the refundable Federal tax.
Plaintiff purchased gasoline for nonhighway use and made a claim with the Department for a refund of the State taxes paid on the gasoline. When the Department refunded only the State fuel tax, plaintiff filed a class action for declaratory judgment to obtain a refund of the use and occupation taxes attributable to the refundable Federal tax for himself and all other nonhighway use purchasers in Illinois.
The trial court preliminarily enjoined the Department from disposing of taxes received under the Illinois Motor Fuel Tax Law where the basis of a refund claim was that the use and occupation taxes were paid on a selling price which included the refundable Federal tax. The court also enjoined the State Treasurer from transmitting any of these taxes other than into a segregated protest fund. Thereafter, the court entered an order in favor of plaintiff and the class declaring inter alia that the prevailing Federal tax should not be considered a part of the selling price for the purpose of making refunds of Illinois taxes; that if the Federal tax was refundable, the use and occupation taxes paid on that Federal tax should also be refundable to the plaintiff and the members of the class for nonhighway used gasoline; that the practice of the Department in refusing to refund the use and occupation taxes where the Federal tax was included in the selling price is contrary to the Illinois Motor Fuel Tax Law; and that any rule requiring the inclusion of the Federal tax in the selling price in determining refunds of State taxes is unconstitutional and invalid. The court then permanently enjoined the Department from including the Federal tax in the selling price and from transferring into the general revenue fund any of the tax monies held in the protest fund.
The threshold question on appeal is whether purchasers of motor fuel in Illinois for nonhighway use are entitled to a refund of the use and occupation taxes attributable to the refundable Federal tax.
We initially note that the Retailers' Occupation Tax Act (ROTA) (Ill. Rev. Stat. 1975, ch. 120, pars. 440-53) imposed the occupation tax upon persons engaged in selling tangible personal property at retail. (Ill. Rev. Stat. 1975, ch. 120, par. 440; Hagerty v. General Motors Corp. (1974), 59 Ill.2d 52, 54-55, 319 N.E.2d 5, 6.) The amount of the taxes is computed as a specific percentage of the gross receipts of such sales at retail (Ill. Rev. Stat. 1975, ch. 120, par. 441), and it is the seller who is required to remit the tax to the Department (Ill. Rev. Stat. 1975, ch. 120, par. 442). The Use Tax Act (UTA) (Ill. Rev. Stat. 1975, ch. 120, pars. 439.1-439.22), which compliments the ROTA (Turner v. Wright (1957), 11 Ill.2d 161, 142 N.E.2d 84) imposes the use tax at the same rate as the ROTA upon the privilege of using tangible personal property purchased at retail in this State (Ill. Rev. Stat. 1975, ch. 120, par. 439.3). Usually, the retailer collects the use tax from the purchaser and remits it to the Department. *fn1 Ill. Rev. Stat. 1975, ch. 120, par. 493.3; Hagerty v. General Motors Corp.; Snyderman v. Isaacs (1964), 31 Ill.2d 192, 201 N.E.2d 106.
1, 2 The obligation of a citizen to pay taxes is a purely statutory creation and, conversely, the right to a refund or credit can arise only from the acts of the legislature. (People ex rel. Eitel v. Lindheimer (1939), 371 Ill. 367, 21 N.E.2d 318; Weil-McLain Co. v. Collins (1946), 395 Ill. 503, 71 N.E.2d 91.) Thus, taxes voluntarily paid cannot be recovered by a taxpayer in the absence of a statute providing for a credit or a refund (People ex rel. Eitel v. Lindheimer) regardless of whether a valid claim may exist (Scoa Industries, Inc. v. Howlett (1975), 33 Ill. App.3d 90, 337 N.E.2d 305), and this is so even if the taxing statute itself is unconstitutional (S.A.S. Co. v. Kucharski (1972), 53 Ill.2d 139, 290 N.E.2d 224). Furthermore, a payment under protest is not enough for a refund where the validity of the tax is not questioned, unless there is a valid statute authorizing a refund. People ex rel. City of Highland Park v. McKibbin (1942), 380 Ill. 447, 450, 44 N.E.2d 449, 450.
In this regard, the Illinois legislature has provided in the ROTA and UTA that the only person entitled to receive a refund or credit is the remitter of the tax. (Ill. Rev. Stat. 1973, ch. 120, pars. 439.19, 445.) The reason for this provision was stated by the court in Snyderman v. Isaacs, as follows:
"[A] refund procedure without safeguards might result in refunds of taxes that had not actually been remitted, or in the unjust enrichment of persons who had not themselves paid the tax, but had passed its burden on to another. To protect the real taxpayer and to prevent unjust enrichment of any other party, the legislature has provided both in the Use Tax Act and in the Retailers' Occupation Tax Act that the only person entitled to receive credit is the remitter of the tax." (31 Ill.2d 192, 196, 201 N.E.2d 106, 108.)
In the instant case, the allegations of the complaint clearly show that plaintiff and the other members of the class did not remit the tax and therefore have no statutory right to a refund of the taxes remitted by the gasoline retailers.
Notwithstanding the lack of a statutory right to a refund, plaintiff, relying on Crane Construction Co. v. Symons Clamp & Manufacturing Co. (1962), 25 Ill.2d 521, 185 N.E.2d 139, and Williams v. City of Chicago (1976), 36 Ill. App.3d 216, 343 N.E.2d 539, rev'd on other grounds (1977), 66 Ill.2d 423, 362 N.E.2d 1030, asserts that he had standing to seek a refund directly from the Department. We disagree, as we believe neither case supports his position. In Crane Construction Co., a lessee brought an action against the lessor, challenging the constitutionality of an amendment to the UTA and sought to enjoin the lessor from forwarding the use tax to the Department other than by paying such tax under protest. The court held this to be "an appropriate method for litigating questions which it [plaintiff] has a right to have determined" in that plaintiff "obviously has standing to challenge the validity and applicability of the use tax and is not compelled to rely upon its lessor * * * to protect its interests." (25 Ill.2d 521, 527-28, 185 N.E.2d 139, 143.) In Williams, plaintiff was not seeking a refund of taxes paid but, on constitutional grounds, sought a permanent injunction against the further collection of a municipal tax, and we held that the action was appropriately brought under the reasoning of Crane.
3 The procedure used in Crane of enjoining retailers from paying a challenged tax to the Department other than under protest was subsequently approved and specifically recommended in Adams v. Jewel Companies, Inc. (1976), 63 Ill.2d 336, 348, 348 N.E.2d 161, 167, Hagerty v. General Motors, and S.A.S. Co. v. Kucharski. In view thereof, it appears that the Crane approach should be used by a taxpayer who has not remitted directly to the Department. Here, plaintiff was a nonremitter who did not pursue the ...