Appeal from the Circuit Court of Sangamon County; the Hon.
Richard J. Cadagin, Judge, presiding.
PRESIDING JUSTICE WEBBER DELIVERED THE OPINION OF THE COURT:
The defendants (Department) appeal from an order of the circuit court of Sangamon County, sitting in administrative review, which reversed a determination by the Department that the sales of plaintiff's (Moody) publications were subject to taxation pursuant to the provisions of the Retailers' Occupation Tax Act (Ill. Rev. Stat. 1979, ch. 120, par. 440 et seq.) (ROTA) and the Use Tax Act (Ill. Rev. Stat. 1979, ch. 120, par. 439.1 et seq.).
Before considering the merits of the appeal, we must first thread our way through an extremely convoluted procedural maze. The root of the procedural problem lies principally with the enactment during the pendency of these proceedings of a statute (Ill. Rev. Stat. 1979, ch. 127, par. 39b20) which authorized the appointment of a board of appeals (Board) by the Department.
Moody sells publications containing financial information to subscribers within the State of Illinois. Eight of these publications are concerned here. A brief description of each follows.
1. News Reports and Manuals: the Reports are issued twice a week and give current comprehensive financial information on specific commercial or governmental enterprises in six areas: Municipal and Government, Bank and Finance, Industrial, OTC Industrial, Public Utilities, and Transportation. The Reports are compiled into the Manuals each year and are supplementary to the Manuals which are revised annually. Old Manuals are generally discarded. For the purpose of the instant proceedings the Department treated the News Reports and Manuals as a single publication. The News Reports come in loose-leaf form, while the Manuals are hardbound, and together they account for about 55 percent of the sales involved.
2. Bond Survey: this is published weekly and is of primary interest to brokers, bond dealers and bankers. It breaks down the bond market into seven sectors and the current status of each sector is analyzed with Moody's recommendations on each.
3. Stock Survey: this is also published weekly and contains articles about the stock market, the economy, events in Washington, the international situation, business changes, and industrial and corporate developments. It also includes specific buy-hold-sell recommendations and investment policy suggestions, together with charts, tables, and statistical comparisons. This publication and the Bond Survey account for about 15 percent of involved sales.
4. Handbook of Common Stocks: this is soft-bound and is published every three months. It contains a brief description of 850 common stocks and background information on over 2,500 stocks. Each new issue supplants the prior one. It accounts for about 7 percent of involved sales.
5. Dividend Record: this is published twice a week and shows the dividends of approximately 6,000 companies. It is cumulative and used for a full year. It accounts for approximately four percent of the sales.
6. Bond Record: this is published monthly and contains data on over 19,000 bonds. Much of the information is subject to change and is constantly updated. The prior issue becomes obsolete upon issuance of the current issue. It accounts for approximately three percent of involved sales.
7. Municipal Credit Reports: this is published irregularly and entitles the subscriber to receive credit reports on newly issued bonds or on bonds which receive a revised Moody's rating. A description of the bonds is offered together with an opinion on the issue.
8. Commercial Paper Reports: this also is published irregularly and entitles the subscriber to reports on commercial paper of the same nature as municipal bonds. This publication and Municipal Credit Reports account for less than one percent of involved sales.
The remaining sales, approximately 15% of the total, are represented by combined subscriptions to the Stock Survey and the Bond Survey.
The Department commenced an audit of Moody's sales of the publications for the period July 1, 1970, through March 31, 1974. This culminated in the issuance by the Department on June 26, 1974, of a notice of tax liability (NTL) of $36,192.72 in delinquent taxes, $7,238.54 in penalties, and $9,048.27 in interest. Within 20 days as provided in section 6b of ROTA (Ill. Rev. Stat. 1979, ch. 120, par. 445b) Moody protested the NTL and requested a hearing. This hearing was held on February 6, 1975. Moody claimed at that hearing, and has claimed throughout all these proceedings, that it is exempt under the "newspaper" provision of section 1 of ROTA. Ill. Rev. Stat. 1979, ch. 120, par. 440.
The hearing referee recommended that the NTL be made final as issued with interest computed to May 31, 1975. Moody requested a rehearing and deposited $14,200 with the Department. This is referred to in the record as a "good faith" deposit. Rehearings spanned the period from February 24, 1976, until August 17, 1977, at which time they were concluded. A "Revised Final Assessment" was issued as a result of the rehearings. It did not materially alter the original; it indicated $767.23 less in delinquent taxes and $153.45 less in penalties; interest was computed through February 28, 1979. The record does not disclose the reason for the long lapse of time between the conclusion of the rehearings on August 17, 1977, and the revision approved March 16, 1979.
Moody apparently then requested another rehearing on the revised final assessment of March 1979. The record indicates that such rehearing was concluded on October 18, 1979, with no alterations of the revised final assessment except to calculate interest through December 31, 1979. The Department participated in both the rehearings of 1977 and 1979. Meanwhile, the Department processed the $14,200 good faith payment made by Moody and described above, together with another payment of $28,225 made on July 1, 1979. The total liability after the 1979 ...