Appeal from the Circuit Court of Jefferson County; the Hon.
Bruce Irish, Judge, presiding.
JUSTICE JONES DELIVERED THE OPINION OF THE COURT:
Plaintiff, George R. Beck, doing business as Beck's Texaco Service, brought the instant action for judicial review of a final assessment for delinquent motor fuel taxes rendered by the defendant, the Department of Revenue (Department). Following a hearing the trial court affirmed the Department's assessment of tax delinquencies against the plaintiff but reversed the Department's imposition of a fraud penalty for "wilful failure" to pay the amounts due. The plaintiff has appealed from the trial court's judgment in favor of the Department, and the Department has cross-appealed from that portion of the judgment reversing its assessment of a fraud penalty. We affirm.
The plaintiff's alleged tax liability stems from his failure to remit taxes pursuant to the Motor Fuel Tax Law (MFTL) (Ill. Rev. Stat. 1971, ch. 120, par. 417 et seq.) for the period from January 1971 through September 1974. It is undisputed that during that time he was engaged in the business of supplying motor fuel although he was not a licensed supplier under the terms of the MFTL.
The MFTL, at issue in this appeal, imposes a tax upon the privilege of operating a motor vehicle upon the State's public highways and waters. (Ill. Rev. Stat. 1971, ch. 120, pars. 418, 433.) This tax is based upon the consumption of fuel by vehicles operating in the State and is to be collected by distributors and suppliers of such fuel. (Ill. Rev. Stat. 1971, ch. 120, pars. 433, 422, 422(a).) Such persons are required by the MFTL to be licensed by the State, and they must further execute a bond with the State to protect against a failure to account for and pay the tax collected. Ill. Rev. Stat. 1971, ch. 120, pars. 419, 419(a); People ex rel. Rice v. Wilson Oil Co. (1936), 364 Ill. 406, 4 N.E.2d 847.
Section 3(a) of the MFTL (Ill. Rev. Stat. 1971, ch. 120, par. 419(a)) provides specifically:
"No person, other than a licensed distributor, shall act as a supplier of special fuel within this State without first securing a license to act as a supplier of special fuel from the Department."
Under section 5(a) (Ill. Rev. Stat. 1971, ch. 120, par. 421(a)), a licensed supplier is required to file monthly tax returns with the Department, itemizing the number of taxable gallons of special fuel purchased or sold during the preceding calendar month. A person whose license has been revoked must make a return, subject to the same conditions, for the period immediately prior to the revocation of the license.
The supplier's duty to collect motor fuel taxes is set forth in section 6(a) of the MFTL (Ill. Rev. Stat. 1971, ch. 120, par. 422(a)), which states:
"A supplier, other than a licensed distributor, who sells or distributes any special fuel, which he is required by Section 5a [par. 421(a)] to report to the Department when filing a return, shall * * * collect at the time of such sale and distribution, the amount of tax imposed under this Act on all such special fuel sold and distributed, and at the time of making a return, the supplier shall pay to the Department the amount so collected * * * and shall also pay to the Department an amount equal to the amount that would be collectible as a tax in the event of a sale thereof on all such special fuel used by said supplier during the period covered by the return.
A person whose license to act as supplier of special fuel has been revoked shall, at the time of making a return, also pay to the Department an amount equal to the amount that would be collectible as a tax in the event of a sale thereof on all special fuel, which he is required by the 1st paragraph of Section 5a [par. 419(a)] to report to the Department in making a return."
Section 7 of the MFTL (Ill. Rev. Stat. 1971, ch. 120, par. 423) further provides:
"Any person, not licensed as a distributor or supplier, purchasing motor fuel as to which there has been no charge made to him of the motor fuel tax shall, if the same be thereafter used in the operation of a motor vehicle upon the public highways, make payment of the motor fuel tax * * * on the amount so used * * *."
As noted, the Department assessed a tax liability against the plaintiff for failure to make returns and pay the tax due under these provisions, and the trial court affirmed the Department's finding of tax delinquencies for the period in question. On appeal from this decision, the plaintiff contends that he cannot be held liable for failure to collect the tax due under the MFTL where, at the time of the pertinent sales, he had neither a current nor a revoked license to act as a supplier of special fuel. Since, he contends, the MFTL makes no provision for the collection of motor fuel taxes by one who is not licensed or bonded as a supplier, he had neither the authority nor the responsibility to collect such taxes from purchasers of the fuel at the time of sale. The plaintiff contends further that he should not be held liable for payment of the tax where, by statute, the legal incidence of the tax falls not upon the supplier but upon the eventual user of the motor fuel. See American Oil Co. v. Mahin (1971), 49 Ill.2d 199, 273 N.E.2d 818.
In addressing the plaintiff's contentions, we note preliminarily that no question is raised regarding the plaintiff's status as a "supplier" of special fuel under the MFTL (see Ill. Rev. Stat. 1971, ch. 120, par. 417.14) at the time of the relevant sales. It is the plaintiff's position, however, that because he was supplying fuel in violation of the licensing and bonding requirements of the statute, he was thereby relieved of the obligations imposed by statute upon those who complied with such requirements. While, as the plaintiff asserts, the MFTL makes no provision for the collection of taxes by an unlicensed supplier, this ...