CHAPTER 235
STATE REVENUE
CIGAR AND CIGARETTE TAX ACT
AN ACT TO AMEND CHAPTER 6 OF THE REVISED CODE OF DELAWARE, 1935 AS AMENDED, RELATING TO STATE REVENUE BY PROVIDING FOR A TAX ON THE SALE OF CIGARS AND CIGARETTES AND THE ADMINISTRATION AND ENFORCEMENT THEREOF AND MAKING APPROPRIATION FOR THE EXPENSES INCURRED THEREIN.
Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met:
Section 1. This Act shall be known as the Cigar and Cigarette Tax Act.
Section 2. As used in this Act the following words and phrases are defined as follows:
The words "Tax Department" and "department" and "Tax Commissioner" mean the State Tax Department and the State Tax Commissioner as created by and defined in Article 12 of Chapter 6 of the Revised Code of Delaware, 1935.
The word "cigarette" means any roll for smoking made wholly or in part of tobacco irrespective of size or shape and whether or not such tobacco is flavored, adulterated or mixed with any other ingredient, the wrapping or cover of which is made of paper or any other substance or material except tobacco.
The word "cigar" shall mean all rolls of tobacco or any substitute therefor wrapped with tobacco.
The word "Person" includes any individual, co-partnership, society, association, corporation, joint stock company, and any combination of individuals and also an executor, administrator, receiver, trustee or other fiduciary.
The word "Sale" in addition to its usual meaning, includes any barter, exchange or transfer of title to cigarettes by any means or in any manner whatsoever.
The words "Retail Sale" or "Sale at Retail" mean a sale to a consumer or to any person for any purpose other than resale.
The word "Dealer" means any wholesale dealer and retail dealer as hereinafter defined.
The words "Wholesale Dealer" mean any person who sells cigarettes to retail dealers or other persons for purpose of resale only.
The words "Retail Dealer" mean any person other than a wholesale dealer engaged in the business of selling cigarettes.
The word "Package" means the individual package, box or other container in or from which retail sales of cigarettes are normally made or intended to be made.
For the purposes of this Act the singular shall include the plural; and the masculine shall include the feminine and the neuter.
Section 3. There is hereby imposed and shall be paid a tax on all cigarettes possessed in this State by any person for sale on and after the first day of July 1949 at the rate of one cent per ten cigarettes or fraction thereof except such sales of cigarettes as are not within the taxing power of this State under the commerce clause of the Constitution of the United States, and except such sales as are made to or by a voluntary organization of army and navy personnel operating a place for the sale of goods pursuant to regulations promulgated by the Secretary of War or the Secretary of the Navy. This tax shall be imposed upon only one sale of the same package of cigarettes.
Section 4. There is hereby imposed and shall be paid a tax on all cigars possessed in this State by any person for sale on and after the first day of July 1949 at the rate of two cents on each twenty cigars or fractional part thereof weighing not more than three pounds per thousand, and a tax of one cent on each cigar manufactured to retail for more than six cents each, and a tax of two cents on each cigar manufactured to retail for more than twenty cents each, except such sales as are made to or by a voluntary organization of army and navy personnel operating a place for the sale of goods pursuant to regulations promulgated by the Secretary of War or the Secretary of the Navy.
Section 5. The administration, enforcement and collection of all taxes, permits, licenses and fees under this Act are hereby
vested in the State Tax Department and the State Tax Commissioner and the powers conferred upon the Tax Department and the Tax Commissioner under the provisions of Article 12 of Chapter 6 of the Revised Code of Delaware, 1935, as amended; shall so far as applicable be exerciseable with respect to the provisions of this Act and the said Tax Department is hereby authorized and empowered to prescribe, adopt, promulgate and enforce rules and regulations relating thereto:
A. The method and means to be used in the cancellation of stamps.
B. The denominations and sale of stamps.
C. Any other matter or thing pertaining to the administration and enforcement of the provisions of this Act.
SECTION 6. UNLAWFUL TO SELL CIGARS OR CIGARETTES WITHOUT A PERMIT.
(A) During the period beginning July 1, 1949, it shall be unlawful for any person to continue to engage in or to begin to engage in, the sale of cigars or cigarettes at wholesale within this State or for any person excepting commissaries, ships' stores and voluntary unincorporated organizations of the Army or Navy personnel operating under regulations promulgated by the Secretary of War or Secretary of the Navy, to continue to engage in or begin to engage in the sale of cigars or cigarettes at retail within this State unless a cigar or cigarette permit or permits shall have been issued to him as hereinafter prescribed.
(B) Every person, desiring to continue to engage in, or to begin to engage in the sale of cigars or cigarettes at wholesale or retail within this State during the period beginning July 1, 1949, except those persons exempt under Section 6 (A) hereof, shall file an application for a permit or permits with the Tax Department. Every application for a cigar or cigarette permit shall be made upon a form prescribed, prepared, and furnished by the Tax Department, and shall set forth the name under which the applicant transacts or intends to transact business, the location of his place of business within the State, whether or not the applicant is holder of a mercantile or business license in effect when the application is made, and if so the number of such license and the county for which such license was issued, and such other information as the Tax Department may require. If the applicant has or intends to have more than one place of business within the
State the application shall state the location of each place of business. If the applicant is an association, the application shall set forth the names and addresses of the persons constituting the association, and if a corporation, the names and addresses of the principal officers thereof, and any other information prescribed by the Tax Department for purposes of identification. The application shall be signed and verified by oath or affirmation by the owner, if a natural person, and in the case of an association, by a member or partner thereof, and in the case of a corporation, by an executive officer thereof, or some person specifically authorized to sign the application, to which shall be attached the written evidence of his authority.
At the time of making such application the applicant shall pay to the Tax Department a permit fee of One Dollar ($1.00) for each permit.
Upon approval of the application and the payment of the permit fee herein required, the Tax Department shall grant and issue to each applicant a cigar or cigarette permit for each place of business within this State as set forth in his application. Cigar or cigarette permits shall not be assignable and shall be valid only for the persons in whose names issued, and for the transaction of business at the places designated therein, and shall at all times be conspicuously displayed at the places for which issued. All permits shall expire on the thirtieth day of June annually unless sooner suspended, surrendered or revoked for cause by the Tax Department.
(C) Permits issued under the provisions of this Act, may be renewed annually before the first day of July, upon application made to the Tax Department and the payment of a renewal fee of One Dollar ($1.00).
Whenever any permit issued .under the provisions of this Act is defaced, destroyed or lost, the Tax Department may issue a duplicate to the holder of the defaced, destroyed or lost permit under the payment of a fee of fifty cents (50c).
(D) The Tax Department may suspend, or, after hearing, revoke a cigar or cigarette permit whenever it finds that the holder thereof has failed to comply with any of the provisions of this Act, or any rules or regulations of the department prescribed, adopted, and promulgated under this Act. Suspending or revoking any cigar or cigarette permit, the department shall
request the holder thereof to surrender to it immediately all permits, or duplicates thereof, issued to him, and the holder shall surrender promptly all such permits to the department as requested. Whenever the department suspends a cigar or cigarette permit, it shall notify the holder immediately and afford him a hearing, if desired, and if a hearing has not already been afforded. After such hearing, the department shall either rescind its order of suspension, or good cause appearing therefor, shall continue the suspension or revoke the permit.
Section 7. Except as hereinafter provided, dealers shall be liable to the State as taxpayers for the payment of the tax imposed by this Act, and shall pay the tax into the State Treasury, through the department, by purchasing from the department adhesive stamps of such design and denominations as may be prescribed by the department. Manufacturers of cigars or cigarettes, located either within or outside of this State, and wholesale dealers in cigars or cigarettes located outside of this State, may purchase stamps from the department and affix such stamps, in the manner hereinafter prescribed, to packages of cigars or cigarettes to be sold within this State, in which case the dealer within this State, receiving such stamped packages will not be required to purchase and affix stamps on such packages.
Section 8. Each dealer shall affix, within the time hereinafter prescribed, to each package of cigars or cigarettes, stamps furnished by and purchased from the Department, evidencing the payment of the tax imposed by this Act, and shall cancel such stamps before such cigars or cigarettes are offered for sale, or before they are otherwise disposed of, unless stamps have been affixed to such packages before such dealer received them. Each wholesale dealer in this State shall affix such stamps to each package of cigars or cigarettes, unless such stamps shall have been previously affixed thereto, and shall cancel the same, in the manner prescribed by the Department, prior to the delivery of such packages to any retail dealer in this State.
The Department shall appoint wholesale dealers in cigars or cigarettes within this State, and may appoint any other persons, within or without the State, as agents to affix the stamps to be used in paying the tax herein imposed, but a wholesale dealer shall at all times have the right to appoint the person who is to affix the stamps to any cigars or cigarettes under his control, and whenever the department shall sell, consign or deliver to any such agent in any such stamps, such agent shall be entitled to
receive as compensation for his services and expenses as such agent in affixing such stamps, and to retain out of the moneys to be paid by him for such stamps, a commission of seven and one-half per centum on the par value thereof, if, and where such agent has purchased the stamps affixed by him directly from the department. The department is hereby authorized and required to allow such commission or compensation in the settlement of the accounts of such agent, upon payment by him into the State Treasury, through the department, of any moneys which may be, or become due, to the State by reason of the sale, delivery or consignment to such agent of such stamps.
Each retail dealer in this State, except those persons exempt under Section 6 (A) hereof, shall immediately upon the receipt of any cigars or cigarettes at his place of business, so affix such stamps to each package of cigars or cigarettes, unless such stamps shall have been previously affixed thereto, and shall cancel the same in the manner prescribed by the Department, or shall immediately mark in ink on each unopened box, carton or other container of such cigars or cigarettes, the word "received", and the month, day and year of such receipt, and shall affix his signature thereto. The retail dealer shall, in any event, open such box, carton or other container, and immediately affix such stamps to each package therein, and cancel the same, in the manner prescribed by the department, within twenty-four hours after such receipt, and prior to the sale of such cigars or cigarettes.
Whenever any cigars or cigarettes are found in the place of business of such retail dealer without the stamps affixed and cancelled, or not marked as having been received within the preceding twenty-four hours, as required by this section, the prima facie presumption shall arise that such cigars or cigarettes are kept therein in violation of the provisions of this Act.
Stamps shall be affixed to each package of cigars or cigarettes of an aggregate denomination not less than the amount of tax upon the contents therein, and shall be affixed in such manner that they will be visible to the purchaser. Upon affixing stamps to a package of cigars or cigarettes, the person affixing them shall cancel them by such method or in such manner as may be prescribed by the department.
Section 9. DEPARTMENT TO PREPARE AND FURNISH STAMPS. The department shall prescribe, prepare, and furnish adhesive stamp may be necessary for the payment of the tax imposed and assessed by this Act. The department shall make provisions for the sale of such stamps in such places and at such times as it may deem necessary.
The department shall appoint wholesale dealers in cigars or cigarettes within this State, and may appoint any other persons, within or without this State, as agents to affix the stamps to be used in paying the tax herein imposed upon sales of cigars or cigarettes, but a wholesale dealer shall at all times have the right to appoint the person who is to affix the stamps to any cigars or cigarettes under his control.
Section 10. Every person engaged in the sale of cigars or cigarettes at wholesale within this State and every person engaged in the sale of cigars and cigarettes at retail within this State, except commissaries, ships' stores, and voluntary unincorporated organizations of the Army or of the Navy personnel operating under regulations promulgated by the Secretary of War or the Secretary of the Navy, shall maintain and keep, for a period of two years, such record or records of cigars and cigarettes received, sold, and delivered within this State by him, together with invoices, bills of lading, and other pertinent papers as may be required by the department.
The department, or any agent appointed in writing, by it, is hereby authorized to examine the books, papers, invoices, and other records, the stock of cigars or cigarettes, in and upon any premises where the same are placed, stored, and sold, and equipment of any such wholesale or retail dealer pertaining to the sale and delivery of cigars or cigarettes taxable under this Act, to verify the accuracy of the payment of the tax imposed and assessed by this Act. Every such person is hereby directed and required to give to the Tax Commissioner, or his duly authorized representative, the means, facilities, and opportunity for such examinations as are hereby provided and required.
Section 11. Whenever any cigars or cigarettes, upon which stamps have been placed by a wholesale dealer, have been sold and shipped by him into another state for resale, or have been sold to commissaries, ships' stores and voluntary unincorporated organizations of the Army or of the Navy personnel operating under regulations promulgated by the Secretary of War or the Secretary of Navy for resale to authorized purchasers, or have become unfit for use and consumption or unsaleable or have been destroyed, such dealer shall be entitled to a refund on the
actual amount of tax paid by him with respect to such cigars or cigarettes. If the department is satisfied that any dealer is entitled to a refund, it shall certify the proposed amount of such refund to the State Tax Board for approval, and thereafter shall issue to such dealer stamps of sufficient value to cover the refund or pay to him cash as approved by the Board. The department is hereby authorized to adopt, prescribe, and promulgate such rules and regulations with regard to the presentation and proof of claim for refunds, as it may deem advisable.
The department may promulgate rules and regulations to relieve manufacturers and dealers from affixing the stamps on such cigars or cigarettes as are sold and shipped to points outside the State for resale outside the State, or on such cigars or cigarettes as are sold to commissaries, ships' stores and voluntary unincorporated organizations of the Army and the Navy personnel operating under regulations promulgated by the Secretary of War or the Secretary of Navy for resale to authorized purchasers.
Section 12. PERSONS DELIVERING CIGARS OR CIGARETTES MUST HAVE INVOICES. Every person, other than a common carrier, or the employes, thereof, who shall possess or transport any cigars or cigarettes upon the public highways, roads or streets of this State, for the purpose of delivery, sale or disposition, shall be required to have in his actual possession invoices, or delivery tickets for such cigars or cigarettes. The absence of such invoices or delivery tickets shall be prima facie evidence that such person is a dealer in cigars or cigarettes in this State and subject to the provisions of this Act.
Section 13. PENALTY SECTION. (A). Any person who shall sell cigars or cigarettes without being the holder of a permit or permits, as required by this Act, shall, upon conviction in a summary proceeding, be sentenced to pay a fine of Twenty-five Dollars ($25.00) and costs of prosecution, and in default of payment thereof, to undergo imprisonment for not more than ten (10) days.
(B) Any person who shall sell cigars or cigarettes without purchasing and affixing stamps to each package thereof, as required by this Act, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be sentenced for the first offense to pay a fine of not less than One Hundred Dollars ($100.00) or more than One Thousand Dollars ($1,000.00) or to suffer imprisonment for a term not exceeding six (6) months, or both, in the
discretion of the court, and in the case of a conviction of a second or subsequent offense hereunder, shall be sentenced to pay a fine of not less than Five Hundred Dollars ($500.00) or more than One Thousand Dollars ($1,000.00) and to suffer imprisonment for a term of not less than six (6) months or more than three (3) years.
(E) Any person who shall fail, neglect or refuse to comply with or shall violate the rules and regulations prescribed, adopted and promulgated by the department under the provisions of this Act, or who shall refuse to permit the department, or any agent appointed, by it, in writing, to examine his books, papers, invoices, and other records, his stock of cigars and cigarettes in and upon any premises where the same are prepared, stored, and sold, and his equipment pertaining to the sale of cigars and cigarettes taxable under this Act, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be sentenced to pay a fine of not less than One Hundred Dollars ($100.00) or more than Five Hundred Dollars ($500.00), or to suffer imprisonment of not more than six (6) months, or both, in the discretion of the court.
(F) Any person who falsely or fraudulently makes, forges, alters or counterfeits any stamp prescribed by the department, under the provisions of this Act, or causes or procures to be falsely or fraudulently made, forged, altered or counterfeited any such stamp, or knowingly and wilfully utters, publishes, passes or tenders, as true, any such false, altered, forged or counterfeited stamp, or uses more than once any stamp provided for and required by this Act, for the purpose of evading the tax hereby imposed or assessed, shall be guilty of a misdemeanor, and upon conviction thereof, shall be sentenced to suffer imprisonment for a term of not less than two (2) years or more than five (5) years.
Section 14. The sum of Ten Thousand Dollars ($10,000.00) in addition to all other monies appropriated under the General Budget Appropriation Bill, is hereby appropriated and the State Treasurer is hereby authorized to pay out of any funds not otherwise appropriated on warrants of the State Tax Commissioner, the salaries and expenses incurred in the administration, enforcement and collection of the provisions of this Act.
Section 15. All acts or parts of acts inconsistent with this Act are hereby repealed to the extent of such inconsistency only.