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Tenorio v Trust Territory [1978] TTLawRp 5; 7 TTR 592 (10 April 1978)

7 TTR 592

PEDRO P. TENORIO, d/b/a P/S AMUSEMENT COMPANY, Appellant

v.

TRUST TERRITORY OF THE PACIFIC ISLANDS and RONALD A. PETERSON, Director of Finance, Appellees

Civil Appeal No. 190

Appellate Division of the High Court

Mariana Islands District

April 10, 1978

Payer of gross receipts tax appealed from decision against him in his declaratory judgment action, brought when government defined total amount of money inserted in slot machines as taxable gross receipts. The Appellate Division of the High Court, Hefner, Associate Justice, held that gross receipts included neither payoffs made by the machine nor payoffs by the owner of the machine after he took from the machine the money not paid off by the machine, and that that part of the money not paid off by the machine which was given to proprietor of the establishment where the machine stood was rent and to be included in gross receipts of owner of the machine.

1. Taxation—Gross Revenue Tax—Construction

Letter from Director of Finance to taxpayer interpreting term "gross revenue" as used in tax law was not an unlawful usurpation of legislative authority, but rather, an administrative interpretation of the law, and construction of the law ultimately rested with the court. (77 TTC § 251(7))

2. Taxation—Generally

The obligation to pay taxes arises only from legislation and the interpretation of that legislation is guided by the rule that words are to be given their common and ordinary meaning.

3. Taxation—Gross Revenue Tax—Gross Receipts

"Gross receipts" does not include receipts held for the account of another.

4. Taxation—Gross Revenue Tax—Gross Receipts

"Gross receipts" as used in gross receipts tax law does not mean the total amount of money put into a slot machine, but rather, the money taken out of the machine by the owner after opening the machine; the tax may not be levied upon the total amount inserted in the machine, and the money is not "received" until the machine is opened and that portion of the money inserted which has not been paid out by the machine as winnings is taken out of the machine by the owner. (77 TTC §§ 251(7), 258)

5. Taxation—Gross Revenue Tax—Gross Receipts

Where, after taking out of slot machines the money that was not paid out by the machines, the owner of the machines used part of that money for jackpot payoffs, that part of the money was not gross receipts includable in gross receipts tax. (77 TTC §§ 251(7), 258)

6. Taxation—Gross Revenue Tax—Gross Receipts