Court Opinion

ID: 5897225
Source: CourtListenerOpinion
Date Created: 2022-01-13 03:08:38.35868+00
Date Added: 2024-06-11T08:45:32.631688
License: Public Domain

Yesawich, Jr., J. (dissenting).
The settled law appears to me to be such that dismissal of the petition is inevitable. Petitioner seeks the benefit of an exemption from sales and use tax; hence, it carries the burden of proving that it comes within the language of the exemption (Matter of Grace v New York State Tax Commn., 37 NY2d 193, 195). Since statutes creating exemptions are to be strictly and narrowly interpreted, to prevail petitioner must establish that "its interpretation is the only reasonable construction” (Dental Socy. v New York State Tax Commn., 110 AD2d 988, 989, affd on opn below 66 NY2d 939 [emphasis supplied]). If respondent’s version is not irrational or unreasonable, it must be upheld (Matter of Howard v Wyman, 28 NY2d 434, 438).
In my view, respondent’s determination here is both rational and in keeping with the objective of Tax Law § 1115 (a) *103(12) and (c). The Internal Revenue Code and Environmental Conservation Law definitions of mining relied upon by the majority were conceived with vastly different goals in mind than that of a sales and use tax assessment. And the expansive opinion issued by the Society of Mining Engineers as to what it believes constitutes mining has no binding effect upon respondent in its application of the Tax Law. Respondent was at liberty to reject that opinion and to adopt any other rational definition of mining such as one that excludes the transporting of raw materials on public roads in tractor trailer trucks required to be registered with the Department of Motor Vehicles.
Moreover, with limited exceptions not relevant here, Tax Law § 1115 (a) (12) focuses on machinery and equipment used directly or predominantly in "production”. Quite reasonably, respondent excluded trucking from the reach of the exemption. And I read Matter of Rochester Ind. Packer v Heckelman (83 Misc 2d 1064) as being consistent with respondent’s position. In that case, despite the fact that they played an integral role in processing the livestock into saleable meat products, railway cars purchased to transport the cattle to a slaughterhouse were denied a sales and use tax exemption because the cars simply provided "a means of transporting raw materials” (supra, at 1066). To this end, in conformity with the Legislature’s expressed intention to bestow an exemption on production equipment and machinery, respondent’s regulations distinguish between transportation, deemed to be an administrative activity, and production, subjecting the former to sales and use tax (see, 20 NYCRR 528.13 [b] [i], [ii]). The majority has effectively enlarged the exemption conferred by Tax Law § 1115 (a) (12) and (c) so as to eliminate this distinction, to the point, I believe, that respondent may no longer weigh the taxpayer’s need to travel on public roadways or to register its vehicles for use thereon, or to even take into account the distance to be traveled, as factors bearing upon whether the taxpayer qualifies for the exemption.
The emphasis on the unsaleable character of the ore at the minehead strikes me as a dubious distinction. Nothing in the statute suggests that saleability is a basis for the exemption. Furthermore, were someone to build a second mill near petitioner’s mine, the ore would surely be saleable. And affording an exemption on the ground that the ore processing mill here is a monopsony is neither justifiable nor salutary.
As for Matter of Envirogas, Inc. v Chu (114 AD2d 38, affd on *104opn below 69 NY2d 632), there the trucks that hauled water to the wellhead, to be used in the removal of natural gas, were ruled exempt, while trucks used to transport personnel and equipment to the production site were not. Clearly, petitioner’s trucks used inside the mines are more akin to the former, given their intimate and direct connection with the production process, while those of petitioner’s trucks engaged in hauling ore down the road are closer to the latter, involved in what is more commonly regarded as transportation (compare, 20 NYCRR 528.13 [c] [2], example 8 [the forklift], with 20 NYCRR 528.13 [c] [2], example 7 [trucks on a public road]).
Accordingly, I would confirm respondent’s determination and dismiss the petition.
Mahoney, P. J., Main and Levine, JJ., concur with Harvey, J.; Yesawich, Jr., J., dissents and votes to confirm in an opinion.
Determination annulled, and petition granted, with costs.