Court Opinion

ID: 7370855
Source: CourtListenerOpinion
Date Created: 2022-07-28 00:13:01.017689+00
Date Added: 2024-06-11T16:20:53.675080
License: Public Domain

On Rehearing.
GOODWYN, Justice.
The Gas Company now insists that even though it be held that the gas compressors are subject to the use tax, the opinion should be modified so as to exempt the electric generators. The position taken is as follows: That the generating equipment is of the type, and designed for the same purpose, as that used by any electric power company for generating electricity for sale; that if so used by such company, it would unquestionably be exempt from use tax under the doctrine of Curry v. Alabama Power Company, 243 Ala. 53, 8 So.2d 521; and that, under the decision in State v. Calumet & Hecla Consol. Copper Co., 259 Ala. 225, 66 So.2d 726, 729, the exemption is not made dependent on the fact of sale of the electricity but applies even though all of the electricity is used or consumed by the owner in his own business.
On original consideration, we treated the generators as though they were integral, inseparable and essential parts of the gas compressors; and proceeded on the theory that their tax status depended on that of the gas compressors. Such was the position we understood to be taken by counsel. In the light of the Calumet case, supra, we are constrained to hold that the electric generators are in a category separate and distinct from the gas compressors, and are exempt as machines used in manufacturing tangible personal property, viz: electricity. Curry v. Alabama Power Company, supra. As we see it, the question presented is: Does the fact that an electric generator used by the owner to manufacture electricity to be used exclusively in the owner’s business for a purpose other than in compounding, processing or manufacturing of tangible personal property, serve to deny use tax exemption to such generator? In other words, to be exempt, must the electricity be used in the compounding, processing or manufacturing of tangible personal property? And is the use to be made of the tangible personal property manufactured by a machine a criterion for determining the exempt status of the machine? Since the Calumet case holds, in effect, that it is not necessary for a machine to manufacture tangible personal property for sale in order to be exempt, we see no rational basis for holding that the generators in this case, which are manufacturing tangible personal property, not for sale, should not also be held to be exempt. Counsel for the state suggest that the case at hand and the Calumet case may be differentiated, in that in the Calumet case the machines sought to be taxed were manufacturing tangible personal property which, in turn, was used in manufacturing tangible personal property for sale, while in the instant case the machines sought to be taxed manufacture tangible personal property— electricity — which is not used in connection with any of the exempt categories, i. e., compounding, processing or manufacturing tangible personal property. True, the situation in the two cases is different in the respect indicated, but we find nothing in the Calumet case which would support a holding that a machine for manufacturing tangible personal property is taxable unless the property manufactured is, in turn, used in compounding, processing or manufacturing tangible personal property either for use by the owner or for sale, or is itself manufactured for sale. The effect of the Calumet case is that, in order for a machine used in manufacturing tangible personal *230property to be exempt, it is not required that such property itself be manufactured for sale or that it be used in compounding, processing or manufacturing tangible personal property either for use by the owner or for sale. So long as a machine is used for manufacturing tangible personal property, it is granted exemption by the statute, Code 1940, Tit. 51, Sect. 789(p), as amended regardless of the use made of the property manufactured. Such is the import of the Calumet case. By this we do not wish to be understood as holding that every device which might be said to have for its purpose the compounding, processing or manufacturing of tangible personal property is necessarily exempt. There may be circumstances affecting its exempt status, such as where a device becomes an integral and inseparable part of a non-exempt machine so as to make it indistinguishable as a separate unit. But that question is not before us. Here, we think it is sufficiently shown that the generators, as stand-by power units, are separate and distinct from the non-exempt compressors.
As stated in the opinion in the Calumet case:
“The fact remains that the appellant [state] is asking the courts to supply words not found in the statute itself and which could have been inserted in the act by the legislature if it had intended so to do.”
If the legislature had intended to restrict the exemption to machines manufacturing tangible personal property for sale, or which, in turn, is used in compounding, processing or manufacturing tangible personal property either for use by the owner .or for sale, it would have been a simple matter to have so provided. It is not our prerogative to question the wisdom of the ..exemptions. That is a matter of policy which rests exclusively with the legislature.
The original opinion is modified and the judgment of the trial court reversed in the respects indicated. Judgment will be rendered here exempting the electric generators, and parts, attachments and replacements therefor, from the use tax assessment.
Application for rehearing is granted. Opinion and judgment modified. Opinion extended.
Reversed in part, affirmed in part and rendered.
LAWSON, SIMPSON and CLAYTON, JJ., concur.