Court Opinion

ID: 9853061
Source: CourtListenerOpinion
Date Created: 2023-09-24 05:41:52.342418+00
Date Added: 2024-06-11T09:22:40.415990
License: Public Domain

CALLISTER, Justice
(dissenting).
The majority opinion states that the issue of this case is whether a railroad is a commercial or an industrial enterprise; if it be industrial, it is exempt from sales *98or use taxes on fuel oil bought or consumed in the propulsion of its engines.
This characterization is in effect an amendment of § S9-15^t[a] and [b], U.C.A. 1953, the relevant portions provide as follows:
“ * * * The sale of coal, fuel oil and other fuels shall not be subject to the tax except as hereinafter provided.
“[b] (2) To any person as defined in this act including municipal corporations for gas, electricity, heat, coal, fuel oil or other fuels sold or furnished for domestic or commercial consumption. * * * »
The statute clearly provides that fuel oil is exempt from the sales tax except that sold or furnished for domestic or commercial consumption. The majority opinion has interpreted the statute as providing that all fuel oil is subject to the sales tax except that sold or furnished for industrial consumption. This distinction is important because the majority opinion has arbitrarily determined that there are three basic types of consumers, domestic, commercial, and industrial, and all consumers must fit neatly within one of these categories.
This misconception that the statute provides for only three categories may have arisen from Union Portland Cement Co. v. State Tax Comm., 110 Utah 152, 157, 176 P.2d 879, 881 (1947), where on rehearing this court stated:
“In the case at bar an amendment to the Sales Tax Act became effective March 18, 1943, which, in effect, exempted sales of industrial coal from the sales tax. * * * ”
However, at page 153 of the Utah Reports, page 880 of 176 P.2d, this court admonished:
“In this opinion and for the purposes of this opinion only we use the terms ‘industrial coal’ and ‘coal for industrial use’ as meaning ‘coal other than sold or furnished for domestic or commercial consumption.’ ” [Emphasis mine.]
This opinion was never intended to be construed as meaning that if the consumption were not domestic or commercial, it must be industrial.
As observed by the majority opinion, the basic language for the Utah statute was obtained from a similar provision contained in Section 616(a) of the Federal Revenue Act of 1932. In an interpretation of the federal act in Wisconsin Electric Power Co. v. United States, 336 U.S. 176, 69 S.Ct. 492, 495, 93 L.Ed. 591, it was stated:
“The regulations interpret the section in line with the legislative history. U.S. Treas.Reg. 46 (1940 ed.) § 316.190 [as amended by T.D. 5099], presently applicable, provides in pertinent part:
“ ‘Scope of tax. — The tax imposed by section 3411(a) of the Internal Revenue *99Code, as amended, applies, except as provided hereinafter, to all electrical energy sold for domestic or commercial consumption and not for resale.
“ ‘The term “electrical energy sold for domestic or commercial consumption” does not include (1) electrical energy sold for industrial consumption, e. g., for use in manufacturing, mining, refining, shipbuilding, building construction, irrigation, etc., or (2) that sold for other uses-which likewise cannot be classed as-domestic or commercial, such as the electrical energy used by electric and gas companies, waterworks, telegraph, telephone, and radio communication companies, -railroads, other similar common carriers, educational institutions not operated for private profit, churches, and charitable institutions in their operations as such. * * ’ ” [Emphasis mine.]
This opinion clearly emphasizes that a use may be neither domestic nor commercial and yet not industrial. Nevertheless, if the consumption is not commercial or domestic, it is tax exempt.
This dissent is premised on the basis that if the consumption of fuel by the taxpayer is neither commercial nor domestic, the taxpayer is within the exempt status provided in § 59-15-4(a), U.C.A. 1953, and whether the use is industrial becomes irrelevant.
In State ex rel. Kansas City Power & Light Co. v. Smith, 342 Mo. 75, 111 S.W.2d 513, 515 (1932), a sales tax was imposed on the sales of electricity, sewer service, and gas to domestic, commercial, or industrial consumers. The court stated:
“* * * We therefore conclude that the Legislature did not intend to tax the sale of all electricity but, rather, to impose a tax only on the sale to ‘domestic, commercial or industrial consumers,’ each of which is distinct from the other, and, under the rule above announced, to exclude the sale of all electricity not coming within the meaning of these words.”
The court concluded that the electricity sold to the taxpayer to propel its street cars, was used neither for industrial nor commercial purposes within the meaning of the act, and was therefore not subject to the tax.
In the instant case, the consumption' of fuel by the taxpayer is neither domestic nor commercial and therefore falls within the exempt status. The fact that the consumption is not industrial does not alter its status.
The majority opinion has held that the legislature intended to exclude from taxation the fuel oil which industrial concerns use in the business of fabricating merchandise, which, when completed, would be subject to the sales tax, and that a sales tax is intended to be imposed on railroads which are primarily engaged in commerce, -that is, in trade rather than in industry, or the fabrication of merchandise. ■
Section 59-15-4(a) provides' for the levy of a tax' upon every retail sale -of tangible *100personal property made within the State of Utah; it further provides that the sale of coal, fuel oil and other fuels shall not be subject to the tax except as hereinafter provided. The majority opinion renders this second provision superfluous and meaningless.
Section 59-15-2(e) defines a retail sale as “every sale within the state of Utah by a retailer or wholesaler to a user or consumer, except such sales as are defined as wholesale sales or otherwise exempted by the terms of this act,” and a wholesale sale is deemed in § 59 — IS—2(f) “each purchase of tangible personal property or product made by a person engaged in the business of manufacturing, compounding for sale, profit or use, any article, substance or commodity, which enters into and becomes an ingredient or component part of the tangible personal property or product which he manufactures, or compounds.”
From these definitions we may conclude that the sale of fuel oil would be a retail sale if made to a consumer, unless the sale were to a manufacturer, in which case it would be a wholesale sale and exempt from the sales tax. The legislature by the second provision of § 59-15-4(a) suspended the operation of . these rules and provided a general exemption for fuel oil unless it was sold for commercial or domestic consumption. Therefore, we are compelled to conclude that the legislature intended to exclude a class of consumers of fuel oil who did not fit within the group defined by § 59 — 15—2(f) and yet were not domestic or commercial consumers. The appellant, taxpayer, is entitled to this exemption.