Court Opinion

ID: 9851644
Source: CourtListenerOpinion
Date Created: 2023-09-24 05:16:42.410297+00
Date Added: 2024-06-11T09:22:09.639670
License: Public Domain

Carlisle , J.
1. The sole question for determination is whether or not the natural gas used in the manner alleged in the petition comes within the exemption provision of section 3 (c) 2 of the act of 1951 (Ga. L. 1951, pp. 360, 365), which provides: “The terms ‘sale at retail,’ ‘use,’ ‘storage,’ and ‘consumption’ shall not include the sale, use, storage or consumption of industrial materials for future processing, manufacture or conversion into articles of tangible personal property for resale where such *238industrial materials become a component part of the finished product nor shall such terms include industrial material, other than machinery and machinery repair parts, that are used directly in the fabricating, converting, or processing of articles of tangible personal property or parts thereof for resale, nor shall such terms include materials, containers, labels, sacks or bags used for packaging tangible personal property for shipment or sale.” If it does fall within that provision then the corporation is entitled to the refund, and the trial court did not err in overruling the general and special demurrers of the defendants. If it does not fall within the provision, then the converse is true.
It is entirely clear that the General Assembly intended to tax natural and artificial gas when sold to any purchaser for purposes other than resale. By the terms of the act itself it is provided: “For the purpose of the tax imposed by this Act, these terms [retail sale and sale at retail] shall include ... (a) The sale of natural or artificial gas . . . when made to any purchaser for purposes other than resale.” Section 3 (c) 1.
It is not so entirely clear, however, whether the natural gas used by the plaintiff in the manner alleged in its petition comes within the exemptions provided in section 3 (c) 2. Does the manner in which the gas is alleged to have been used by the plaintiff make it an industrial material for future processing, manufacture, or conversion into articles of tangible personal property for resale, where such industrial material becomes a component part of the finished product? Or, does the manner in which the gas is alleged to have been used by the plaintiff make it an industrial material that is used directly in the fabricating, converting, or processing of articles of tangible personal property or parts thereof for resale?
The first of the two foregoing questions may be disposed of summarily, as it is nowhere contended in the petition that the gas used by the plaintiff as an industrial material became a component part of the finished brick, nor are there facts in the petition from which such a contention may be inferred.
Our problem is, therefore, narrowed to that of answering the latter of the two foregoing questions, namely, is the gas as used by the plaintiff in the manner alleged in the petition an industrial material that is used directly in the fabricating, converting, *239or processing of articles of tangible personal property or parts thereof for resale? To answer this question requires a proper construction of the statute, with particular reference to section 3 (c) 2, which is an exemption-from-taxation section.
In Cherokee Brick & Tile Co. v. Redwine, 209 Ga. 691 (75 S. E. 2d 550), in considering another exemption provision of the same act presently under consideration, the Supreme Court stated the rule of construction applicable to such provisions j thus: “Under our law any ambiguity in an alleged exemption J from taxation must be construed favorably to the State and j against the taxpayer.” And that court went on to say that the j exemption will not be held to be conferred unless the terms j under which it is granted clearly and distinctly show that such • was the intention of the legislature.
It is inadmissible to mutilate a statute by lifting a mere segment out of its context and construing it without consideration of all other parts of the act. Thompson v. Talmadge, 201 Ga. 867 (41 S. E. 2d 883). The intention of the legislature is to be gathered from the statute as a whole so as to give effect to each of its parts and at the same time harmonize, if possible, the component parts. Drake v. Drewry, 109 Ga. 399 (35 S. E. 44); Ford Motor Co. v. Abercrombie, 207 Ga. 464, 467 (62 S. E. 2d 209). And in determining such intention, the words of the statute are to be given their ordinary and usual signification. Code § 102-102 (1).
In section 3 of the act of 1951, the General Assembly is defining terms, and it says that certain words, terms, and phrases, when used in the act, shall have certain ascribed meanings, except when the context clearly indicates a different meaning; and in a subparagraph of that section (3 (c) 3 (i)), the term “tangible personal property” is, in a most comprehensive definition, defined as personal property “which may be seen, weighed, measured, felt, or touched, or is in any other manner perceptible to the senses.” We think that from the language of section 3(c)l, and the subparagraphs thereto, it is self-evident that the General Assembly is saying that the terms “retail sale” or “sale at retail” shall include sales to consumers or other persons for any purpose other than resale of any and all tangible personal property; bloti lest our definition of tangible personal property, all-inclusive and *240comprehensive though it be, become a fruitful source of litigation, we want it specifically understood that, included within that definition, are all those items enumerated in subparagraphs (a), (b), and (c), and natural and artificial gas are included in this precautionary enumeration.
Now, conceding that the General Assembly has in section 3 (c) 1 and the subparagraphs thereto evinced an intent to tax retail sales and sales at retail of all tangible personal property where sold to a consumer or to any other person for any purpose other than resale, in section 3 (c) 2 the General Assembly begins its enumeration of items of tangible personal property which shall be exempt from the tax, and in subparagraphs (a) through (g) certain items of tangible personal property (and certain services) are specifically listed. The enumeration of exempted items in the subparagraphs of this section does not concern us here. However, in section 3 (c) 2 itself there are three classes of tangible personal property which, depending upon the use to which it is put or the manner in which it is used, may be exempt from taxation. With the third of these three classifications (materials, containers, labels, sacks or bags used for packaging tangible personal property for shipment or sale) we are not here concerned; nor are we concerned .with the first of these classifications, save as the meaning of the first bears upon the meaning of the second. These first two classifications deal with “industrial materials,” which term is not especially defined in the act. The first classification exempts from taxation the sale, use, storage, or consumption of industrial materials for future processing, manufacture, or conversion into articles of tangible personal property for resale where such industrial materials become a component part of the finished product; or, to state this first classification more simply, all industrial materials which become and remain component parts of the finished product are exempt from taxation. The second classification exempts from taxation the sale, use, storage, or consumption of industrial materials, other than machinery and machinery parts, that are used directly in the fabricating, converting, or processing of articles of tangible personal property or parts thereof for resale; or, to state this classification more simply, all industrial materials which are used directly in the manufacturing process are exempt from taxation.
*241It will be observed at once that the three classifications contained in section 3 (c) 2 are disjunctive each of the other rather than appositive; that is, the classifications are distinct. The first classification has been disposed of on the ground that there is no contention that the gas became a component part of the brick. What then did the General Assembly mean when it inserted the second classification, industrial material used directly in fabricating, converting, and processing? It could not have meant by this classification industrial material which became a part of the finished product. That class of industrial material had just been covered in the first classification wherein the industrial material becomes a component part of the finished product.
While there is much discussion pro and con in the briefs of counsel for the plaintiff and for the defendants on the question of whether gas is an industrial material, in view of the well-known fact that in the chemical industries many gases become component parts of the finished chemical products, we think it must be conceded that gas is an industrial material within the meaning of the first classification in section 3 (c) 2, and the term “industrial material,” as used in the first classification, must necessarily mean the same thing in the second classification as in the first, since no language is used in the second classification which would indicate a different intention on the part of the General Assembly.
We are finally, therefore, confronted with the real and only question in this case. Is the industrial material (gas), as used by the plaintiff in the manner alleged in the petition, used directly in the manufacturing process? Under a construction of the statute most favorable to the State, we think not. Counsel for the plaintiff and for the defendants seem readily to concede that electricity which is used for mechanical energy or for motive power, and gas and other fuels which are used to generate mechanical energy or motive power, are indirectly rather than directly used in the manufacturing process, and therefore are not exempt from taxation. We perceive no difference between the indirection of those uses and the use of electricity or gas to generate heat to produce physical or chemical changes in raw material in order to produce the finished product. The gen*242erated energy produces motive power, which drives the machine that produces the finished product in one instance, and the generated energy produces heat, which produces the physical and chemical changes in the raw material that produces the finished product in the other. Both are indirect.
It follows, therefore, that the gas as used in the manner alleged in the petition is not directly used in the manufacturing process of brick and clay products within the meaning of section 3 (c) 2 of the act of 1951, and its sale, use, and consumption is not exempt from taxation; and, consequently, the plaintiff is not entitled to the refund claimed and the trial court erred in overruling the general demurrer to the petition for refund.
Were we not strong enough to stand alone upon our own construction of our own statute, we need look no further afield for support in our position than to our sister State of Tennessee, whose sales tax act served as a model for our own. The section of the Tennessee act and the section of the Georgia act presently under consideration are almost identical, and the Supreme Court of Tennessee in Phillips & Buttorff Mfg. Co. v. Carson, 188 Tenn. 132 (217 S. W. 2d 1), in passing upon the question, among others, of whether coal and fuel oil which was used to heat and maintain enameling solutions at uniform temperatures was exempt from taxation, readily held, under the same rules of statutory construction as obtain in this State, that such a use of coal and fuel oil was not a direct use within the meaning of the Tennessee exemption-from-taxation section of their sales tax act, and said: “When words are used in a statute defining the limits of an exemption, we cannot, under the guise of interpretation, enlarge the scope of the exemption. On the contrary 'all doubts must be resolved in favor of the State and against the exemptions.' ” Though the Tennessee decision be persuasive authority only, we are impressed that the rules of statutory construction are the same in the two States and that, under an application of those rules to the two almost identical sections of the two sales tax acts, this court has reached the same conclusion as the Tennessee court in determining the intent of the legislatures. We think that the reasoning in that case is sound and have no hesitancy in following it in the present case.
We have not found it necessary, in determining the intention *243of the General Assembly, to advert to either the regulations of the Revenue Commissioner, or the act of 1953 (Ga. L. 1953, p. 194). Indeed, we think that any reference to the act of 1953 is inadmissible for that purpose, as the tax period in controversy predates the passage of that act.
Pursuant to the act of the General Assembly, approved March 8, 1945 (Ga. L. 1945, p. 232), requiring that the whole court consider any case in which one of the judges of a division dissents, this case was considered and decided by the court as a whole.

Judgment reversed.

Sutton, C. J., Gardner, P. J., Felton and Quillian, JJ., concur. Townsend, J., dissents.