Court Opinion

ID: 9864930
Source: CourtListenerOpinion
Date Created: 2023-09-25 16:17:16.565704+00
Date Added: 2024-06-11T12:32:42.807788
License: Public Domain

Mr. Justice Stone
dissenting.
*216This case involves only a question of law, to; wit: Whether the service tax of two per cent of the value of services rendered, under section 5 (c), chapter 177, S.L. 1943, is properly assessed in the case of a resident machine shop operator where his services are wholly rendered under contract with a manufacturer whereby they become part of the process of manufacture of chattels which process is completed without the state of Colorado.
There is no contention that the court lacked jurisdiction, and so a discussion of that subject seems unnecessary. Since the pertinent facts were stipulated before the director and the trial court, there is no issue of fact involved as in the case of Carpenter, Director of Revenue v. People ex rel., 112 Colo. 151, 148 P. (2d) 371, and the other authorities cited in the majority opinion. If the director erred in his conclusions of law, his conclusions are subject to review in the courts.
From a reading'of section 5 (c) of the Service Tax Act, it appears that the many services there included as subject to service tax are all services which normally are not performed as a step in the process of the manufacture of chattels, but are either services normally rendered to the person, as in barber shops or banks, or services which normally are performed on existing chattels. While such is the general nature of the services mentioned in that paragraph, still many of them may at times be rendered in connection with the manufacture of new chattels. In the instant case that is true of the machine shop. It might equally well be true in the case of laundries, automobile paint shops, blacksmith shops, cabinet shops, commercial printing shops, and several other of the businesses mentioned in the paragraph. When such services are rendered as part of the process of manufacture of a chattel, we are challenged by the exemption set up in section 3, to wit: “Services rendered or performed as herein defined to a person engaged in * * * selling tangible personal property subject *217to a retail sales tax, provided that the cost of such services, directly or indirectly, enter into and become a part of the charges to the ultimate user or consumer, shall be exempt.”
Patently, the cost of the services rendered by petitioner in his machine shop entered into and became a part of the charges to the ultimate user or purchaser of the finished chattel. While the services were not rendered immediately to the person engaged in selling the personal property, they were rendered mediately to him, and while the chattels so manufactured in this case apparently were not subject to retail sales tax in Cólo-rado, they were chattels which would be “subject to retail sales tax,” and in my opinion, it was not the intention of the legislature to limit the exemption to services in connection with the manufacture of chattels to those for sale within the state of Colorado, but rather by the clause, “subject to retail sales tax,” to help identify the type of service which was exempt from the service tax.
By the majority opinion the imposition of a tax on such services rendered in connection with the manufacture of chattels is made dependent on the place of their ultimate sale which, in most cases, would be impossible of determination, and, in my opinion, the legislature could not have intended to place such a burden upon the taxpayer. Further, the imposition of a service tax on any part of the process of manufacture of chattels in Colorado for sale without the state, constitutes a handicap on Colorado industry in its competition with manufacturers from other states, and this could hardly have been the legislative intent.
Accordingly, I believe the judgment should be reversed.
Mr. Justice Jackson joins in this dissenting opinion.