Court Opinion

ID: 5833173
Source: CourtListenerOpinion
Date Created: 2022-01-12 22:30:49.111082+00
Date Added: 2024-06-11T08:43:30.818169
License: Public Domain

Greenblott, J. P. (dissenting).
Where, as here, the question is one of specific application of a broad statutory term by the agency responsible for administering the statute, the judicial function is limited to determining whether the record contains a rational basis to support the conclusion arrived at by the agency (cf. Matter of Archie Enterprises v State Tax Comm., 57 AD2d 383,. 386; see, also, Matter of UGP Props. v State Tax Comm. of State of N. Y., 64 AD2d 316, 318-319). It is settled that the construction given by an agency responsible for administering a statute will be upheld if not unreasonable or irrational (Matter of Howard v Wyman, 28 NY2d 434, 438), and a statute authorizing a tax exemption will generally be construed against the taxpayer (Matter of Grace v New York State Tax Comm., 37 NY2d 193). Moreover, the courts may not substitute their judgment for that of the Tax Commission where reasonable minds may differ as to the probative force of the evidence (Matter of Liberman v Gallman, 41 NY2d 774, 777-778). Testimony adduced at the hearing revealed that only 1% of the soda ash, ammonia, sulphur dioxide and caustic soda became a component part of the finished product, and that all but a small portion of these chemicals were washed away from the pulp. Moreover, the testimony indicated that these chemicals, including those used in the whitening process, were not a necessary part of the paper, and that petitioner did not intend to include them in the final product. Applying the above general principles, we are of the view that *197there is a rational basis for the commission’s determination that these chemicals were not purchased as a physical component part of tangible personal property (Tax Law, § 1101, subd [b], par [4], subpar [i], cl [A]) or that they became a component part of a product produced for sale by petitioner (Tax Law, § 1118, subd [4]).
We disagree with the conclusion of the majority that the determinative issue is one of statutory interpretation. In our view, the sole question is one of substantial evidence, i.e., whether the chemicals used in the manufacture of the paper became a component part of the paper or whether they were consumed in the manufacturing process. The State Tax Commission found that the chemicals used in the manufacture of the paper were consumed in the papermaking process and did not become a component part of the final product. Since this determination is supported by substantial evidence, we should not disturb it.
Staley, Jr., and Mikoll, JJ., concur with Kane, J.; Greenblott, J. P., and Main, J., dissent and vote to confirm in a separate memorandum by Greenblott, J. P.
Determination annulled, with costs, and matter remitted to the State Tax Commission for further proceedings not inconsistent herewith.