Decision Date03 December 2003
Docket NumberNo. 31377.,31377.
Citation214 W.Va. 684,591 S.E.2d 242
PartiesBLUESTONE PAVING, INC., A Corporation, Petitioner Below, Appellee, v. TAX COMMISSIONER OF the STATE OF WEST VIRGINIA, Respondent Below, Appellant.
CourtWest Virginia Supreme Court
Concurring Opinion of Justice Maynard December 9, 2003.

Darrell V. McGraw, Jr., Esq., Attorney General, Stephen Stockton, Esq., Senior Assistant Attorney General, Charleston, for the Appellant.

Shawn R. Romano, Esq., Daniels Law Firm, P.L.L.C., Charleston, for the Appellee. DAVIS, Justice.

The appellant herein and respondent below, the Tax Commissioner of the State of West Virginia [hereinafter referred to as "Tax Commissioner"], appeals from an order entered July 24, 2002, by the Circuit Court of Mercer County. In that order, the circuit court determined that the appellee herein and petitioner below, Bluestone Paving, Inc. [hereinafter referred to as "Bluestone"], was entitled to receive a use tax refund pursuant to W. Va.Code § 11-15A-10a(a)1 (1986) (Repl.Vol.2002).2 On appeal to this Court, the Tax Commissioner states that the circuit court erroneously applied the governing statute to the facts at issue in this case. Upon a review of the parties' arguments, the pertinent authorities, and the record submitted for appellate consideration, we reverse the decision of the Mercer County Circuit Court.


Bluestone Paving, Inc., is a West Virginia corporation and paving contractor located in Princeton3 whose primary function is to manufacture asphalt and to use this asphalt to pave roads for the West Virginia Department of Transportation, Division of Highways [hereinafter referred to as "DOH"]. In order to manufacture the asphalt needed for its paving operations, Bluestone was required to purchase gravel from a quarry in Virginia because, pursuant to DOH guidelines, there was not a sufficient amount of gravel available in West Virginia to guarantee the level of quality dictated by the DOH. Upon purchasing gravel at the quarry located in Pounding Mills, Virginia, Bluestone was required to pay a Virginia sales tax equivalent to 4 1/2% of the gravel's purchase price.4 The total amount of sales tax Bluestone paid to Virginia on the purchase of gravel at issue herein is $52,288.28.5

Following the purchase of the gravel, Bluestone transported it back to Princeton where it was used to manufacture asphalt. This asphalt was then used to pave roads pursuant to Bluestone's paving contracts with the DOH. Upon the use of the asphalt, Bluestone was required to pay a use tax to the State of West Virginia in the amount of 6% of the total value of the asphalt.6 The total amount of use tax Bluestone paid to West Virginia on the asphalt at issue herein is $69,777.99.

In 2001, Bluestone filed a claim for a tax refund, pursuant to W. Va.Code § 11-15A-10a(a), seeking to recoup the amount of the sales tax it had paid to Virginia when it purchased gravel from the Pounding Mills quarry. The Tax Commissioner denied Bluestone's claim, whereupon Bluestone filed a petition for said refund. By decision rendered January 17, 2002, the administrative law judge [hereinafter referred to as "ALJ"] determined that Bluestone was not entitled to its requested refund. In reaching this decision, the ALJ concluded that W. Va.Code § 11-15A-10a(a)7

allows for a credit against the use tax of a particular item if sales tax on that same property has been paid to another state. In other words, in order to get credit for the sales tax paid to Virginia, the West Virginia use tax must be the Virginia sales tax's "mirror image." The Petitioner in this case [Bluestone] may not claim this credit and subsequent refund because the West Virginia purchasers' use tax on asphalt is not the mirror image of the Virginia sales tax on aggregate [gravel]. By the Petitioner's own admission, the Petitioner takes aggregate and uses it to manufacture asphalt. The manufacturing of asphalt at its Princeton manufacturing facility changes the character of the product, the aggregate, for which sales tax has been paid to Virginia. The asphalt on which the Petitioner has paid the six percent (6%) purchasers' use tax to West Virginia is a separate product, which is made from the aggregate for which sales tax was paid. These are two separate taxable transactions that at first appear similar only because one product is used to manufacture another. However, it is this manufacturing (manipulating the product in an activity beyond common use) of a new and more valuable product that creates a separate taxable transaction and prevents W. Va.Code § 11-15A-10a from applying to this situation.

(Emphasis in original).

Bluestone then appealed this ruling to the Circuit Court of Mercer County. By order entered July 24, 2002, the circuit court reversed the ALJ's decision and found Bluestone to be entitled to the requested refund. In rendering its ruling, the circuit court determined that

the intent of West Virginia Code § 11-15A-10a is to prevent the imposition of double taxation of tangible personal property brought into the State of West Virginia, through the imposition of West Virginia's Use Tax, when tax has been levied by another state.
The Administrative Law Judge erred in determining that in order to obtain a credit "the West Virginia Use Tax must be the Virginia Sales Tax's `mirror image.'"

This Court finds that West Virginia Code § 11-15A-10a makes no such requirement. West Virginia Code § 11-15A-10a only requires that the tangible personal property upon which Use Tax is imposed be the tangible personal property upon which sales tax had been paid.

The Court finds that it is the aggregates [gravel] upon which sales taxes were paid in Virginia, incorporated into asphalt and used by the same taxpayer in a contracting activity upon which Use Taxes were levied by the State of West Virginia....

From this adverse ruling, the Tax Commissioner now appeals to this Court.


On appeal to this Court, the Tax Commissioner questions the circuit court's interpretation of W. Va.Code § 11-15A-10a(a) and its application thereof to the facts of this case. We previously have held that

[i]n reviewing challenges to the findings and conclusions of the circuit court, we apply a two-prong deferential standard of review. We review the final order and the ultimate disposition under an abuse of discretion standard, and we review the circuit court's underlying factual findings under a clearly erroneous standard. Questions of law are subject to a de novo review.

Syl. pt. 2, Walker v. West Virginia Ethics Comm'n, 201 W.Va. 108, 492 S.E.2d 167 (1997). Of specific relevance to the instant proceeding is the method by which we review a circuit court's interpretation of a statutory provision. In this regard, we have held "[w]here the issue on an appeal from the circuit court is clearly a question of law or involving an interpretation of a statute, we apply a de novo standard of review." Syl. pt. 1, Chrystal R.M. v. Charlie A.L., 194 W.Va. 138, 459 S.E.2d 415 (1995). See also Syl. pt. 1, Appalachian Power Co. v. State Tax Dep't of West Virginia, 195 W.Va. 573, 466 S.E.2d 424 (1995) ("Interpreting a statute or an administrative rule or regulation presents a purely legal question subject to de novo review."). With these standards in mind, we proceed to consider the parties' arguments.


The sole issue presented for resolution in the instant appeal is whether Bluestone's payment of a 6% use tax in West Virginia for asphalt used to pave roads in West Virginia entitles it to a refund of the 4 1/2% sales tax it paid to Virginia for the gravel it used to make the asphalt. Integral to a resolution of this matter is W. Va.Code § 11-15A-10a(a) (1986) (Repl.Vol.2002),8 which provides that

[a] person is entitled to a credit against the tax imposed by this article on the use of a particular item of tangible personal property equal to the amount, if any, of sales tax lawfully paid to another state for the acquisition of that property: Provided, That the amount of credit allowed shall not exceed the amount of use tax imposed on the use of the property in this state.

Applying this statutory language to the instant controversy, the circuit court reversed the decision of the administrative law judge and found that Bluestone was, in fact, entitled to the aforementioned credit and resultant refund.

On appeal to this Court, the Tax Commissioner disputes the circuit court's ruling and argues that the facts of this case do not entitle Bluestone to a tax credit as contemplated by W. Va.Code § 11-15A-10a(a). In this regard, the Commissioner contends that gravel and asphalt are not the same thing because gravel is an aggregate used to make asphalt and is an entirely different substance from asphalt, i.e., the resultant final product, with entirely different uses and purposes. Citing Central Paving Co., Inc. v. Idaho Tax Comm'n, 126 Idaho 174, 879 P.2d 1107 (1994); Buckley v. Northeastern Paving Corp., 161 Me. 330, 211 A.2d 889 (1965); Bituminous Roadways, Inc. v. Commissioner of Revenue, 324 N.W.2d 799 (Minn.1982); Blevins Asphalt Constr. Co. v. Director of Revenue, 938 S.W.2d 899 (Mo.1997) (en banc); People ex rel. Eastern Bermudez Asphalt Paving Co. v. Morgan, 61 A.D. 373, 70 N.Y.S. 516 (1901); Fritchie Asphalt & Paving Co. v. Bowers, 173 Ohio St. 111, 18 Ohio Op.2d 359, 180 N.E.2d 154 (1962) (per curiam); Union Paving Co. v. Commonwealth, 148 Pa.Commw. 358, 611 A.2d 360 (1992). Thus, the Commissioner states that the taxes Bluestone paid were for two different items and constituted two separate transactions: the first transaction was Bluestone's purchase of gravel, which was subject to sales tax in Virginia, and the second transaction was Bluestone's use of asphalt, which was subject to use tax in West Virginia. Because...

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