Curry Materials Co. v. Oklahoma Tax Commission

• Decision Date: 10 December 1957
• Docket Number: No. 37704,37704
• Citation: 319 P.2d 292,1957 OK 311
• Parties: CURRY MATERIALS COMPANY, A Corporation, of Antlers, Oklahoma, Plaintiff in Error, v. OKLAHOMA TAX COMMISSION, Defendant in Error.
• Court: Oklahoma Supreme Court

Page 292

319 P.2d 292

1957 OK 311

CURRY MATERIALS COMPANY, A Corporation, of Antlers Oklahoma, Plaintiff in Error, v. OKLAHOMA TAX COMMISSION, Defendant in Error.

No. 37704.

Supreme Court of Oklahoma.

Dec. 10, 1957.

Syllabus by the Court.

1. Proviso in Tit. 68 O.S.1951 § 1251d(q) is a condition of the entire, or all provisions of, the sales tax exemption therein provided, and applies equally to machinery and equipment purchased for and used in new plants, and plants already established.

2. On the basis of the facts stipulated in the present case, the machinery and equipment is not exempt from said tax because it is not 'incorporated into, and * * * directly used in, the process of manufacturing property subject to' said tax, within the meaning of said proviso.

Appeal from an order of the Oklahoma Tax Commission.

The Oklahoma Tax Commission assessed Curry Materials Company sales tax on the sale of certain machinery and equipment said company sold another, to be used in extracting from earth certain materials that the latter afterwards sold to contractors and builders for construction purposes, and on which latter sales, said company paid sales taxes. After said company's payment under protect, of the assessed tax on the machinery and equipment, and a hearing on said protest and the company's application for refund, the Tax Commission entered an order denying it. From said order, the Company appeals. Order sustained.

Joe Stamper, Antlers, for appellant.

R. F. Barry, W. F. Speakman, Oklahoma City, for appellee.

BLACKBIRD, Justice.

This appeal involves the question of whether or not a certain sale of machinery and equipment, by appellant, is subject to the tax prescribed by the Sales Tax Act, Tit. 68 O.S.1951 § 1251 et seq.

The sale was made to Cobb & Bates Materials Company and thereafter the appellee assessed appellant, the vendor, the sum of $723.80 on said sale. Appellant thereafter paid the tax, but protested it, and sought a refund thereof on the ground that the sale was not taxable under one of the exemptions specified in sub-sec. 1251d of said Act. After a hearing on said protest, appellee issued its order rejecting it and denying the refund therein sought. Appellant thereafter perfected the present appeal from said order.

Sales of the class free from the tax under the exemption, appellant relies upon for reversal, are described in paragraph (q) of the last cited sub-section, as follows:

'Sale of machinery and equipment purchased and used by persons establishing new manufacturing or processing plants in Oklahoma, and machinery and equipment purchased and used by persons in the operation of manufacturing plants already established in Oklahoma; provided, this exemption shall not apply unless such machinery and equipment is incorporated into, and is directly used in, the process of manufacturing property subject to taxation under the Sales Tax Act. The term 'manufacturing plants' shall mean those establishments primarily engaged in manufacturing or processing operations, and generally recognized as such.'

According to the stipulation of facts, entered into at the hearing, Cobb & Bates Materials Company, vendee of the machinery and equipment, is engaged in the business of extracting sand, gravel and other assorted materials from earth, and selling them to contractors and others for use in the construction of roads and bridges, and other structures made of masonry or concrete. To accomplish this, the earth is placed in what is called a 'washer' where large quantities of water are run through it, washing it, and, by so applying the water, separating the usuable material from other things, such as silt, roots and other vegetable matter. The material which remains, after separation of such unusable matter, is then subjected to several screenings, which screen out, or segregate, from the rest, portions thereof, whose particles are of different sizes. The usable materials thus separated and saved through the screening are called, respectively: 'No. 2 Chips', 'No. 1 Cover Stone', and 'Concrete Aggregate and Sand' and are the identical ones that the Cobb & Bates Company sell for use in construction, as aforesaid. Significantly, said company pays the sales tax, hereinbefore referred to, on all such sales of said materials.

The items of machinery and equipment sold, in the sale here involved, for use in the above described process, are, by specific, or trade name, as follows:

'1--Telsmith Washer; 1--Pioneer Conveyor, and Feeder Hopper with power attachment; 3--small belt conveyors with motors; 4-4"' Pumps with 1000 feet of aluminum pipe; 1--Caterpillar power attachment and generator; 1--Screw re-wash; 2--Electric motors; 1-38' Belt conveyor with motor.'

In an effort to have the subject machinery and equipment considered within the hereinbefore quoted sub-section's reference to '* * * machinery and equipment purchased and used by persons establishing new manufacturing or processing plants * * *' (emphasis ours) appellant's counsel represents, under his 'Proposition Two' (without contradiction by appellee's counsel) that the record herein shows said machinery and equipment is used in a new plant. He then urges that the proviso of said sub-section requiring the machinery and equipment's incorporation 'into' and direct use in the manufacturing of property subject to the sales tax, in order for it to be exempt, is inapplicable here. According to this argument, the subject items might be exempt solely on the ground that they were purchased and used 'by persons establishing' a new manufacturing or processing plant.

Appellee...