France Co. v. Evatt
| Decision Date | 14 June 1944 |
| Docket Number | 29762. |
| Citation | 55 N.E.2d 652,143 Ohio St. 455 |
| Parties | FRANCE CO. v. EVATT, Tax Commissioner. |
| Court | Ohio Supreme Court |
Syllabus by the Court.
Sales of tangible personal property used and consumed in operations consisting of transporting crushed-stone products from a stone crushing and screening plant to yards adjacent thereto and of draining, cleaning, blending and reassembling such products to comply with the required specifications of the purchasing trade before they are available and ready for market and sale, are sales of personal property used and consumed directly in the production by processing of tangible personal property for sale and are, under the provisions of Sections 5546-1 and 5546-25, General Code, exempt from state sales and use taxes.
Appeal from the Board of Tax Appeals.
This is an appeal from a decision of the Board of Tax Appeals modifying a determination of sales and use tax reassessment by the appellant as Tax Commissioner against the appellee The France Company. Recovery of sales and use taxes is sought by appellant on certain purchases which appellee claims were of goods the sale of which is not subject to such tax.
The appellee, during the time involved in this inquiry, was engaged in operating a stone quarry, a stone crushing and screening plant and storage yards. The tax was assessed upon certain purchases of supplies and equipment used and consumed by the appellee in its yard operations in handling crushed-stone products for ultimate sale. The operations in question were those which followed after the stone had been quarried, removed from the quarry, crushed and screened on the ground level. These operations consisted of the removal of the screened product to the yards of the appellee, connected directly with the stone crushing plant where it was stored prior to sale, and of the reassembling of this product in form and proportions as required by purchasers, preparatory to and including loading for shipment.
The tangible personal property, the subject matter of the audit and assessment, was used only in yard operations and consisted of dump cars, movable tracks, together with rails, ties, spikes and bolts, which go to make up the movable tracks, locomotive engines, locomotive cranes, movable shovels, loaders, together with coal, petroleum products and other supplies consumed in the operation of this equipment. Other pertinent facts are stated in the opinion.
Thomas J. Herbert, Atty. Gen., and A. A. Cartwright, of Columbus, for appellant.
R. H. Rogers and Brandon G. Schnorf, both of Toledo, for appellee.
The determination of his appeal calls for the construction of Sections 5546-1 and 5546-25, General Code, as applied to the use of the equipment and supplies in question in the operations of the appellee in its plant yards.
The pertinent portion of Section 5546-1, General Code, under which appellee claims exemption, is as follows:
"Retail sale' and 'sales at retail' include all sales excepting those in which the purpose of the consumer is * * * to use or consume the thing transferred directly in the production of tangible personal property for sale by * * * processing * * *.'
The appellant contends that the tangible personal property in question was not used in the 'production of tangible personal property for sale by * * * processing'; that the production and processing was completed in the crushing and screening process; and that the subsequent operations in which the personal property in question was used constituted a distribution and marketing of the crushed-stone products. The appellee, on the other hand, contends that the storage of the crushed-stone products in its yards and the operations of washing, cleaning, blending and reassembling were still a necessary process in preparing the product for the market, and that such operations constituted a continuation of the production and processing of the materials for sale.
The record shows that slightly less than half of the stone crushed and screened during the period involved was transferred immediately from the screen to trucks and cars for immediate delivery to purchasers. The remainder of the crushed stone, in order to keep the plant in continuous operation, was transferred to storage piles in the yards from immediately adjacent to three-eighths of a mile from the screen. The transportation of this product and its reassembly for delivery to purchasers were accomplished by the use of the tangible personal property above described and now under consideration.
The stone was crushed into various sizes to meet the specifications of purchasers and was used for railroad ballast, road building, building construction, agricultural limestone and other purposes. The purchasers' specifications frequently called for combinations of certain percentages of grades or sizes of the product, which are made up from...
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