Oxford Tire Supply, Inc. v. Commissioner of Revenue Services

• Decision Date: 18 July 2000
• Docket Number: (SC 16087)
• Citation: 253 Conn. 683,755 A.2d 850
• Court: Connecticut Supreme Court
• Parties: OXFORD TIRE SUPPLY, INC. v. COMMISSIONER OF REVENUE SERVICES

253 Conn. 683

755 A.2d 850

OXFORD TIRE SUPPLY, INC. v. COMMISSIONER OF REVENUE SERVICES

(SC 16087)

Supreme Court of Connecticut.

Argued November 2, 1999.

Officially released July 18, 2000.

Borden, Norcott, Palmer, Sullivan and Callahan, JS.¹ Jonathon L. Ensign, assistant attorney general, with whom, on the brief, was Richard Blumenthal, attorney general, for the appellant (defendant).

Douglas R. Steinmetz, with whom were Michael J. Hinton and, on the brief, Heather V. Taylor, for the appellee (plaintiff).

Richard Blumenthal, attorney general, and Kimberly P. Massicotte and Mark P. Kindall, assistant attorneys general, filed a brief for the commissioner of environmental protection as amicus curiae.

Richard Blumenthal, attorney general, and Mark F. Kohler, assistant attorney general, filed a brief for the Connecticut siting council as amicus curiae.

Opinion

PALMER, J.

This appeal requires us to decide whether the trial court properly concluded that scrap tire removal services are exempt from state sales and use taxes. We conclude that those services are subject to sales and use taxes² and, therefore, we reverse the judgments of the trial court.

The relevant facts and procedural history are undisputed. At all times relevant to this appeal, the plaintiff, Oxford Tire Supply, Inc. (Oxford), was engaged in the business of removing used automobile tires from the premises of various commercial enterprises, including tire dealers and gas stations. Oxford removed the scrap tires for a fee and transported them to its facility in Plainfield, where they were sorted. Oxford thereafter delivered the tires to Exeter Energy (Exeter), a tire burning plant located in Sterling.³ Oxford's smaller customers typically stored scrap tires on their business premises pending their removal. Oxford's larger customers generally warehoused their scrap tires in trailers that Oxford had provided to them. Oxford served numerous customers throughout Connecticut and removed millions of scrap tires annually.

During the two audit periods that are the subject of this appeal, January 1, 1989, through December 31, 1991, and January 1, 1992, through December 31, 1994, Oxford did not charge or collect sales taxes from its customers for its tire removal services. In November, 1993, the defendant, the commissioner of revenue services (commissioner), assessed sales taxes against Oxford pursuant to General Statutes (Rev. to 1993) § 12-415,⁴ for the scrap tire removal services that Oxford had rendered during the audit periods. Thereafter, Oxford petitioned the commissioner for reassessment under General Statutes § 12-418,⁵ claiming that its tire removal services were not subject to sales tax based on General Statutes § 12-407 (2) (i) (I),⁶ which exempts from such taxation services that are rendered in the "voluntary ... removal of hazardous waste, as defined in [General Statutes §] 22a-115,⁷ or other contaminants of air, water or soil...." The commissioner denied Oxford's petitions, and Oxford appealed⁸ to the Superior Court from the denial of the petitions pursuant to General Statutes (Rev. to 1995) § 12-422, as amended by Public Acts 1995, Nos. 95-26, § 18, and 95-220, § 4.⁹

After a trial,¹⁰ the court found that scrap tires, when exposed to the environment over time, leach certain contaminants.¹¹ On the basis of this and related findings,¹² the court sustained the plaintiffs appeals¹³ and rendered judgments in favor of Oxford, concluding that the removal of scrap tires is exempt from sales tax because scrap tires constitute hazardous waste under § 12-407 (2) (i) (I). Oxford Tire Supply, Inc. v. Commissioner of Revenue Services, 45 Conn. Sup. 508, 511, 514, 725 A.2d 1009 (1998). The trial court also noted that, even if it had found that scrap tires were not hazardous waste within the meaning of § 12-407 (2) (i) (I), the removal thereof still would be exempt from sales tax because scrap tires "would certainly constitute `other contaminants of air, water [or] soil'...." Id., 514 n.4, quoting General Statutes § 12-407 (2) (i) (I).

The commissioner appealed from the judgments of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to General Statutes § 51-199 (c) and Practice Book § 65-1. On appeal, the commissioner claims that the scrap tire removal services rendered by Oxford are not exempt from sales tax under § 12-407 (2) (i) (I).

During the pendency of this appeal, the legislature amended the definition of hazardous waste found in § 22a-115 (1); see footnote 6 of this opinion; by expressly excluding scrap tires from the purview of that definition.¹⁴ Public Acts 1999, No. 99-225, § 30 (P.A. 99-225). Consequently, we, sua sponte, ordered the parties to file supplemental briefs on the following two issues: "(1) Is [P.A. 99-225, § 30] retroactive ... [and] (2) [i]f the answer to [the first] question ... is yes, what effect, if any, does that retroactivity have on the question of whether scrap tires are (a) hazardous waste, or (b) contaminants of air, water [or] soil, within the meaning of ... § 12-407 (2) (i) (I)?"

We conclude that: (1) P.A. 99-225, § 30, is retroactive and, consequently, scrap tires do not constitute hazardous waste for purposes of § 12-407 (2) (i) (I); and (2) scrap tires are not "contaminants of air, water or soil" within the meaning of § 12-407 (2) (i) (I). We, therefore, agree with the commissioner that the trial court improperly determined that Oxford is entitled to a sales tax exemption for its scrap tire removal services rendered during the six year period from January 1, 1989, through December 31, 1994.

I

Before considering the commissioner's claims, we note that our resolution of the issues raised by this appeal is governed by several well established principles. First, the determination of whether Oxford's tire removal services qualify for a sales tax exemption pursuant to § 12-407 (2) (i) (I) is a question of statutory interpretation over which our review is plenary. See, e.g., Coelho v. ITT Hartford, 251 Conn. 106, 110, 752 A.2d 1063 (1999). Second, "[i]n construing any statute, [including taxing statutes] we seek to ascertain and give effect to the apparent intent of the legislature.... In seeking to discern that intent, we look to the words of the statute itself, to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common law principles governing the same general subject matter." (Internal quotation marks omitted.) Sharper Image Corp. v. Miller, 240 Conn. 531, 536, 692 A.2d 774 (1997). Finally, "[t]o ascertain the intention of the legislature with respect to a tax exemption, we employ three overlapping presumptions. First, statutes that provide exemptions from taxation are a matter of legislative grace that must be strictly construed against the taxpayer. Second, any ambiguity in the statutory formulation of an exemption must be resolved against the taxpayer. Third, the taxpayer must bear the burden of proving the error in an adverse assessment concerning an exemption. Plastic Tooling Aids Laboratory, Inc. v. Commissioner of Revenue Services, 213 Conn. 365, 369, 567 A.2d 1218 (1990); United Illuminating Co. v. Groppo, 220 Conn. 749, 752-53, 601 A.2d 1005 (1992); United Church of Christ v. West Hartford, 206 Conn. 711, 718-19, 539 A.2d 573 (1988)." (Internal quotation marks omitted.) Common Fund v. Fairfield, 228 Conn. 375, 380-81, 636 A.2d 795 (1994). Guided by these principles, we turn to the issues raised by this appeal.

II

We first address the commissioner's contention that the trial court improperly determined that Oxford's tire removal services constituted services rendered in the "voluntary ... removal of hazardous waste" pursuant to § 12-407 (2) (i) (I). We are persuaded that P.A. 99-225, § 30, retrospectively excluded scrap tires from the applicable definition of hazardous waste and that Oxford thus cannot avail itself of the sales tax exemption for services rendered in the voluntary removal of hazardous waste.

As we previously have indicated, the exemption for services rendered in the removal of hazardous waste incorporates the definition of such waste under § 22a-115 (1). From the date that this action was commenced until approximately six months after the trial court had rendered judgments, § 22a-115 (1) contained no express reference to scrap tires. See footnote 6 of this opinion. Public Act 99-225, § 30, however, amended § 22a-115 (1) by explicitly excluding scrap tires from the definition of hazardous waste. See footnote 13 of this opinion. Thus, if P.A. 99-225, § 30, has retrospective applicability, then the scrap tire removal services rendered by Oxford do not fall within the statutory sales tax exemption for the voluntary removal of hazardous waste.

"Whether to apply [P.A. 99-225, § 30] retroactively or prospectively depends upon the intent of the legislature in enacting the statute.... In order to determine the legislative intent, we utilize well established rules of statutory construction. Our point of departure is General Statutes § 55-3, which states: No provision of the general statutes, not previously contained in the statutes of the state, which imposes any new obligation on any person or corporation, shall be construed to have retrospective effect. The obligations referred to in the statute are those of substantive law.... Thus, we have uniformly interpreted § 55-3 as a rule of presumed legislative intent that statutes affecting substantive rights shall apply prospectively only.... This presumption in favor of prospective applicability, however, may be rebutted when the legislature clearly and unequivocally expresses its intent that the legislation shall apply retrospectively.... Where an amendment is intended to clarify the original intent of an earlier statute, it necessarily has retroactive effect.... We...