Oxford Tire Supply v. Commiss Revenue Services

• Decision Date: 16 December 1998
• Docket Number: Nos. CV960564091,CV960564092,s. CV960564091
• Citation: Oxford Tire Supply v. Commiss Revenue Services, 725 A.2d 1009, 45 Conn. Sup. 508 (Conn. Super. 1998)
• Court: Connecticut Superior Court
• Parties: (Conn.Super. 1998) OXFORD TIRE SUPPLY, INC. v. COMMISSIONER OF REVENUE SERVICES; OXFORD TIRE SUPPLY, INC. v. COMMISSIONER OF REVENUE SERVICES File - NEW BRITAIN, AT HARTFORD

725 A.2d 1009 (Conn.Super. 1998)

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

File Nos. CV960564091, CV960564092

SUPERIOR COURT OF CONNECTICUT, JUDICIAL DISTRICT OF HARTFORD - NEW BRITAIN, AT HARTFORD

December 16, 1998, Memorandum Filed

COUNSEL: Cummings & Lockwood, for the plaintiff. Jonathon L. Ensign, assistant attorney general, with whom was Richard Blumenthal, attorney general, for the defendant.

MCWEENY, J.

The plaintiff, Oxford Tire Supply, Inc., (Oxford), in these consolidated cases appeals the denial by the defendant, the commissioner of the department of revenue services (commissioner), of Oxford's protests and petitions for reassessments of sales and use taxes, interest and penalties. The taxes at issue relate to Oxford's service of collecting scrap fires. A taxpayer's appeal from such decisions is authorized pursuant to General Statutes 12-422. The Superior Court has full equitable powers in such appeals and provides a trial de novo. Gallacher v. Commissioner of Revenue Services, 221 Conn. 166, 176, 602 A.2d 996 (1992); Kimberly Clark Corp. v. Dubno, 204 Conn. 137, 144, 527 A.2d 679 (1987).

The dispositive issue in these consolidated cases is whether the service of collecting scrap tires falls within the exemption from the sales and use tax of General Statutes 12-407(2)(i)(I) for "services rendered in the . . . removal of hazardous waste as defined in [General Statutes ] 22a-115, or other contaminants of air, water and soil . . . ." If such service falls within this exception, then the commissioner has improperly assessed all taxes at issue. The inquiry thus becomes whether the scrap tires removed by Oxford constitute "hazardous waste" or "other contaminants of air, water or soil." The court finds that scrap tires are "hazardous waste" and rules for the plaintiff.

The plaintiff is a service company that annually collects millions of tires, which are delivered to a tire burning facility.¹ The sources of tires (commercial gas stations, tire stores, etc.) pay Oxford a fee for removing and disposing of the tires. The department of environmental protection of the state of Connecticut (department) classifies tires as "special waste" which requires special handling, storage, disposal and processing. Regs., Conn. State Agencies 22a-209-8. Oxford argues that scrap tires are hazardous waste as defined in 22a-115(1)² or other contaminant of air, water or soil. The commissioner claims that scrap tires are not hazardous waste but rather special waste pursuant to Section 22a-209-1³ of the Regulations of Connecticut State Agencies. The evidence at trial consisted of a stipulation of facts, substantial documentary evidence and testimony. The plaintiff at trial was obligated to overcome the presumption of General Statutes 12-410 (1) that all gross receipts are subject to sales tax, and the high burden on taxpayers claiming exemption. See Plastic Tooling Aids Laboratory, Inc. v. Commissioner, 213 Conn. 365, 369, 567 A.2d 1218 (1990).

The plaintiff has met its burden of proving that scrap tire pickup services qualify for the 12-407 (2) (i) (1) exemption as hazardous waste.

At trial, the plaintiff introduced the testimony of Mr. John Schaub, who established the nature of the scrap tire disposal problem and the role of Oxford in the elimination of such waste. The commissioner's witnesses did not dispute the problematic nature of scrap tires. Schaub testified to the fire hazard of scrap tires and their breakdown in the environment. He stated that "basically tires do leach several components and pretty much on a constant basis." Schaub's testimony further established that tires create problems with respect to fire potential. Tires burn and such fires are difficult to suppress. Tire fires release contaminants into the environment. Tires may combust spontaneously into fire in landfills. Tires are breeding sites for vectors such as mosquitoes, rodents and snakes.

The most critical evidence at trial was the testimony of Kirk Brown, Ph.D., and his incorporation of studies reflecting the hazardous nature of scrap tires. Brown is an expert in waste management. He is an agronomist with a special area of expertise in soil contamination. Brown testified that "under normal landfill conditions, under conditions where they're placed in stacks. . . . Under all those conditions, it's my opinion that they would leach hazardous substances." Included within such leachate would be: (1) volatile chemicals, including carbon disulfide, toluene and methyl ethyl ketone; (2) metals including zinc, arsenic, chromium, cadmium, barium, lead, selenium and mercury; and (3) polynuclear aromatic hydrocarbons, including known chemical carcinogens as well as other components.

The testimony of Schaub and Brown confirmed the obvious observation that the leaching would increase over time as a tire was left in the environment. The department's toxicity tests demonstrate that waste tires are generally not subject to leaking except for small quantities of barium. A department test of the water at the Hamden Tire Pond found grease, iron, turbidity and phenol. The department has ordered the Hamden Tire Pond closed and remedial action to be taken, including removal of all exposed tires.

A critical element of testimony by Brown concerned the composition of tires. He stated that the substances in tires leach because "they're not chemically bound. Particularly, the volatile substances are going to diffuse out just along concentration gradients. And the metals are not chemically bound. They're kind of residues left over as a result of the processing, and it's just a matter of the tires breaking down or releasing those." Thus, refuse tires that deteriorate under normal environmental conditions, are distinguishable from other products that may contain hazardous chemicals, which if encapsulated, are not readily released into the environment.

The Exeter tire burning plant discharges in its water runoff contaminants as evidenced by the department's "fleas and minnows" test. The ash resulting from the burning of tires is classified as hazardous waste.

Brown, though not a chemist, is an expert in waste management. His opinions were supported by numerous studies. The scientific evidence provided by Brown meets the standard for admission of scientific evidence established in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S. Ct. 2786, 125 L. Ed. 2d 469 (1993), and adopted for Connecticut courts in State v. Porter, 241 Conn. 57, 68, 698 A.2d 739 (1997), cert. denied, U.S. , 118 S. Ct. 1384, 140 L. Ed. 2d 645 (1998).

The hazardous waste definition of 22a-115(1) adopts the federal definition of hazardous waste contained in 40 C.F.R. 261.2(a)(2)...