Petco Insulation Co., Inc. v. Crystal
| Decision Date | 15 November 1994 |
| Docket Number | No. 14978,14978 |
| Citation | 231 Conn. 315,649 A.2d 790 |
| Court | Connecticut Supreme Court |
| Parties | PETCO INSULATION COMPANY, INC. v. Allan A. CRYSTAL, Commissioner of Revenue Services. AAIS CORPORATION v. Allan A. CRYSTAL, Commissioner of Revenue Services. |
Robert J. Percy, Hartford, for appellant (plaintiff AAIS Corp.).
Anne O'Leary, Asst. Atty. Gen., with whom, on the brief, was Richard Blumenthal, Atty. Gen., for appellee (defendant).
Before BORDEN, BERDON, NORCOTT, KATZ and PALMER, JJ.
The principal issue in this appeal is whether the trial court correctly interpreted the term "services" in General Statutes § 12-407(2)(i)(I) 1 to exclude tangible personal property purchased and consumed by asbestos removal contractors. The statute exempts the cost of "hazardous waste removal services" from sales and use tax, and the department of revenue services defines asbestos as a "hazardous waste." Department of Revenue Services Ruling 89-230 (November 21, 1989). Because we conclude that tangible personal property purchased and consumed by asbestos removal contractors is not services within the meaning of § 12-407(2)(i)(I), we affirm the judgment of the trial court.
The record establishes the following undisputed facts. The plaintiff, AAIS Corporation, 2 is a contractor engaged in the business of providing asbestos abatement services. Asbestos includes any of several fibrous minerals that commonly were used as insulation until it was discovered that the inhalation of asbestos fibers may cause a variety of lung diseases, including cancer. Therefore, extensive precautions are taken in preparation for asbestos removal and in the actual removal process. 3
As a contractor engaged in asbestos removal services, the plaintiff must purchase disposable supplies and materials, including paper uniforms, filters, plastic covering, plastic bags, tape and other miscellaneous materials, that are used in the process. The cost of these materials accounts for approximately 10 to 15 percent of the amount paid for the service by the owner of the property. Because the industry assumed that tangible personal property used to remove asbestos was excluded from the sales and use tax pursuant to § 12-407(2)(i)(I), none of the plaintiff's suppliers required it to pay sales tax on the purchase of these materials. The defendant, the commissioner of revenue services, determined, however, that tangible personal property purchased by contractors for use in the removal of asbestos is subject to sales and use tax and levied a deficiency assessment against the plaintiff pursuant to General Statutes § 12-415. 4 The plaintiff then petitioned the defendant for a hearing and reassessment under General Statutes § 12-418, 5 arguing that § 12-407(2)(i)(I) exempts materials as well as labor from the sales and use tax. After the defendant found that it had assessed the deficiency properly and denied a hearing, the plaintiff appealed to the Superior Court pursuant to General Statutes § 12-422. 6 That court determined that the plaintiff had failed to sustain its burden of proof that the assessment had been erroneously levied and, accordingly, upheld the deficiency assessment. The plaintiff appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199(c). We affirm. 7
The plaintiff made two arguments to the trial court. First, it argued that the tangible personal property used to remove asbestos was resold by the plaintiff to the service recipients and therefore was not taxable to the plaintiff. 8 Because the plaintiff did not obtain a resale certificate and because it ultimately consumed the materials, the trial court found no merit in this argument. The plaintiff has not raised it before this court and, therefore, we do not address it. 9
In the alternative, the plaintiff argued that the meaning of "services" under § 12-407(2)(i)(I); see footnote 1; includes both labor and tangible personal property. As the trial court reasoned, although the term "services" is not defined for the purposes of chapter 219 of the General Statutes, entitled "Sales and Use Taxes," the term is used repeatedly throughout § 12-407(2), the definitional section, as well as General Statutes § 12-412, the exemption section. The court concluded that when the legislature intended to exempt both services and tangible personal property from the tax, it clearly indicated this intent by explicitly including both terms. The court reasoned, therefore, that if the legislature had intended to exempt both labor and materials used for asbestos abatement services, it would have specifically provided for that exemption as it had in other legislative enactments dealing with the sales and use tax. Accordingly, the trial court determined that the plaintiff had failed to sustain its burden of proof and upheld the defendant's deficiency assessment. We agree with the reasoning and conclusion of the trial court.
At the outset, we note the principles of statutory construction that govern the applicability of a tax exemption. Plastic Tooling Aids Laboratory, Inc. v. Commissioner of Revenue Services, 213 Conn. 365, 369, 567 A.2d 1218 (1990). Applying these principles to the present case, we conclude that the trial court properly determined that the plaintiff failed to sustain its burden of proving that the § 12-407(2)(i)(I) exemption for "services" includes tangible personal property purchased and consumed by asbestos removal contractors.
Neither the plain wording of the statute nor the legislative intent supports the plaintiff's argument. It is fundamental that statutory construction requires us to ascertain the intent of the legislature and to construe the statute in a manner that effectuates that intent. Lauer v. Zoning Commission, 220 Conn. 455, 459-60, 600 A.2d 310 (1991). "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...." Id., 460, 600 A.2d 310. After considering the language of the statute, both alone and in the context of chapter 219 of the General Statutes, as well as the underlying legislative purpose of the exemption, we conclude that the sales and use tax exemption for asbestos removal services under § 12-407(2)(i)(I) does not include tangible personal property purchased and consumed by an asbestos removal contractor.
The plain language of §§ 12-407 and 12-412 makes clear that § 12-407(2)(i)(I) does not include tangible personal property. First, § 12-407(2) 10 distinguishes between tangible personal property and services. Section 12-407(2)(i), (k), (l ) and (m) define certain services as sales for purposes of the sales and use tax. Much of the remainder of the statute relates to the sales or leasing of "tangible personal property." General Statutes § 12-407(2)(a), (b), (c), (d), (f), (g) and (j). Therefore, according to the plain language of § 12-407(2), services are differentiated from tangible personal property.
Second, § 12-412 indicates that an exemption for services does not encompass an exemption for tangible personal property. 11 It is settled that statutes must be construed consistently with other relevant statutes because the legislature is presumed to have created a coherent body of law. In re Valerie D., 223 Conn. 492, 524, 613 A.2d 748 (1992). In construing a statute, the court may look to other statutes relating to the same subject matter for guidance. Vecca v. State, 29 Conn.App. 559, 564, 616 A.2d 823 (1992). Exemptions under § 12-412(21), (22), (29), (55), (68), (73) and (76) relate only to the sale of various tangible personal property. Section 12-412(3)(B), (11), (36), (41), (58), (62), (74) and (77) exempt only services. Finally, § 12-412(1), (2), (5), (8) and (35) specifically exempt both services and tangible personal property. Thus, when the legislature intended to exempt tangible personal property, services or both, it clearly provided for that specific exemption. 12 We assume the legislature recognized and intended the distinctions it incorporated in the provisions of §§ 12-407(2) and 12-412. Windham First Taxing District v. Windham, 208 Conn. 543, 554, 546 A.2d 226 (1988). Therefore, the statutory differentiation between "services" and "tangible personal property" in these sections indicates that the legislature intended the definition of services to exclude tangible personal property for the purposes of sales and use tax exemptions.
The plaintiff contends that asbestos removal services are unique in that the materials a contractor introduces onto a removal site are used only once and, thereafter, they become part of the hazardous waste. The plaintiff argues that because the tangible personal property and the removal services are inseparable, both should be exempt from the sales and use tax. We are not persuaded. The sales and use tax statutes indicate that the term "services" does not include any tangible personal property, spare parts or equipment that may be used in the performance of a service. When an exemption is intended for both service and materials utilized in the act of providing that service, the legislature has explicitly included each component. See General Statutes §§ 12-407 and 12-412.
Further, as the trial court recognized, the purpose of the exemption lends little support to the plaintiff's position. The...
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