Portland Gas Light Co. v. Johnson

Decision Date08 August 1968
Citation244 A.2d 817
PartiesPORTLAND GAS LIGHT COMPANY v. Ernest H. JOHNSON, State Tax Assessor.
CourtMaine Supreme Court

James R. Flaker, Portland, for plaintiff.

Jon R. Doyle, Asst. Atty. Gen., Augusta, for defendant.

Before WILLIAMSON, C. J., and WEBBER, TAPLEY, MARDEN and WEATHERBEE, JJ.

MARDEN, Justice.

On report. To a use tax assessed under our sales and use tax law (Act) (36 M.R.S.A. § 1751 et seq.) against the plaintiff on coke used in the manufacture of 'carburetted water gas,' which plaintiff sells at retail, plaintiff appealed under Rule 80B M.R.C.P. to the Superior Court. From that Court the case was reported upon an agreed statement of facts.

The part which coke plays in the manufacturing process is stipulated as follows:

'5. Concerning the use of the coke in the manufacturing process, the following facts are stipulated:

'During the period in question, the Plaintiff Portland Gas Light Company produced 'carburetted water gas' at its Portland plant for distribution to its customers. A three shelled carburetted water gas machine was used for the production of the gas. The three shells of the machine were thoroughly insulated and consisted of a generator, carburetter and superheater connected to a stack which has a lid and a connection to a gas holder or tank.

'The raw materials used in the production of the 'carburetted water gas' are coke, air, water (in the form of steam), and oil.

'The process of producing the water gas commences in the first shell of the machine, the generator, which has an ash pit and grates. A four foot layer of coke on the grates is ignited and air is blown through the coke until the coke reaches a state of incandescence sufficiently high enough to react efficiently with steam. When the temperature of the coke is high enought to so react the lid on the stack which has been opened while the air is being blown through is closed and steam is passed up through the coke.

'A chemical reaction takes place between the incandescent coke and steam and the gas which results from this reaction flows from the generator into the carburettor. When the gas resulting from the reaction of the coke and steam reaches the carburetter, oil is sprayed into the gas steam. The mixture then flows into the superheater and while passing down through flues becomes stablized. The stablized gas leaves the machine through the connection in the stack, passes through a water seal in which most of the tar is removed. The gas then passes into a gas holder and is ready for purification. The production of 'carburetted water gas' is a cyclic process in which there are two basic periods:

'1. BLOW-In this cycle the mass in the generator is heated to a reaction temperature by passing air over the incandescent coke. During this portion of the cycle, coke is burned for the purpose of raising the temperature of the coke bed so it will react in a later portion of the cycle with steam to produce gas.

'2. RUN-In the run cycle the steam passes through the coke bed and reacts with the coke to produce the carburetted water gas which is a product of the operation. This portion of the cycle absorbs heat from the coke bed, cooling it to a point where it must again be reheated by returning to the 'blow' or first portion of the cycle. The heat energy released during the 'blow' is largely absorbed during this period and provides the basic heat content of the gas which is sold at retail.

'A cycle is approximately three minutes long and is broken down in the following precentages of time.

Blow 27%

Run 73%

'6. The operation of a gas generating facility which uses coke as a source of carbon for the production of fuel gas utilizes a portion of the coke to furnish the heat necessary for the reactions. Another portion of the coke enters into the manufacture of gas.

'Expert information indicates that 34.6% of the coke used is consumed during the blow and the remaining 65.4% during the run.'

The amount of the use tax assessed on the coke during the period in question is $13,385.58. It is stipulated that if no portion of the coke used during the reference period is subject to a use tax, the tax should be abated in the amount of $13,385.58. It is also stipulated that if a portion of the coke used is not subject to a use tax then that portion of $13,385.58 is to be abated.

The statute, the interpretation of which will control the issue, is 36 M.R.S.A § 1752, subsection 11, in which retail sale is defined, and the pertinent portions of which are as follows:

"Retail sale' or 'sale at retail' means any sale of tangible personal property, in the ordinary course of business, for consumption or use, or for any purpose other than for resale, except resale as a casual sale, in the form of tangible personal property * * *

"Retail sale' and 'sale at retail' do not include the sale of tangible personal property which becomes an ingredient or component part of, or which is consumed or destroyed or loses its identity in the manufacture of, tangible personal property for later sale but shall include fuel and electricity. It shall be considered that tangible personal property is 'consumed or destroyed' or 'loses its identity' in such manufacture, if it has a normal physical life expectancy of less than one year as a usable item in the use to which it is applied * * *'.

Plaintiff argues exemption from taxability for two reasons, (1) that the...

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2 cases
  • Burlington Elec. Dept. v. Vermont Dept. of Taxes
    • United States
    • Vermont Supreme Court
    • May 11, 1990
    ...coke of its character as a fuel and affirmed the levy of the sales tax. Id. at 456, 88 A.2d at 160-61; see also Portland Gas Light Co. v. Johnson, 244 A.2d 817, 819-20 (Me.1968) (in the manufacture of carburetted gas, the portion of coke burned for fuel was "[A]bsent compelling indication o......
  • Eagle Rental, Inc. v. State Tax Assessor, Docket No. BCD–12–254.
    • United States
    • Maine Supreme Court
    • May 21, 2013
    ...factor would be dispositive; rather, the analysis is based on the totality of circumstances in a given case. Cf. Portland Gas Light Co. v. Johnson, 244 A.2d 817 (Me.1968) (undertaking a fact-intensive inquiry to determine whether fuel used in a manufacturing process was subject to use tax).......

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