Red Fox Gingerale Co. v. Langton, 10763

• Decision Date: 16 March 1966
• Docket Number: No. 10763,10763
• Citation: 100 R.I. 531,217 A.2d 466
• Parties: RED FOX GINGERALE COMPANY v. Fred M. LANGTON, Tax Adm'r. Ex.
• Court: Rhode Island Supreme Court

Page 466

217 A.2d 466

100 R.I. 531

RED FOX GINGERALE COMPANY v.Fred M. LANGTON, TaxAdm'r.

Ex. No. 10763.

Supreme Court of Rhode Island.

March 16, 1966.

Bernard S. Goldberg, Providence, for petitioner.

J. Joseph Nugent, Atty. Gen., D. A. St. Angelo, Gen. Counsel, Div. of Taxation, for respondent.

ROBERTS, Chief Justice.

This petition to determine the correctness of a tax deficiency under the provisions of G.L.1956, § 44-19-18, was brought by Red Fox Gingerale Company, the taxpayer, against the tax administrator of the state of Rhode Island, hereinafter referred to as the administrator.After a hearing thereon a justice of the superior court found the tax deficiency was erroneously and illegally assessed and entered an order for a refund.From that order the administrator has prosecuted an exception to this court.

The court in its order set out the facts determined by it from testimony that was not disputed.The taxpayer engages in the business of bottling and distributing carbonated beverages and selling such bottled beverages to retail dealers who in turn sell them to the ultimate consumer.The challenged assessment was a use tax assessed on the basis of the taxpayer's acquisition of a quantity of bottles to be used by it for such sale and distribution of carbonated beverages.A taxable use is defined in § 44-18-10 of the act as 'the exercise of any right or power over tangible personal property incident to the ownership of that property, except that it does not include the sale of that property in the regular course of business.'

Concerning the taxpayer's use of the bottles in the business the court found specifically: 'Now, in this particular instance the petitioner here retained no control over the bottle.The bottle is sold to the retailer.The retailer in turn sells the bottle content to the consumer.* * * The consumer has the choice or the election of either retaining the bottle or to do with it as he or she sees fit or to return the bottle for sale to the retailer, and to receive the sum of 5cents per bottle and the retailer has the same option of either keeping the bottle or returning them to the manufacturer or the distributor such as the petitioner at the rate of 5cents per bottle.In this particular instance the petitioner has no control, has no property rights in the containers.The ownership of the container remains in the ultimate purchaser, in this particular instance the consumer, and the consumer has title to the bottle in which the contents were placed.The petitioner cannot force the consumer to return the bottle for resale to either the retailer or to the manufacturer of the bottle.'

The court then went on to conclude that the 'bottles are actually sold by the petitioner to the retailer and the retailer in turn sells the bottle with the contents to the consumer' and is, therefore, exempt from taxation by virtue of the provisions of § 44-18-30, subd. D(3).The pertinent portion of the statute relating to such exemptions from sales and use taxes reads: 'There are exempted from the taxes imposed by this chapter the following gross receipts: * * * D. Containers.From the sale and from the storage, use, or other consumption in this state of: * * * (3) Returnable containers when sold with the contents in connection with a retail sale of the contents or when resold for refilling.As used herein the term 'returnable containers' means containers of a kind customarily returned by the buyer of the contents for reuse.All other containers are 'nonreturnable containers."

The taxpayer in its petition for relief admits the acquisition of the bottles which are the subject matter of the assessment from a bottle manufacturer located outside of the state.He concedes that they were brought into his plant to be used in the preparation of his product for marketing.His specific contention in the instant case is that the bottles are exempt from taxation under the provisions of § 44-18-30, subd. D(3).This raises directly the question whether the exemption set out in clause D(3) covers the property here under consideration.

This court has long adhered to the rule that statutes which purport to exempt...