Reed v. Jones, 434

• Citation: 81 N.M. 481,1970 NMCA 50,468 P.2d 882
• Decision Date: 17 April 1970
• Docket Number: No. 434,434
• Parties: Paul D. REED, d/b/a Equipment Service of Roswell, Plaintiff-Appellant, v. Franklin JONES, New Mexico Commissioner of Revenue, Defendant-Appellee.
• Court: Court of Appeals of New Mexico

Page 882

468 P.2d 882

81 N.M. 481

Paul D. REED, d/b/a Equipment Service of Roswell, Plaintiff-Appellant, v. Franklin JONES, New Mexico Commissioner of Revenue Defendant-Appellee.

No. 434.

Court of Appeals of New Mexico.

April 17, 1970.

S. B. Christy, IV, C. D. Martin, Hinkle, Bondurant & Christy, Roswell, for plaintiff-appellant.

James A. Maloney, Atty. Gen., Santa Fe, Richard J. Smith, Asst. Atty. Gen., for defendant-appellee.

OPINION

HENDLEY, Judge.

Plaintiff is engaged in the business of performing mechanical repairs. On October 31, 1969, Mead's Fine Bread Company of Amarillo, Texas, caused a bread delivery truck to be driven to Roswell, New Mexico, for the sole purpose of having plaintiff repair the motor, battery, generator, hand brake and clutch. Upon completion of the repairs the truck was driven back to Amarillo, Texas. The truck was used exclusively for the delivery of bread in Amarillo, Texas.

The Commissioner had issued a Non-Taxable Transaction Certificate to Mead's and Mead's delivered the certificate to plaintiff. Plaintiff had knowledge of the fact that the truck would be driven back to Amarillo, Texas. Plaintiff filed his gross receipts for the October, 1969 period. Plaintiff forwarded his payment for tax liability less the amount applicable to Mead's transaction. Plaintiff protested the Commissioner's ruling that the above transaction was non-deductible. An informal hearing was held before the Commissioner and a written Decision and Order issued stating that plaintiff was not entitled to the deduction provided by § 72--16A--14.12, N.M.S.A.1953 (Repl.Vol. 10, pt. 2, Supp.1969) in that the initial use of the product of the services was in the State of New Mexico.

We affirm.

Section 72--16A--14.12, supra, states:

'DEDUCTION--GROSS RECEIPTS TAX--SALE OF A SERVICE TO AN OUT-OF-STATE BUYER.--A. Receipts from performing a service other than a legal, accounting or architectural service may be deducted from gross receipts if the sale of the service is made to a person who delivers a nontaxable transaction certificate to the seller.

B. The buyer delivering the nontaxable transaction certificate must make initial use of the product of the service outside New Mexico.'

We are asked to construe the term 'initial use.' Plaintiff contends: '* * * that the word 'use' connotes an ultimate purpose; the purport for which the particular thing will be consumed, and * * * the 'initial use' of the product of the services rendered * * * (was) when said bread delivery truck was placed into service for the local delivery of bread in Amarillo.'

We disagree.

Our Supreme Court stated in Winston v. New Mexico State Police Board, 80 N.M. 310, 454 P.2d 967 (1969):

'Legislative intent is to be determined primarily by the language of the act, State v. Shop Rite Foods, Inc., 74 N.M. 55, 390 P.2d 437; and words used in a statute are to be given their ordinary and usual meaning unless a different intent is clearly indicated. State ex rel. State Highway Commission v. Marquez, 67 N.M. 353, 355 P.2d 287. * * *'

The Random House Dictionary of the English Language (1969) defines initial as 'of or pertaining to the beginning; first: the initial step in a process.' It also defines 'use' as the '* * * act of employing, using, or putting into service * * *' We think these definitions are the ordinary and usual meaning and conclude that the 'initial use' here occurred in New Mexico.

We are further convinced by the declared purpose of the act (§ 72--16A--2, N.M.S.A.1953 (Repl.Vol. 10, pt. 2, Supp. 1969)) which states in part that the Gross Receipts Act '* * * is to provide revenue for public purposes by levying a tax on the privilege of engaging in certain activities within New Mexico * * *.' Since the avowed purpose of the act is to provide revenue, any deductions must receive strict construction in favor of the taxing authority. The burden is on the taxpayer to establish clearly his right to the deduction and the intention to authorize the deduction claimed by the taxpayer must be clearly and unambiguously expressed in the statute. See Flaska v. State, 51 N.M. 13, 177 P.2d 174 (1947) and Peisker v. Unemployment Compensation Commission, 45 N.M. 307, 115 P.2d 62 (1941). The taxpayer has not clearly established his right to the deduction because the statute does not clearly and unambiguously authorize the deduction being claimed under the facts of this case. If it was clear and unambiguous, we would not have to construe 'initial use.'

In speaking on exemptions from taxation the United States Supreme Court stated in Hoge v. Railroad Co., 99 U.S. 348, 25 L.Ed. 303 (1879) the following:

'* * * But though this power is recognized, it is accompanied with the qualification that the intention of the legislature to grant the immunity must be clear beyond a reasonable...