Standard Register Co. v. Commissioner of Taxes, 334-76

• Decision Date: 07 June 1977
• Docket Number: No. 334-76,334-76
• Citation: 135 Vt. 271,376 A.2d 41
• Court: Vermont Supreme Court
• Parties: STANDARD REGISTER COMPANY v. COMMISSIONER OF TAXES.

Page 41

376 A.2d 41

135 Vt. 271

STANDARD REGISTER COMPANY v. COMMISSIONER OF TAXES.

No. 334-76.

Supreme Court of Vermont.

June 7, 1977.

Leslie C. Pratt, Paterson, Gibson, Noble & Brownell, Montpelier, for plaintiff.

M. Jerome Diamond, Atty. Gen., and Richard J. King, Asst. Atty. Gen., Montpelier, for defendant.

Before BARNEY, C. J., and DALEY, LARROW, BILLINGS and HILL, JJ.

LARROW, Justice.

Standard Register Company appealed to the Washington Superior Court from a deficiency assessment by the Commissioner of Taxes under 32 V.S.A. § 9773. That assessment, of additional sales and use tax for a period from November 1970 through October 1973, totalled, with interest, $9,605.37. Of that total $8,317.30 represents a compensating use tax on packaging materials purchased by Standard outside the state, and used by it to package business forms fabricated and sold by it to various customers, who by stipulation consume the forms in the course of their business. This compensating use tax is the subject matter of the controversy. The superior court reversed the holding of the Commissioner, reasoning that (1) under 32 V.S.A. § 9741(a)(16), as then in effect, the items in question were not subject to use tax regardless of whether the items they were used to package were to be used or resold by Standard's customers; (2) that the packaging materials are, in effect, "resold" to Standard's customers; and (3) that basing the tax on actions taken by Standard's customers places an undue burden on the taxpayer, since some may use or consume them, while others may "resell" them to parent, sister or subsidiary companies. We disagree with this reasoning in toto, and accordingly reverse.

The third reason advanced by the trial court may be disposed of quickly. It goes beyond the facts as stipulated and found. Finding No. 1, which substantially follows the stipulation of the parties, is that the forms manufactured by Standard at its Middlebury plant "are sold to customers who use them in the operation of their own businesses." The court's conclusion that some customers may "resell" them has no support in the record.

The other two reasons relied on by the trial court present a question of statutory construction, with the primary objective of giving effect to the intention of the Legislature. Rock of Ages Corporation v. Commissioner of Taxes, 134 Vt. 356, 360 A.2d 63 (1975). The plain, ordinary meaning of language is presumed to be intended. Camp v. Department of Motor Vehicles, 131 Vt. 536, 310 A.2d 35 (1973). Exemptions from taxation are strictly construed, with none being allowed unless shown to be within the necessary scope of the statute. Rock of Ages Corporation, supra, 134 Vt. at 359, 360 A.2d 63.

32 V.S.A. § 9773 imposes a compensating use tax on tangible personal property purchased at retail, not subject to the sales tax and not otherwise exempted. The sale of the packaging materials to Standard is a sale because it is a "transfer of title or possession" under 32 V.S.A. § 9701(6). It is a sale at retail under 32 V.S.A. § 9701(5) because it is a "sale of tangible personal property to any person for any purpose, other than for resale (except resale as a casual sale)." From the foregoing, the legislative purpose is quite clear. Retail sales within the state are the general subject of the sales tax, unless specifically exempted. And sales from outside the state, at retail, to persons within the state for use in the state, as distinguished from resale, are the subject of the compensating use tax, unless specifically exempted.

The specific exemption upon which Standard relies, as it then read, was found in 32 V.S.A. § 9741(a)(16). Exempt from the use tax are receipts from:

(16) Materials, containers, labels, sacks, cans, boxes, drums or bags and other packing, packaging, or shipping materials for use in packing, packaging or shipping tangible personal property...