Tulsa Machinery Co. v. Oklahoma Tax Commission
| Decision Date | 24 February 1953 |
| Docket Number | No. 35393,35393 |
| Citation | 208 Okla. 138,253 P.2d 1067 |
| Parties | TULSA MACHINERY CO. v. OKLAHOMA TAX COMMISSION. |
| Court | Oklahoma Supreme Court |
Syllabus by the Court.
In order that the gross proceeds derived from the sale of machinery and equipment sold to others for use in the operation of manufacturing plants may be exempt from sales tax it is essential that the property sold be incorporated by the purchaser into and directly used in the process of manufacturing property subject to taxation under the Sales Tax Act. 68 O.S.1951 § 1251d, subd. (q).
F. C. Swindell and A. D. Mason, both of Tulsa, for plaintiff in error.
R. F. Barry, W. F. Speakman and E. J. Armstrong, of Oklahoma City, for defendant in error.
There is presented here an appeal taken by Tulsa Machinery Company, hereinafter referred to as appellant, from an order of the Oklahoma Tax Commission, hereinafter referred to as the Commission assessing a sales tax against it including interest and penalty in the sum of $1,623.01. Appellant paid the tax under protest and filed a claim for refund of the amount paid. The Commission denied the claim for refund.
The tax was assessed by the Commission against the gross proceeds derived from the sale of machinery and equipment to the Ancher Stone and Material Company and Chandler Materials Company.
The evidence shows that Anchor Stone and Material Company and Chandler Materials Company owned separate tracts of land near the City of Tulsa beneath the surface of which lay a stratum of limestone rock. The first step in the process of the business conducted by these companies was to remove the overburden of surface soil of said rock. This is done by use of bulldozers and shovels powered by motor equipment. After the removal of the overburden, the next step required the drilling of holes in the rock of sufficient size and depth as to emplant therein nitroglycerin or other explosives. The explosion would crack the rock into chunks, then by means of motor powered shovels and conveyors the rocks were loaded on a dump truck and transported to rock crushers located on the properties of these companies. The rock would then be placed in and would pass through a series of crushers. The crushers would reduce it into small sizes for commercial use. The processed material was then sold and used for building roads, sidewalks and other purposes.
It is the contention of appellant that all the machinery and equipment sold by it to Anchor Stone and Material Company and Chandler Materials Company was sold for use in manufacturing and the proceeds derived from the sale of such machinery and equipment were therefore exempt from taxation under 68 O.S.1951 § 1251d(q) which exempts:
'Sale of machinery and equipment purchased and used by persons establishing new manufacturing or processing plants in Oklahoma, and machinery and equipment purchased and used by persons in the operation of manufacturing plants already established in Oklahoma; provided, this exemption shall not apply unless such machinery and equipment is incorporated into, and is directly used in, the process of manufacturing property subject to taxation under the Sales Tax Act. * * *'
The items upon which the taxes were assessed consisted of the sale to Anchor Stone and Material Company of a K360 Diesel shovel, the purchase price of which was $28,687.02 and also parts for a pneumatic drill and repair parts for the Diesel shovel upon which combined items there was assessed a sales tax in the sum of $645.72 plus interest and penalty in the sum of $173.89; sales to Chandler Materials Company consisting of welding equipment in the sum of $389.36 and repair parts for Diesel shovel similar to the shovel sold by appellant to the Anchor Stone and Material Company upon which items sales tax was assessed in the sum of $680 plus penalty and interest in the sum of $123.40.
Counsel for the Commission contend that the sales here involved and upon which the taxes were assessed do not come within the exemption claimed by appellants for the following reasons: (1) the Anchor Stone and Chandler Material Companies to whom the machinery and equipment were sold were not engaged in the...
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