Vulcraft, a Div. of Nucor Corp. v. Karnes

• Decision Date: 02 September 1988
• Docket Number: No. 86-1056,86-1056
• Citation: 428 N.W.2d 505,229 Neb. 676
• Parties: VULCRAFT, A DIVISION OF NUCOR CORPORATION, a Delaware Corporation, Appellee, v. Donna KARNES, Tax Commissioner of the State of Nebraska, et al., Appellants.
• Court: Nebraska Supreme Court

Page 505

428 N.W.2d 505

229 Neb. 676

VULCRAFT, A DIVISION OF NUCOR CORPORATION, a Delaware Corporation, Appellee, v. Donna KARNES, Tax Commissioner of the State of Nebraska, et al., Appellants.

No. 86-1056.

Supreme Court of Nebraska.

Sept. 2, 1988.

Syllabus by the Court

1. Statutes. Where words of a statute are plain and unambiguous, no interpretation is needed to ascertain their meaning, and in the absence of anything to indicate the contrary, words will be given their ordinary meaning.

2. Statutes: Taxation: Proof. Statutes exempting property from taxation are to be strictly construed, and the burden of proving the right to exemption is upon the claimant.

3. Statutes: Administrative Law. The interpretation of a statute given by an administrative agency to which the statute is directed is entitled to weight.

Robert M. Spire, Atty. Gen., and L. Jay Bartel, Lincoln, for appellants.

Michael J. Ogborn and Tim O'Neill, of Nelson & Harding, Lincoln, for appellee.

BOSLAUGH, WHITE, and SHANAHAN, JJ., and SPRAGUE and THOMPSON, District Judges.

THOMPSON, District Judge.

This is an appeal pursuant to Neb.Rev.Stat. § 84-918 (Reissue 1987) from an order of the district court for Lancaster County, Nebraska, overruling the findings and order of the State Tax Commissioner affirming a deficiency assessment against appellee, Vulcraft, a division of Nucor Corporation, for use tax assessed on its purchase and use of argon, carbon dioxide, and oxygen in its steel welding and cutting operations for the period between April of 1981 and April of 1984.

Vulcraft is engaged in the business of manufacturing steel joists, joist girders, steel roof deck, steel floor deck, and cold finish bars at Norfolk, Nebraska. Vulcraft purchases several gases (argon, carbon dioxide, and oxygen) for use in various welding and cutting operations which are part of Vulcraft's manufacturing processes.

On November 30, 1984, the Nebraska Department of Revenue issued a notice of deficiency determination to Vulcraft based, in part, on Vulcraft's failure to pay use tax on these various gases. Vulcraft filed a petition for redetermination in response to this deficiency assessment, and a formal hearing was held on Vulcraft's petition on September 12, 1985. Vulcraft paid $21,152, under protest, which amount included tax, interest, and penalty.

On April 15, 1986, the Tax Commissioner entered her findings and order affirming the deficiency assessment against Vulcraft for use tax due as a result of Vulcraft's purchase and use of argon, carbon dioxide, and oxygen for its welding and cutting operations.

Vulcraft appealed the findings and order of the Tax Commissioner to the district court for Lancaster County.

By order dated November 7, 1986, the district court overruled the findings and order of the Tax Commissioner, finding The standard for review is governed by § 84-918, and is de novo on the record of the agency. Haeffner v. State, 220 Neb. 560, 371 N.W.2d 658 (1985).

that the gases used by Vulcraft in its manufacturing processes qualified for exemption under Neb.Rev.Stat. § 77-2704(1)(k) (Supp.1983) and its predecessors. Appellants subsequently perfected their appeal.

The issue before the Tax Commissioner was whether the argon, carbon dioxide, and oxygen gases used by Vulcraft during its manufacturing processes were entitled to the exemption under § 77-2704.

Section 77-2704 provided as follows:

(1) There are exempted from the computation of the amount of sales and use taxes imposed by sections 77-2701 to 77-27,135 the gross receipts from the sale, lease, or rental of and the storage, use, or other consumption in this state of the following:

....

(k) Sales and purchases of electricity, coal, gas, fuel oil, diesel fuel, tractor fuel, propane, gasoline, coke, nuclear fuel, and butane for use in processing, manufacturing, mining, refining, irrigation, farming, building construction, telegraph, telephone and radio communication, street, and railroad transportation services and all business, commercial and industrial uses....

Where words of a statute are plain and unambiguous, no interpretation is needed to ascertain their meaning, and in the absence of anything to indicate the contrary, words will be given their ordinary meaning. Clinchard v. White, 223 Neb. 139, 388 N.W.2d 477 (1986).

Statutes exempting property from taxation are to be strictly construed, and the burden of proving the right to exemption is upon the claimant. United Way v. Douglas Co. Bd. of Equal., 215 Neb. 1, 337 N.W.2d 103 (1983). Nebraska Department of Revenue ruling No. 1-78-16 (Dec. 29, 1978), considering the above exemption, stated as follows:

For an artificial or natural gas to qualify for the sales and use tax exemption it must be used as a power or energy source by the business or industry. Gases such as, but not limited to, freon, oxygen, carbon dioxide, anhydrous ammonia, chlorine gas, and gas used to slaughter cattle are not a power or energy source within the intent of the Act. Such gases are not exempt from sales and use tax even though purchased for business, commercial, or industrial use.

There is a general rule of statutory construction that the interpretation of a statute given by an administrative agency to which the statute is directed is entitled to weight. ATS Mobile Tel., Inc. v. Curtin Call Communications, Inc., 194 Neb. 404, 232 N.W.2d 248 (1975); McCaul v. American Savings Co., 213 Neb. 841, 331 N.W.2d 795 (1983).

Upon reviewing the record, there is no question that argon, carbon dioxide, and oxygen are "gases" in the generic sense of the word. The issue is whether each gas is a power or energy source as used in Vulcraft's business, since the plain meaning of the...