Blount v. ECO Resources, Inc
| Docket Number: | 2006-CC-00673-COA Linked Case(s): 2006-CC-00673-SCT2006-CC-00673-COA2006-CT-00673-SCT |
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| Oral Argument: | 05-22-2007 | |
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| Court of Appeals: |
Opinion Date: 11-20-2007 Opinion Author: GRIFFIS, J. Holding: Affirmed in part; Reversed and Rendered in Part |
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| Additional Case Information: |
Topic: Exemption from contractor’s tax - Personal property exemption - Section 27-65-21(1)(a)(i) - Real property - Section 1-3-41 - Comm’n Rule 41 Judge(s) Concurring: KING, C.J., LEE AND MYERS, P.JJ., IRVING, CHANDLER, BARNES, ISHEE, ROBERTS AND CARLTON, JJ. Procedural History: Jury Trial Nature of the Case: CIVIL - STATE BOARDS AND AGENCIES |
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| Trial Court: |
Date of Trial Judgment: 03-23-2006 Appealed from: Harrison County Chancery Court Judge: Jim Persons Disposition: JUDGMENT IN APPELLEE’S FAVOR, FINDING ECO EXEMPT FROM CONTRACTOR’S TAX. Case Number: C2402 03-824 |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | JOSEPH BLOUNT, IN HIS OFFICIAL CAPACITY
AS CHAIRMAN AND COMMISSIONER OF THE
MISSISSIPPI STATE TAX COMMISSION |
DAVE SCOTT |
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| Appellee: | ECO RESOURCES, INC. | LUTHER T. MUNFORD C. DELBERT HOSEMANN, JR. R. GREGG MAYER |
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| Topic: | Exemption from contractor’s tax - Personal property exemption - Section 27-65-21(1)(a)(i) - Real property - Section 1-3-41 - Comm’n Rule 41 |
| Summary of the Facts: | The motion for rehearing is granted, and this opinion is substituted for the original opinion. ECO Resources, Inc. filed an action for refund against Joseph Blount, in his official capacity as the chairman and commissioner of the Mississippi State Tax Commission. The chancellor held that ECO was exempt from the contractor’s tax and ordered the Commission to refund $394,972 to ECO and to pay interest. The Commissioner appeals. |
| Summary of Opinion Analysis: | Issue 1: Personal property exemption The chancellor held that section 27-65-21(1)(a)(i) and the Commission’s internal rules exempt repairs to component parts of water and sewer systems that may be classified as personal property. The Commissioner argues that the personal property exemption from the contractor’s tax does not apply to repairs of water and sewer systems. The plain meaning of the statute is that any fee over $10,000, earned by ECO through repair of sewer and water systems is taxed at 3.5%, so long as the repair is to real property. Repairs to water and sewer systems are listed as a taxable “activity.” Immediately following this sentence, the next one begins, “Such activities,” i.e., those just listed. Therefore, the personal property exemption does apply to repairs of water and sewer systems. The Commissioner’s argument that because repairs to water and sewer systems are specifically listed as taxable activities, they cannot be subject to the personal property exemption, would make the exemption a complete nullity. The Commissioner argues that it does not make sense to break the water and sewer system up into personal and real property bits and pieces for taxation purposes. However, this is the prerogative of the Mississippi Legislature. Issue 2: Real property The Commissioner argues that water and sewer systems are real property. Section 1-3-41 defines personal property as goods, chattels, effects. According to the Commission’s rules and regulations (Comm’n Rule 41), for personal property to be considered real property, it must be permanently attached to real property. The minor repairs in question were generally restricted to the water wells and lift stations. A water well is a facility within a water system that produces ground water, which is treated and distributed for potable use. A lift station is found in the sewer system. It is a facility through which sewage is lifted and moved from a lower pipe to a higher pipe. The testimony was that within these facilities, the repairs were to motors, water pumps, and electrical panels. There was undisputed testimony that the pumps were personal property. In addition to the testimony, the chancellor had the benefit of viewing the property in question. There is nothing to challenge the chancellor’s findings of his on-site inspection, and the chancellor’s determination of realty versus personalty is supported by substantial credible evidence. The Commission argues that ECO admitted that some of its repairs were to real property. However, ECO’s attorney represented that 10.3 % represented all repairs. He did not admit that 10.3% of the work was to real property. In fact, he did not differentiate between residential versus non-residential, nor realty versus personalty. |
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