Taxpayer is protesting the imposition of use tax on the
purchase of a concrete pumping truck, line pump, as well as repairs and service
parts for the truck and pump for the 2008, 2009, and 2010 tax years.
According to Taxpayer, it is hired by customers to pump
concrete for use in mining infrastructure, other construction, and preset
molds. Taxpayer's pump truck is kept in one location so that it is easily
accessible to ready-mix concrete trucks. The ready-mix concrete trucks, hired
by Taxpayer, pour concrete into Taxpayer's line pump, which pumps concrete
through a pipeline to a specific destination. Taxpayer supplies both the
concrete and the pumping equipment for the customer and charges the customer
for both labor and materials.
…
Taxpayer argues that use tax should not be imposed because
they qualify for the manufacturing exemption.
…
First, Taxpayer argues in its protest letter that "trucks
not to be licensed for highway use and to be directly used in direct production
of manufacturing, mining, refining or harvesting of agricultural commodities
are specifically exempt from the imposition of the sales tax." Energy
Supply, Inc. v. Indiana Dept. Of State Revenue, 549 N.E.2d 1110 (Ind. Tax Ct.
1990). However, Energy Supply does not discuss truck licensing. Instead, the
case focuses on the distance trucks must travel from Energy Supply's two mines
to the processing plant to determine if the trucks have an immediate link to
the manufacturing process. Taxpayer has not explained beyond the quote above
how Energy Supply relates to the present issue. Taxpayer does not begin work
until Taxpayer has arrived at customer's location. Therefore, the distance the
truck must travel is irrelevant to the determination of this issue.
Next, Taxpayer argues that because it performs some jobs at
mines (where it is contracted to pour concrete for various mine infrastructure
projects), its activities are part of a continuous mining operation and
therefore the equipment it uses should be exempt. Taxpayer generally refers to
Cave Stone and Amax presumably for this proposition. Indiana Dept. of Revenue
v. Cave Stone, Inc., 457 N.E.2d 520 (Ind. 1983) and Indiana Dept. of Revenue v.
Amax, Inc., 513 N.E.2d 1260 (Ind. Ct. App. 1987). Taxpayer however is
incorrect. Taxpayer is not the mining company whose mining operations qualify
for the exemption. Taxpayer's activities at the mines are not even part of the
actual mining operation. Taxpayer is contracted to build part of the
infrastructure of the mining operation, but is not involved in the actual
mining process…
Finally, Taxpayer argues in its protest letter that "a
taxpayer's qualification for this industrial exemption to sales and use taxes
is not based on whether the activity is to be called manufacturing or
processing or any other of the listed terms, but rather whether the activity
was directly involved in creation of a product." Rotation Products.
However, the issue in Rotation Products is whether the remanufacture of roller
bearings is included in the manufacturing exemption. The court in Rotation
Products, held that the repair and remanufacturing activity in this case was so
extensive that it transformed the tangible personal property into a new product
and thus constituted manufacturing. Taxpayer's brief explanation, quoted above,
does not explain how its activities fit into the context of Rotation Products.
Taxpayer does not itself mix the concrete and does not itself alter the
concrete to create tangible personal property. Instead, Taxpayer purchases
pre-mixed concrete which is poured into its concrete pump line by a third party
and which Taxpayer then pumps into a designated location or item belonging to a
customer.
Some of the language of Taxpayer's protest suggests that
Taxpayer is relating itself to an industrial processor. However, Taxpayer does
not fit the description of an industrial processor. Taxpayer buys pre-mixed
concrete from a third party concrete producer, but Taxpayer does not return the
concrete to the third party concrete producer. Instead, Taxpayer sells the
concrete purchased from the third party concrete producer to the customer who
hired Taxpayer to pump the concrete.
Taxpayer enters into contracts to pump concrete. Some
contracts require Taxpayer to pump concrete into the infrastructure of mines
and others require Taxpayer to pump concrete into preset molds. The customers
may themselves be manufacturers and miners, but Taxpayer is a contractor.
…
Taxpayer is a contractor and is not exempt from tax in this
instance. Taxpayer did not meet the burden to show exemption set in IC §
6-8.1-5-1(c). The imposition of use tax on Taxpayer's equipment, repairs, and
service parts was proper.
