Opinion
Civil Action No. 00-2894.
October 31, 2001.
ORDER AND REASONS
This case was submitted on the papers on September 24, 2001 and no oral arguments were heard. The Court has reviewed the memoranda, deposition, and exhibits and finds as follows.
Background Facts
Defendant in this case is a company engaged in the business of washing tank trucks in St. Charles Parish. As a part of its job duties, defendant washes the interior and exterior of cabs and trucks, cleans hoses and pumps on tanks, scrapes tanks to remove deposits or "heel" left in the tanks, changes gaskets on trucks, and performs vacuum and pressure tests on tanks. When tanks have been used to ship chemicals, defendant is required to remove all residue of the chemicals from that load to prevent cross contamination with future loads. However, when tanks that are used to transport only a particular product, they are not cleaned after each load. Depending on the type of material found in the tank, defendant uses hot and cold water, steam, detergents and chemical cleaning agents to wash the interiors of the tanks. While defendant is also responsible for cleaning and inspecting the pumps, hoses, and valves on the tanks to determine whether passivation is required or whether the valves need replacement, defendant does not perform repairs to the valves. Rather, defendant sends damaged valves to "the shop next door." Plaintiffs Trial Memorandum, p. 3.
The interpretation and application of St. Charles Parish Sales Tax Ordinance 1.17 and Louisiana Revised Statute 47:301(14)(g) are at issue in this case. The pertinent language in the St. Charles Sales Tax Ordinance states:
The term "Sale" shall also include the "Sales of Service" which means and includes the following: (7) the furnishing of repairs to tangible property, including by way of illustration and not of limitation, the repair and servicing of automobiles and other vehicles . . .
Louisiana Revised Statutes 47:301(14)(g)(1) similarly provides that the "Sales of services" means and includes "the furnishing of repairs to tangible personal property, including but not restricted to the repair and servicing of automobiles and other vehicles . . ." Furthermore, in December 1997, St. Charles Parish adopted the language of the state statute into its ordinance) although it expressly disavowed any interpretations of those statutes adopted by the state administrative branches. Under the parish ordinance and state statute, St. Charles Parish concluded that defendant's services during 1997, 1998 and 1999 were taxable as "repairs."
Thus, the resolution of this case hinges on whether defendant's services constitute the "furnishing of repairs to tangible personal property" under La. R.S. 47:301(14)(g). Plaintiff claims that under the relevant tax provisions, it is entitled to tax the following washing and cleaning services performed by defendant: (1) stripping of tanks with a cleaning solution, solvent, or water, (2) scraping product off the wails of tanks with a razor knife, (3) passivation — spraying of a hydrochloric acid solution into tanks to draw out any absorbed carbons in the stainless steel which aids in the prevention of "pitting" on the inside of the tank, (4) use of presolvent to loosen the material before a detergent wash, and (5) heating the remaining product to loosen it for further cleaning. Additionally, plaintiff contends that defendant's changing of gaskets and alleged replacement of valves are taxable "repairs." However, plaintiff concedes that defendant should not be held responsible for taxation on "exterior wash or cab cleaning." Uncontested Material Facts Numbers 7 and 8. In essence, plaintiff claims that the services rendered on the interior of the trucks are "repairs" while treatments to the exterior of the tank trucks are not, taxable as "repairs."
In response, defendant claims that none of its tank cleaning services are taxable under either ordinance because it does not fix anything that is broken. Rather, defendant argues that it merely "cleans something that is dirty." Defendant also points out that it does not fix damaged tanks or their valves. Instead, damaged parts are sent elsewhere for repair. Barrios Deposition at 46, line 22 through p. 47, line 6.
As the parties point out, there have been no cases to illuminate the proper application of the St. Charles Sales Tax Ordinance. However, there have been two cases that focus on Louisiana Revised Statute 47:301(g) and the Court finds them relevant to the resolution of this matter. In Intracoastal Pipe Serv. Co. v. Assumption Parish Sales and Use Tax Dept., 558 So.2d 1296 (La.App. 1st Cir. 1990), the District Court held that the cleaning of oil field drilling tubing was not a "repair" within the meaning of La R.S. 47:301(14)(g) or the parish ordinance levying the sales tax on the furnishing of repairs to tangible personal property. In that case, defendant was responsible for the internal and external cleaning of pipe using brushes, high pressure sands and waterblast machines and pneumatic scraping methods in order to remove rust and dirt that had accumulated during drilling operations and, if left untreated, would cause corrosion. Defendant reasoned that its procedures were not repairs because "nothing broken was fixed." Id at 1298.
The Court agreed with defendant and noted initially that because the word "repair" was not defined in 47:301(g), it was to be understood in its most usual signification as defined by Webster's Collegiate Dictionary as, "to restore by replacing a part or putting together what is torn or broken. Under that definition, the Court concluded that defendant's actions merely maintained the tubing in a usable condition and likened the situation to washing dishes. Specifically, the Court explained:
the analogy that appears apt is that of washing dishes. Surface, external impurities accumulate both with use (food residue) and with simple storage (dust). Removal of these impurities in no way repairs the dishes or mends anything that is broken. While one could use dishes that had not been cleaned from their previous use, it would be both unsafe and undesirable to do so, as the impurities from the prior use would affect the present use (taster and bacterial count)." Id. at 1300.
In McNamara v. Stauffer Chemical Company, 506 So.2d 1252 (La.App. 1st Cir. 1987) the First Circuit also interpreted 47:301(14)(g)(1). In that case, the state and Baton Rouge Parish had attempted to levy a sales tax on a number of services of defendant's services, including the regeneration of sulfuric acid, alleging that they were "repairs" under La R. S. 47:301(14)(g). Through the regeneration process, defendant removed water absorbed by the acid during its use in order to make the acid more effective. As the expert witness explained at trial, defendant's actions were akin to "restoring a discharged battery to a charged state. There is nothing mechanically in the process, all a chemical reaction . . ." Id at 1257.
The Court also noted that in the absence of a definition of "repair" in the statute, Black's Law Dictionary provided the following definition: "to mend, restore, renovate." Under that definition, the Court reasoned that the regeneration process was a "repair" and explained that the contracts in the record clearly reflected the parties' intention for defendant's services to be a "restoration" of spent sulfuric acid to its original usable condition.
Analysis
As noted above, the resolution of this case depends on whether defendant's services constitute a "repair." Initially, this Court acknowledges that under Louisiana law, uncertainty in the language of a statute must be resolved against the government and in favor of the taxpayer and that words defining things to be taxed should not be extended beyond there clear import. Hibernia National Bank v. Louisiana Tax Commission, 196 So. 15 (1940). Neither the St. Charles ordinance nor the Louisiana Revised Statute defines "repair" as to be interpreted in this matter. Therefore, this Court will adhere to the usual interpretation of "repair" as defined in Webster's Third New International Dictionary: "To restore by replacing a part or putting together what is torn or broken: Fix, Mend." Employing that definition, this Court concludes that defendant's services — cleaning and washing tank trucks in order to prevent cross contamination and deterioration — do not constitute repairs. Therefore, no taxes are due and owing to plaintiff from the washing and cleaning services.
This Court finds the analysis affirmed in Intracoastal v. Assumption Parish Sales and Use Tax, 563 So.2d 863 (La. 1990), to be relevant and persuasive authority. The factual scenario of that case is much like the one now before the Court. In Intracoastal, the defendant was primarily responsible for cleaning pipe in order to prevent change or deterioration, and in this case defendant was employed to wash and clean tank trucks to achieve the same result. Therefore, this Court similarly refuses to extend the scope of La. R.S. 47:301(g)(i) or Parish Ordinance 1.17(7) to include defendant's washing and cleaning services as they are merely preventative and not intended to "fix or mend" anything that is broken. Likewise, the facts presented in McNamara v. Stauffer Chemical Co., 506 So.2d 1252 (La.App. 1st Cir.) are too dissimilar to persuade this Court to follow the approach taken in that case.
This Court also notes that La. Admin. Code Title 61, Part 1, § 4301, interpreting La. R.S. 47:301, is not persuasive authority in this case because St. Charles Parish qualified their adoption of parish ordinance 1.17 with an amendment stating "the adoption of this amendment does not adopt any interpretation of Title 47 of the Louisiana Revised Statutes made by the Louisiana Department of Revenue or the Department of Revenue and Taxation . . ." As St. Charles Parish clearly distinguished its ordinance from the state statute and its interpretation, this Court will not now assist plaintiff in its self-serving attempt to ignore its prior decision. Furthermore, this Court is persuaded by defendant's argument that § 4301 is inapplicable and unpersuasive because: (1) the regulation was not promulgated with the adoption of the statute as was required in State v. BP Exploration Oil Co., 686 So.2d 823 (La. 1997) and (2) the regulation is ultra vires because it is contrary to the judicially determined meaning of the statute in Intracoastal Pipe.
However, this Court also holds that the changing of gaskets by defendant may be taxed under St. Charles Parish tax ordinance Section 1.17 as the sale of "personal tangible property." That ordinance provides in pertinent part:
An ordinance levying within the Parish of St. Charles, State of Louisiana, a tax of one per cent (1%) upon the sale at retail, the use, the lease, or the rental, the consumption, and the storage for use or consumption of tangible personal property
Furthermore the ordinance defines "personal tangible property" in Section 1.20 as:
[P]ersonal property which may be seen weighed, measured, felt or touched, or is in any other manner perceptible to the senses. The term "tangible personal property" shall not include stocks, bonds, notes, or other obligations or securities.
This definition is consistent with prior jurisprudential interpretation in which "tangible personal property," within the scope of "sales of services tax law," has been described as "the same as movable property as used in property law." Exxon Co. v. Traigle, 353 So.2d 314 (La. 1977). In this case, the sale of "gaskets" is clearly the sale of "personal tangible property."
Defendant admits that it "generally changes gaskets on the tanks to insure that the next load is not cross contaminated" and that it "charges the customer for the new gasket unless the customer presents its own gasket, in which case Quala changes it free of charge." Defendant's Trial Memorandum, p. 4. Furthermore, defendant notes that the "charge for a replacement gasket, if any, is recorded separately from whatever service may have been performed by Quala." Id. Therefore, the Court mandates compliance with St. Charles Ordinance 1.17 to the extent it taxes defendant's replacement of gaskets.
This Court also reaffirms its decision reflected in its Order and Reasons issued March 26, 2001 (rec. doc. 9 ) holding inter alia that all federal review of state tax systems is not foreclosed by the Tax Injunction Act as the Supreme Court held specifically that a suit to collect a tax is "surely not brought to restrain state action, and therefore does not fit the Act's description of suits barred from federal district court adjudication." Jefferson County, 527 U.S. 423, 433-34; see also Louisiana Land Exploration Co. v. Pilot Petroleum Corp., 900 F.2d 816, 818 (5th Cir. 1990) ("Section 1341 does not, however, preclude federal court jurisdiction over a suit brought to collect a state tax rather than to enjoin, suspend, or restrain the collection of taxes"); Carrollton-Farmers Branch Indep. School Dist. v. Johnson Cravens, 858 F.2d 1010 (5th Cir. 1988); American Civil Liberties Union Foundation of Louisiana v. Crawford, 2000 WL 1273406 at *1 (E.D.La. 2000); Irving Independent School District v. Packard Properties, Ltd., 741 F. Supp. 120, 122 (N.D.Tex 1990); Wright Miller, Federal Practice and Procedure, § 4237, fn.15 (2000).
Accordingly, it is ORDERED that defendant must comply with St. Charles Tax Ordinance Section 1.17 for any replaced gaskets as that constitutes a sale of personal tangible property. The jurisdiction of the Court shall remain open in the event that the parties are unable to agree upon the sale tax due for the sale of gaskets.