93-0615

Special Fuel

Signed 10/15/93

BEFORE THE UTAH STATE TAX COMMISSION

___________________________________________

XXXXX ET AL., )

Petitioners, : ORDER

v. :

OPERATIONS DIVISION OF THE : Appeal No. 93-0615

UTAH STATE TAX COMMISSION, : (CONSOLIDATED WITH 93-0617

: 93-0618 & 93-0619)

Respondent. : Tax Type: Special Fuel

__________________________________________

STATEMENT OF CASE

This matter came before the Utah State Tax Commission for a hearing on the Petitioners’ Motion for Partial Summary Judgment on XXXXX. Paul F. Iwasaki, Presiding Officer, heard the matter for and on behalf of the Commission. Present and representing the Petitioners was XXXXX, Esq. Present and representing the Respondent was XXXXX, Assistant Attorney General.

Based upon the arguments of counsel for the respective parties, the stipulated facts, and memoranda submitted in support of each party’s position, the Tax Commission hereby makes it:

FINDINGS OF FACT

1. The tax in question is special fuel tax.

2. Each of the Petitioners is an interstate trucking company which operates its vehicles, at various times, within the state of Utah and upon the highways of the state, transporting primarily property and goods.

3. The vehicles operated by the Petitioners consume “special fuel", specifically, diesel fuel.

4. In the operation of their motor vehicles within the state of Utah, the Petitioners nonmally and customarily consume special fuel while said vehicles are parked with the motors running.

5. Each of the Petitioners files a quarterly report showing the amount of special fuel consumed by each carrier without differentiating between that fuel which is consumed while the vehicles are being propelled over the highways of the state from that fuel which is being consumed while the vehicles are in a nonpropulsion mode.

6. Each of the Petitioners is required to pay a motor fuel tax on special fuel consumed regardless of the amount of fuel which is consumed in the nonpropulsion mode.

CONCLUSIONS OF LAW

1. “Special fuel" means any fuel regardless of name or character that: is useable as fuel to operate or propel a motor vehicle upon the public highways of the state; and

(ii) is not taxed under the category of aviation or motor fuel. Special fuel includes those fuels that are not conveniently measurable on a gallonage basis. (Utah Code Ann. 59-13102(3)(d).)

2. "Use" as used in part 3, means the consumption of special fuel for the operation or propulsion of a motor vehicle upon the public highways of the state and includes the reception of special fuel into the fuel supply tank of a motor vehicle. (Utah Code Ann.59-13-102(7).)

3. A tax is imposed at the rate of 19 cents per gallon on the sale or use of special fuel.

No tax is imposed upon special fuel which:

(a) is sold or used for any purpose other than to operate or propel a motor vehicle upon the public highways of the state, but this exemption applies only in those cases where the purchasers or the users of special fuel establish to the satisfaction of the commission that the special fuel was used for purposes other than to operate a motor vehicle upon the public highways of the state . . . (Utah Code Ann.59-13-301(1) and (2)(a).)

DECISION AND ORDER

In the present case, the narrow issue to be determined by the Commission is whether the nonpropulsion use of the special fuel by the Petitioners is subject to the special fuel tax. The Petitioners, in their Motion for Partial Summary Judgment, argues that only that amount of special fuel which is used to actually propel the motor vehicle upon the highways of the state of Utah is subject to the special fuel tax. Therefore, the Petitioner argues, fuel consumed by motor vehicles while the motor vehicles are not actually moving on the highways of the state is not subject to the special fuel tax.

In support of their position, counsel for the Petitioners argued that the legislative intent of the tax on special fuel was to tax the users of the public highway who, by driving on the highways, cause wear and damage to the highways. Such wear and damage, according to Petitioners counsel occurs only when the vehicles are actually moving on the highways.

Counsel for the Petitioners alleges that support for such an interpretation of legislative intent is found in 59-13102(3)(d) which defines "special fuel" as “ . . . any fuel regardless of name or character that: (i) is useable as fuel to operate or propel a motor vehicle upon the public highways of the state . . . “

Counsel argues that by using the word "propel" the legislature showed an intent to tax only the fuel used in propelling a motor vehicle.

The Commission is unpersuaded by the Petitioners’ argument. Such an interpretation completely disregards the fact that59-13-102(3)(d) defines special fuel as any fuel usable as a fuel to operate or propel a motor vehicle upon the highways of the state. The use of the word "or” to separate the word "operate" from “propel” evidences a legislative intent to list two separate and distinct processes either of which would render the special fuel subject to taxation. It demonstrates a clear legislative intent not to limit the taxability of the fuel to propulsion consumption only. Had the legislature intended to limit taxability to propulsion consumption only, it could easily have done so by listing only the word “propel”. Therefore, it must be logically assumed that the legislature consciously chose not to limit the taxability of special fuel to such a narrow parameter.

Based upon the foregoing, the Tax Commission finds that fuel consumed in the nonpropulsion operation of a motor vehicle on the public highways of the state is subject to special fuel tax. Therefore, the Motion for Partial Summary Judgment of the Petitioner is denied. Further proceedings on these matters will be set at a date, time and place to be set by the Commission.

DATED this 15th day of October, 1993.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

W. Val Oveson Roger O. Tew

Chairman Commissioner

Joe B. Pacheco Alice Shearer

Commissioner Commissioner