Opinion
24496.
ARGUED FEBRUARY 13, 1968.
DECIDED MARCH 7, 1968.
Injunction. Fulton Superior Court. Before Judge Tanksley.
Arthur K. Bolton, Attorney General, William L. Harper, Louis F. McDonald, Assistant Attorneys General, Joel M. Feldman, Deputy Assistant Attorney General, for appellants.
Gambrell, Russell, Moye Killorin, E. Smythe Gambrell, T. M. Forbes, Jr., for appellees.
Alston, Miller Gaines, Francis Shackelford, Robert L. Dodd, Jr., for parties at interest not parties to record.
Industrial materials used to coat or impregnate a product at any stage of its manufacture are not subject to the Georgia Sales and Use Tax by reason of the amendment of 1953 (Ga. L. 1953. Jan. Sess., pp. 194-195) even if they may later be removed in another manufacturing process.
ARGUED FEBRUARY 13, 1968 — DECIDED MARCH 7, 1968.
This is an action to enjoin an alleged unlawful attempt by a Georgia taxing authority to assess and collect sales and use taxes in respect to the use of certain industrial materials called "spray oils" that are used in the manufacture of textile fibers which are later removed after these fibers are made into finished cloth. The sole question involved is whether or not the later removal of the "spray oils" causes purchasers of the oil to be subject to the tax. The suit alleges that since some manufacturers are exempt from a tax on the purchase of the oils by selling their manufactured fibers in bulk rather than making finished cloth and then selling it as cloth after thus removing the "fiber conditioning oils" — as these petitioners do — the petitioners are discriminated against in violation of the State and Federal Constitutions because in another manufacturing process they remove the impregnated oils in finishing the cloth and, according to the taxing authority, become subject to the tax. They pray for a declaratory judgment and for a temporary and permanent injunction against the assessment and collection of such taxes in order to avoid a multiplicity of suits and because they have no full, adequate and complete remedy at law. The lower court sustained the petitioners in granting a summary judgment in their favor, declaring the "fiber conditioning oils" or "spray oils" used in the manufacture of textiles as not subject to the tax and enjoined the collection of same. The State officials appealed to the Court of Appeals which has transferred the case to this court because of lack of jurisdiction.
The case sounds in declaratory judgment and contains pleadings which could require the application of constitutional clauses to a given situation both of which come within the jurisdiction of the Court of Appeals on review. However, since the above would not give this court jurisdiction, yet the case may be one of equity jurisdiction, and since we take jurisdiction of "bad equity" cases as well as good, we move without further discussion to a decision on the merits of this case.
Since there seems to be no question as to the facts, a pure law question remains as to whether or not the so-called "spray oils" used in impregnating textile fibers are subject to the sales and use tax where they are thus used in the manufacturing process. The oils are admittedly washed out or otherwise removed from the finished cloth, yet the oils are an integral part of the manufacture of the textile fibers. Thus they constitute "industrial materials ... that are coated upon or impregnated into the product at any stage of the processing, manufacture or conversion" (emphasis supplied) covered in Section 3 (c) (2) of the Georgia Retailers' and Consumers' Sales and Use Tax Act, as amended (Ga. L. 1951, pp. 360, 363; Ga. L. 1953, Jan. Sess., pp. 194-195; Ga. L. 1964, p. 206; Code Ann. § 92-3403a C2), as exempt from the tax; and, as properly ruled by the lower court "not subject" under the exemption provisions hereinabove referred to. The law is definite that "the sale, use, storage, or consumption of industrial materials for future processing, manufacture or conversion into articles of tangible personal property for resale where such industrial materials become a component part of the finished product," or are "coated upon or impregnated into the product at any stage of its processing, manufacture or conversion" are exempt. The "spray oils" are used in the manufacture of the textile fibers which are tangible personal property and are exempt either as a part of the finished product at that stage, or at any stage of the manufacture of the finished cloth even if removed thereafter by being washed out or otherwise removed. They should not be considered as fuels and materials "for heat, light, power or refrigeration" used in the manufacturing and not exempt. They become exempt as a component part of textile fibers in the manufacture of the fibers, or they become exempt by being "coated upon or impregnated into the product at any stage" of the processing, manufacture or conversion into finished cloth. It seems abundantly clear from the law that this is the legislative intent by reason of the amendment of 1953, supra, which is a fair, just and equitable treatment of the manufacturer. To rule otherwise would require a strained construction, and, as we see it, the law is not ambiguous but clear requiring no construction. See State of Ga. v. Cherokee Brick c. Co., 89 Ga. App. 235, 240 ( 79 S.E.2d 322). Accordingly, the court did not err in granting the motion for summary judgment in favor of the petitioners.
Judgment affirmed. All the Justices concur, except Undercofler, J., disqualified.