Combs v. Roark Amusement & Vending, L.P., 422 S.W.3d 632

Roark Amusement & Vending seeks a sales-tax refund for plush toys used as prizes in Roark’s coin-operated crane machines in Texas.
Toys were purchased for stock from Oct 1, 2000 through Feb 29, 2004; Roark argued the toys qualify for the sale-for-resale exemption.
The Comptroller disputed the exemption; the trial court granted summary judgment for the Comptroller; the court of appeals reversed and remanded for refund amount; the Court granted review.
Roark’s machines provide a taxable amusement service; the plush toys are tangible personal property and are exempt under the sale-for-resale provisions when transferred as an integral part of a taxable service.
The Court emphasizes statutory interpretation of Chapter 151 as a whole, considering economic realities, and declines to graft extra-statutory requirements from rules.
Roark’s argument is that the transfer of toys occurs as an integral part of the service, qualifying for resale exemption despite an amusement-service exemption for coin-operated machines.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does Roark’s crane-game service constitute a taxable service under the statute?	Roark argues the service is taxable (amusement service) and the toys are resale items.	Comptroller argues the exemption for coin-operated amusements undermines the taxable status.	Yes, the service is a taxable amusement service under the statute.
Is the chance to win an integral part of a taxable service sufficient for resale exemption?	Transfer of toys to customers is integral to the amusement service.	Exemption requires a transfer to the purchaser of the service, not an abstract benefit.	Yes, the chance to win is an integral part of the service and supports resale exemption.

First Am. Title Ins. Co. v. Combs, 258 S.W.3d 627 (Tex.2008) (statutory interpretation and deference to agency interpretations within tax context)
Tex. Lottery Comm'n v. First State Bank of DeQueen, 325 S.W.3d 628 (Tex.2010) (statutory construction; plain meaning governs when unambiguous)
7-Eleven, Inc. v. Combs, 311 S.W.3d 676 (Tex.App.-Austin 2010) (sale-for-resale analysis within tax-code context)
City of San Antonio v. City of Boerne, 111 S.W.3d 22 (Tex.2003) (read statute as a whole to give effect to every part)
Helena Chemical Co. v. Wilkins, 47 S.W.3d 486 (Tex.2001) (interpretation of statutes with respect to broader regulatory schemes)
Bullock v. Statistical Tabulating Corp., 549 S.W.2d 166 (Tex.1977) (economic realities in tax determinations)