2013 COA 92
Colo. Ct. App.2013Background
- Manufacturer in Golden factory makes beer can ends and tabs from rolled aluminum sheets; approx. 20% of sheet becomes scrap after punching ends/tabs.
- Scrap is collected, compressed into 40-pound briquettes, and sold to aluminum companies for resale.
- City issued use tax assessment on scrap for 1999–2008 (~$5M); aluminum incorporated into finished product was exempt via processing clause.
- Trial court granted summary judgment that scrap purchases were wholesale and exempt; city ordered to repay taxed amount plus interest.
- City deposit/registry order under C.R.C.P. 67(a) tolled post-judgment interest; funds remained in court registry pending appeal.
- On appeal, issues focus on whether scrap qualifies as wholesale for exemption and whether deposit/tolling of interest was proper under governing statutes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| wholesale vs retail for scrap purchases | City argues scrap is retail use taxed; scrap is by-product. | Manufacturer argues wholesale exemption applies to scrap intended for resale. | Scrap purchases are wholesale; exempt from use tax. |
| Application of primary purpose test | City contends primary purpose was non-resale use of scrap. | Manufacturer contends primary purpose includes resale of scrap. | Primary purpose test supports resale of scrap and wholesale exemption. |
| Authority to deposit funds and toll post-judgment interest | N/A (City seeks to deposit to toll interest) | N/A (Manufacturer challenges jurisdiction/impact) | Trial court may deposit funds and toll post-judgment interest; action proper under Rule 67(a) and §39-21-105. |
Key Cases Cited
- A.B. Hirschfeld Press, Inc. v. City & County of Denver, 806 P.2d 917 (Colo.1991) (primary purpose test for wholesale vs retail use tax exemption)
- Martin Marietta Corp., 805 P.2d 1102 (Colo.1991) (dual purposes realizable in use and resale; supports primary purpose framework)
- IBM v. Charnes, 198 Colo. 374 (Colo.1979) (use tax meaning; wholesale transformed to retail upon disposal for own use)
- Conoco, Inc. v. Tinklenberg, 121 P.3d 893 (Colo.App.2005) (gas by-product similarly treated under use tax depending on disposition)
- Baltimore Foundry & Machine Corp. v. Comptroller of State, 211 Md. 316, 127 A.2d 368 (Md.1956) (dual purposes for purchase; resale intent matters for exemption)