Inglett & Stubbs International, Ltd. v. Riley
339 Ga. App. 375
Ga. Ct. App.2016Background
- Inglett & Stubbs International, Ltd., a Georgia electrical contractor, purchased construction materials in Georgia for U.S. Army contracts to be performed in Afghanistan.
- Inglett paid Georgia sales tax at purchase, then sought a refund (~$1.9M), claiming it was a reseller to the U.S. government and not the ultimate consumer.
- The Georgia Department of Revenue denied the refund; the Georgia Tax Tribunal (ALJ) upheld the Department; the Fulton County Superior Court affirmed.
- The Court of Appeals reviewed de novo legal issues and statutory interpretation on further appeal.
- Central factual point: materials were bought and stored in Inglett’s Smyrna, GA warehouse before shipment to Afghanistan.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether contractor (Inglett) is a reseller to the U.S. government or a retail consumer for Georgia sales-tax purposes | Inglett: it resold materials to the U.S. government and thus is not liable for sales tax | Department: under Georgia law and precedent a contractor who buys materials to perform a contract is the consumer and liable for sales tax | Held: Inglett is a consumer, not a reseller; sales tax liability applies |
| Whether performing the contract outside Georgia (Afghanistan) exempts Inglett because materials were ultimately shipped out of state | Inglett: work occurred outside GA so contractor-as-consumer rule should not apply | Department: materials were purchased and stored in Georgia and services were performed in GA as part of fulfilling the contract, bringing the transaction within OCGA § 48-8-63(b) and precedent | Held: Location of ultimate use does not avoid the contractor-as-consumer rule when purchase and storage occurred in GA; sales tax stands |
Key Cases Cited
- J. W. Meadors & Co. v. State of Ga., 89 Ga. App. 583 (contractor who fabricates materials into realty is a consumer for sales-tax purposes)
- Nat. Svc. Indus. v. Hawes, 227 Ga. 221 (purchases from Georgia sellers are taxable even if destined for out-of-state shipment)
- Strickland v. W. E. Ross & Sons, 251 Ga. 324 (statutory construction and confirmation of contractors treated as consumers under OCGA § 48-8-63)
- ESI Cos. v. Fulton County, 271 Ga. App. 181 (contractor remains liable for sales/use taxes even when government is the ultimate consumer)
- Ciba Vision Corp. v. Jackson, 248 Ga. App. 688 (retail purchasers are liable for sales tax)