60 F. Supp. 563 | W.D. Ky. | 1945
The plaintiff, Ohio River Sand Company, brought this action to recover $725.-23 which it claims was illegally assessed against and collected from the plaintiff under the provisions of Section 3475 of the Internal Revenue Code, as amended by Section 620(a) of the Revenue Act of 1942, 26 U.S.C.A.. Int.Rev.Code, § 3475, which imposes a three per cent, tax on the transportation of property by rail, motor vehicle, water or air. A timely claim for refund was made by the plaintiff and disallowed by the Commissioner of Internal Revenue.
The plaintiff is a Kentucky corporation with its principal office in Louisville, Kentucky. It was engaged in the business, among others, of owning, operating, and chartering to others for operation, sometimes with and sometimes without a full or partial crew, towboats and motor vehicles constructed and designed primarily for operation on the Mississippi and Ohio Rivers. On or about June 27, 1941, the plaintiff entered into a written agreement with the Standard Oil Company of Ohio to furnish and operate a tug motor vessel owned by the plaintiff and bearing the name “J. H. Duffy” for the towing of
Pursuant to the terms of the agreement Standard Oil Company paid to the plaintiff as and for the rentals reserved therein the sum of $13,108.19 for the month of December 1942 and $11,066.10 for the month of January 1943. A tax of 3% was assessed and collected on these payments, for the recovery of which this action was filed.
Section 3475 of the Internal Revenue Code as amended provides that there shall be imposed upon the amount paid within the United States after the effective date of the Act" for the transportation of property by rail, motor vehicle, water or air from one point in the United States to another, a tax equal to three percentum of ■the amount so paid, except that in the case of coal a rate of four cents per short ton was to apply. It further provides that “such tax shall apply only to amounts paid to a person engaged in the business of transporting property for hire, including amounts paid to a freight forwarder, express company, or similar person, * * *.” The defendant contends that the towing of barges carrying petroleum products is transportation of property by water, and that under -the contract in question the plaintiff performed this service. The plaintiff contends that it leased the towboat, equipment and crew to the Standard Oil Company and that it thereafter transported its own product by use of the leased towboat.
It seems clear that the.towing of barges containing petroleum products constitutes transportation of property by water within the provisions of the statute. It is not necessary that the motive power applied to move the barges be in the barges themselves. The movement of barges by tugs is similar to the transportation of freight over highways in trailers attached to motor trucks. Transportation implies the taking up of persons or property at some point and putting them down at another. Gloucester Ferry Co. v. Pennsylvania, 114 U.S. 196, 203, 5 S.Ct. 826, 29 L.Ed. 158.
This leaves as the real question in the case whether the plaintiff was furnishing to the Standard Oil Company under the contract in question transportation
The plaintiff is entitled to recover the amount of the tax which it was required to pay, with interest from date of payment.