Appeal from the Order of the Board of Finance and Revenue in the case of J.D. Lamison Drilling Co., Inc. v. Commonwealth of Pennsylvania, Docket No. RST-2383.
Lloyd R. Persun, Shearer, Mette & Woodside, for petitioner.
Paul S. Roeder, Deputy Attorney General, for respondent.
President Judge Crumlish, Jr. and Judges Mencer, Blatt, Williams, Jr. and Craig. Opinion by President Judge Crumlish, Jr.
[ 63 Pa. Commw. Page 156]
J.D. Lamison Drilling Company, Inc. appeals from a Board of Finance and Revenue order which assessed a use tax deficiency against Lamison's business activities for the period from January 1, 1973 to September 30, 1976.*fn1 We affirm in part and reverse in part.
We adopt as our findings of fact in this de novo tax appeal the facts as stipulated by the parties. These
[ 63 Pa. Commw. Page 157]
facts disclose that Lamison is in the business of water-well, blast hole and core hole drilling.*fn2 During the period in issue, Lamison was involved primarily in blast hole drilling for coal and limestone miners.*fn3
Section 202(b) of the Tax Reform Code imposes a tax upon the use of tangible personal property and services purchased at retail, subject to certain exceptions not here applicable. Section 201(o)(4)(B) excludes from the definition of "use":
The use or consumption of tangible personal property, including but not limited to machinery and equipment and parts therefor . . . in any of the operations of --
(i) The manufacture of personal property. . . .
Section 201(c) defines "manufacture" as:
The performance of manufacturing, fabricating, compounding, processing or other operations, engaged in as a business, which place any personal property in a form, composition or character different from that in which it is acquired . . . and shall include, but not limited to --
(3) Refining, blasting, exploring, mining and quarrying for, or otherwise extracting from the earth . . . any natural resources, minerals and mineral aggregates. . . .
[ 63 Pa. Commw. Page 158]
Lamison contends first that, since its core hole and blast hole drilling activities were identical to those operations performed by coal and limestone miners using their own equipment, the parts and supplies used directly in the operation and maintenance of his drilling rigs and the razorback shovels used to clear the drill-hole area should be excluded from the tax. Secondly, Lamison contests the tax assessment and computed interest on parts and supplies for several registered pickup trucks used to transport employees and supplies to and from the drilling sites and work stations in the field.
The Commonwealth insists in reply that the manufacturing exclusion demands commercial extraction of a natural resource to qualify as "mining." Lamison merely drilled holes, did not himself extract coal or limestone from the ...