THAD M. MOORE, as Chairman, D. C. O'NEIL and WARREN PETERSON, as Members of the STATE TAX COMMISSION OF THE STATE OF ARIZONA; and STATE TAX COMMISSION OF THE STATE OF ARIZONA, Appellants,
ARIZONA BOX COMPANY, a Corporation, Appellee
APPEAL from a judgment of the Superior Court of the County of Maricopa. Howard C. Speakman, Judge. Judgment reversed and case remanded with instructions.
Mr. Joe Conway, Attorney General, and Mr. W. E. Polley, Assistant Attorney General, for Appellants.
Messrs. Lewkowitz & Wein, for Appellee.
[59 Ariz. 263] LOCKWOOD, C.J.
Arizona Box Company, a corporation, plaintiff, brought suit against the State Tax Commission, defendant, praying that it recover from defendant certain sales taxes paid by it under protest, and that it be declared exempt from the provisions of the excise revenue act of 1935, being chapter 77 of the regular session, as amended by chapter 2, First Special Session, 1937, or, if it is not entirely exempt therefrom, that its classification thereunder be declared. Judgment was rendered holding that plaintiff was wholly exempt from sales taxes under the revenue act aforesaid, and that it was entitled to recover some [59 Ariz. 264] thirty-three thousand dollars of taxes paid, whereupon defendant appealed.
The facts necessary for a determination of the case are not in dispute, and may be stated thus: Plaintiff conducts its business as follows: It purchases materials already cut to proper size for the making of wooden containers for lettuce, cantaloupes, and the like, in order to prepare them for shipment. It then sells this material as received, or as made up by it in containers suitable for packing, to its customers. These customers are engaged in the growing, packing and selling of agricultural products, principally lettuce and cantaloupes. These products, when prepared and packed, are distributed in all parts of the United States, through brokers and commission agents, until they finally reach the tables of the ultimate consumers. The crates pass with the products along the line of distribution until they reach the point at which their contents are to be sold in less than crate lots, and are then disposed of by the last seller as junk.
From the adoption of the act up to June, 1940, plaintiff was required by defendant to pay, and did pay, a sales tax of one-fourth of one per cent. on the gross sales made by it. Its books were audited in April, 1936, and approved as of that time and rate by defendant. In June, 1940, a second audit being made, defendant insisted that plaintiff was obliged to pay an amount equal to two per cent. on its gross sales, instead of
one-fourth of one per cent. Plaintiff did pay under protest the amount so demanded, and has brought suit to recover these taxes, its theory being that all of the taxes paid under protest are void.
The matter must be determined by the meaning of the excise act of 1935, as amended, the portions of which material to this case read as follows:
[59 Ariz. 265] "Sec. 1. Definitions. In this article, unless the context otherwise requires:
"'retail sale' or 'sale at retail' means a sale for any purpose other than for resale in the form of tangible personal property,
"'tangible personal property' means personal property which may be seen, weighed, measured, felt, touched, or is in any other manner ...