The Texas Court of Appeals has upheld a District Court’s decision that a plastic closure manufacturer was not entitled to a refund of sales tax paid on charges for removal and disposal of waste from its plant. The manufacturer paid a single charge for the disposal of commingled manufacturing waste, discarded wrapping and packaging materials, and office and cafeteria waste. The relative amounts contributed by each category was not differentiated or documented. Although subsequent tests of the composition of the waste stream indicated that at least 95% of the solid waste removed would qualify for exempt industrial waste removal and disposal, the manufacturer did not adequately document with “books and records” the composition of the waste stream during the periods at issue.
Although the applicable rules can be constructed in the manufacturer’s favor to imply that all of these wastes are industrial waste, the Court could not conclude that the Comptroller’s more limited construction was plainly erroneous, inconsistent, or exceeded her authority, especially since she has “exclusive jurisdiction” to interpret the statutory definitions of taxable services. (Southern Plastics, Inc. v. Combs, Texas Court of Appeals, Third District, No. 03-08-00149-CV, July 1, 2009)