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contracttrialtax lawcorporation

plaintifftax lawcorporation

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Richfield Oil Corp. v. State Board of Equalization, 155 P.2d 1

Facts

Richfield Oil Corporation, a foreign corporation authorized to do business in California, entered into a contract with the New Zealand Government to supply fuel oil. The oil was delivered to the tanker 'Nucula' at Long Beach, California, and was intended for export to New Zealand. After the delivery, the State Board of Equalization assessed a retail sales tax on the transaction, which Richfield paid under protest. The trial court found that the oil was exported and that the tax was improperly levied.

Plaintiff is a foreign corporation authorized to do business in California and engaged in producing, refining and selling crude oil and crude oil products.

Issue

Whether the retail sales tax imposed on Richfield Oil Corporation for the sale of oil intended for export to New Zealand was constitutionally permissible.

Rule

The California Sales Tax Law imposes a tax on retailers measured by gross receipts from sales, but gross receipts from sales that are constitutionally exempt from state taxation are not subject to this tax.

The California Sales Tax Law imposes a tax upon retailers, measured by gross receipts, ‘for the privilege of selling tangible personal property at retail,’ and authorizes retailers to collect the tax from the consumers.

Analysis

The court determined that the sale of oil occurred when it was loaded onto the tanker, at which point title passed to the New Zealand Government. The court applied the constitutional prohibition against state taxation of exports, concluding that the transaction was part of the export process and thus exempt from the sales tax. The court referenced previous cases that established the principle that goods in the process of exportation cannot be taxed.

Applying these general principles or formulas to the facts of the present case, we are of the opinion that the sale of oil was a step in its exportation and that the tax in question was improperly levied.

Conclusion

The court affirmed the trial court's judgment, ruling that Richfield Oil Corporation was entitled to a refund of the sales tax paid, as the transaction was constitutionally protected from state taxation.

The judgment is affirmed.

Who won?

Richfield Oil Corporation prevailed in the case because the court found that the sales tax was improperly levied on an export transaction, which is protected under the Constitution.

The court concluded that plaintiff was entitled to a refund of the amount paid, together with interest thereon, and entered judgment accordingly.

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