
    James M. SIZEMORE, Commissioner, State Department of Revenue v. The DOTHAN PROGRESS.
    2900309.
    Court of Civil Appeals of Alabama.
    Sept. 27, 1991.
    Rehearing Denied Nov. 8, 1991.
    See also 507 So.2d 517.
    James H. Evans, Atty. Gen., and Ron Bowden, Counsel, and J. Wade Hope, Asst. Counsel, Dept, of Revenue, and Asst. At-tys. Gen., for appellant.
    Richard F. Allen of Capell, Howard, Knabe & Cobbs, P.A., Montgomery, for appellee.
   ROBERTSON, Presiding Judge.

The issue in this case is as follows: Whether ink and newsprint purchased at wholesale and withdrawn from inventory or stock for use in producing or printing newspapers which are distributed free are subject to sales tax pursuant to the “withdrawal for use” provisions of §§ 40-23-1(a)(6) and (10), Code 1975 (as amended).

This is the second time this issue has been before this court. In the case of Ex parte The Dothan Progress, 507 So.2d 515 (Ala.1987), the supreme court reversed this court and found that the aforementioned business transaction did not give rise to sales tax liability.

Once again, the Department of Revenue asserts that the withdrawal of ink and newsprint from inventory for use in producing newspapers which are distributed free is a transaction that is subject to sales tax, due to the 1986 amendment of §§ 40-23-l(a)(6) and (10), Code 1975. We disagree and adopt, in part, the language of the order of the trial court:

“Act No. 86-689 changed the statutory definitions of ‘gross proceeds of sale’ back to the same language adopted in a 1947 amendment and deleted the clarifying language inserted in Act No. 83-720. [The Dothan Progress] argues, and the court concurs, that Act No. 83-720 did not change the laws as set forth in the 1947 amendment, rather Act No. 83-720 clarified the law which had been misconstrued by the Department of Revenue and the courts. The purpose of Act No. 83-720 is clearly stated in its title:
“ ‘An Act to further amend Section 40-23-1, Alabama Code 1975, as amended, which Section contains various definitions applicable to the Alabama Sales Tax, so as to clarify, and remove ambiguity from the definitions of “gross proceeds of sales”, “gross receipts” and “sale at retail or retail sale” and declaring that such clarification does not constitute a change in, but is declaratory of, the pre-existing law. (Emphasis added.)’
“Therefore, even though language was deleted from Section 40-23-1 by Act No. 86-689, the legislature expressly retained preexisting law.
“The Supreme Court of Alabama has explicitly recognized the original purpose of the withdrawal provisions:
“ ‘The withdrawal provisions were enacted solely to fill a void not theretofore covered by any existing provisions of the Alabama Sales Tax Law, that is, to tax a person who purchases goods at wholesale for the purpose of reselling and who withdrew some of these goods for his own personal and private use or consumption, without transfer of title. (Emphasis added.) Ex parte Morrison Food Service of Alabama, 497 So.2d 136, 138 (Ala.1936 [1986]).’
See Disco Aluminum Products Company, Inc. v. State, 455 So.2d [849] at 852 [citing Rabren v. United States Steel Corporation, 286 Ala. 394, 240 So.2d 358 (Ala.1970)], State v. Air Conditioning Engineers, Inc., 277 Ala. 675, 174 So.2d 315 (Ala.1965).
“The court finds that legislative intent with regard to Section 40-23-1, Code of Alabama 1975, has remained the same since 1947. Some cases decided between 1947 and 1983 were decided incorrectly based on the 1947 legislative intent, and this the supreme court recognized in Disco Aluminum.
“Further, the court finds that this very case has already been decided in favor of [The Dothan Progress] by the supreme court. Therefore, since the intent of Section 40-23-1 was not changed by Act No. 86-689 this court is bound by the law to decide in favor of [The Dothan Progress].”

The judgment of the trial court is due to be affirmed.

AFFIRMED.

THIGPEN, J., concurs.

RUSSELL, J., concurs specially.

RUSSELL, Judge

(concurring specially).

I concur only in the result reached by the majority; however, I base my concurrence on the well-settled rule that where there is reasonable doubt as to the construction and meaning of a revenue statute, the doubt is to be resolved in favor of the taxpayer and against the taxing authority. Misener Marine Construction, Inc. v. Eagerton, 423 So.2d 161 (Ala.1982).

I do not subscribe completely to the majority’s reasoning because I would find that the circuit court’s determination that the “legislative intent with regard to Section 40-23-1 ... has remained the same since 1947” ignores both the Alabama legislature’s intent in 1986 in dropping the words “without transfer of title” from § 40-23-l(a)(10) and the expression of legislative disapproval — found in the language of Act No. 86-689, Ala. Acts 1986 — of judicial interpretations of the statute after the 1983 amendment and prior to 1986. I also find that the court’s reliance on Ex parte Morrison apparently does not account for the judicial interpretations of the withdrawal provision of § 40-23-l(a)(10) that followed the 1986 amendment, particularly our supreme court’s opinion in Ex parte Campbell & Associates, Inc., 544 So.2d 971 (Ala.1989), which seeks to clarify Morrison as it relates to transfer of title to goods withdrawn for personal use by a taxpayer.

In 1983 the withdrawal provision of § 40-23-l(a)(10) was amended to “remove ambiguity” from the definitions of “sale at retail or retail sale” as they appear in the statute. See Act No. 83-720, Ala. Acts 1983. The obvious significance of the 1983 amendment was the addition of language excepting from taxation certain out-of-state “furnish and install” contracts (see, e.g., Ex parte Disco Aluminum Products, Co., 455 So.2d 849 (Ala.1984)) and the addition of the words “without transfer of title” following the language in the statute that pertains to goods withdrawn from inventory for personal use by a taxpayer. When determining the applicability of the withdrawal provision in the wake of this amendment, our courts began to scrutinize whether title to a taxpayer’s goods had at some point passed to another party. In 1986 in Morrison our supreme court held that an objecting taxpayer who withdrew food from inventory to fulfill obligations under food-service contracts was not subject to sales tax under the withdrawal provision because the taxpayer had “passed title” to the food to other parties.

The legislature was apparently displeased with the ramifications of the Morrison decision, because just after the release of the case in 1986, it amended § 40-23-l(a)(10). The 1986 amendment has one noticeable deletion from the statute: the language “without transfer of title” (which had been added in 1983) is no longer part of the withdrawal provision. The title to Act No. 86-689 reads, in pertinent part, as follows:

“The intent of this bill is to repeal the 1983 amendment of these definitions so as to replace the repealed definitions with the pre-existing definition of these terms; and it is further intended that no provision of this bill is to be construed or interpreted in any manner inconsistent with the pre-existing body of interpretive materials, policies, and court decisions as in existence prior to the 1983 amendment.”

Although there is some ambiguity in the language of this Act (e.g., what exactly is the “body of interpretive materials, policies, and court decisions as in existence prior to the 1983 amendment”?), I nonetheless would find that the legislature in 1986 intended to do away with an interpretation of § 40-23-l(a)(10) that bases the applicability of the withdrawal provision solely upon transfer of title to withdrawn goods.

In 1989 in Ex parte Campbell our supreme court had an opportunity to address the withdrawal provision for the first time since the 1986 amendment went into effect. In affirming the holding of the Court of Civil Appeals that a taxpayer who sought to avoid subjection to the withdrawal provision could not successfully premise a Rule 60(b), Alabama Rules of Civil Procedure, motion for relief from judgment on the holding in Morrison, specifically as it relates to "transfer of title,” the supreme court upheld the imposition of the tax where the taxpayer had transferred title of the goods to another party. The supreme court in Ex parte Campbell endeavored to explain its decision in Morrison as follows:

“Morrison is applicable only to situations where material bought at wholesale is subsequently used to fulfill a contractual obligation to a tax exempt entity. Consequently, when one enters into and fulfills a performance contract with a non-tax exempt entity, title passes and there is a taxable retail sale.”

Ex parte Campbell, 544 So.2d at 977 (emphasis in original).

I find the trial court’s (and the majority’s) reliance on Morrison to be misplaced because there is a crucial difference between the facts in Morrison and the facts in the present case: In Morrison title to the withdrawn goods was transferred to tax-exempt entities, whereas, in this case, while there is evidence that title to the goods was transferred, there is no evidence that title was transferred to a tax-exempt entity.

Even after the supreme court’s opinion in Ex parte Campbell, however, I find that the construction our courts are now required to give § 40-23-l(a)(10) remains somewhat unclear. In White v. Campbell & Associates, Inc., 544 So.2d 969 (Ala.Civ.App.1988), the decision affirmed by the supreme court in Ex parte Campbell, this court wrote that it appears that “the thrust of [the] 1986 amendment was to do away with the interpretation of the withdrawal provision contained in Morrison. White, 544 So.2d at 971. The supreme court, however, failed to address this proposition directly in Ex parte Campbell, neither agreeing nor disagreeing with this court's conclusion, but writing instead that the 1986 amendment was enacted due to the legislature’s unwarranted concerns arising from its “misreading of Morrison.” Ex parte Campbell, 544 So.2d at 977. Thus, we are apparently told by the supreme court that Morrison continues to stand for what it has always stood for, contrary to this court’s opinion in White v. Campbell & Associates.

However, exactly what Morrison does stand for is unclear. Misunderstanding as to this issue is inevitable, for there is language in Morrison stating, without qualifying the tax-status of the transferee, that “when the taxpayer transfers title to the goods which have been withdrawn, he cannot be taxed under the withdrawal provision.” Morrison, 497 So.2d at 141. If, as I would maintain after Ex parte Campbell, the transfer of title to goods withdrawn for use by a taxpayer is irrelevant (unless transferred to a tax-exempt entity) where the taxpayer’s use of the goods otherwise meets the criteria of § 40-23-l(a)(10), then the supreme court in Ex parte Campbell could have availed itself of the opportunity to address previously decided cases where this very factor seems to have been determinative. The court in Ex parte Campbell fails to address language in Morrison indicating that several earlier cases dealing with the withdrawal provision (e.g., White v. Campbell & Associates, Inc., 473 So.2d 1071 (Ala.Civ.App.1985); ARA Hospital Food Management, Inc. v. State, 437 So.2d 530 (Ala.Civ.App.1983)) had been incorrectly decided because the courts in those cases did not consider the fact that title to the withdrawn goods had been passed to other parties. What is more, there is no indication by the court in Morrison that the tax status of the transferees in those earlier cases was relevant.

The court in Morrison also cites with approval Ex parte Disco Aluminum Products, which overruled Alabama Precast Products, Inc. v. Boswell, 357 So.2d 985 (Ala.1978), because the court in Alabama Precast incorrectly, according to the court, held that the withdrawal provision could be applied to situations in which title to the goods withdrawn is transferred to another. Further, in Ex parte Dothan Progress, 507 So.2d 515 (Ala.1987), which is factually identical to the instant case, the supreme court summarily reversed this court’s decision that the withdrawal provision of § 40-23-l(a)(10) applied, basing its reversal on Morrison and Disco Aluminum Products. Presumably, Dothan Progress is still good law; however, as in the instant case, there was no evidence there that title to the withdrawn goods was transferred to tax-exempt entities. Thus, a number of cases decided after 1983 and prior to the 1986 amendment, and which were neither overruled nor addressed in Ex parte Campbell, appear to have been decided on the basis of an interpretation of § 40-23-l(a)(10) that is disavowed in Ex parte Campbell and, I would argue, repudiated by the 1986 amendment.

The state of the law as it relates to § 40-23-l(a)(10) continues to need further clarification by the supreme court or the legislature. The supreme court’s explanation of Morrison in Ex parte Campbell does not lay to rest the issues of the required construction and interpretation of the body of materials, policies, and court decisions coming both before and after the 1983 amendment. The exact meaning of the body of interpretive materials, policies, and court decisions prior to 1983, as referred to in the title of Act No. 86-689, also remains unclear. Therefore, based on Misener Marine Construction, 423 So.2d 161,1 cannot find against the taxpayer in the present case.  