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BTLG Table of Contents > Sales and Use Tax Court Decisions > S > Searles Valley Minerals Operations Incorporated v. State Board of Equalization … (2008)

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Searles Valley Minerals Operations Incorporated v. State Board of Equalization … (2008)

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Tax Applies to Sale of Coal for Production of Electricity.

The trial court ruled in favor of the California State Board of Equalization in determining that taxpayers were not entitled to a refund of use taxes. The taxpayers produced and sold electricity to California consumers. They paid use taxes on coal purchased outside California, which they used to produce steam to power their turbines.

The Court of Appeal affirmed the judgment. The court held that electricity constitutes tangible personal property within the meaning of Sections 6007 and 6008 as property purchased for resale in the regular course of business because the coal was not incorporated into a final product within the meaning of Regulation 1525. Rather, the coal functioned as a catalyst in the manufacturing process. The California Supreme Court denied review. Searles Valley Minerals Operations Incorporated v. State Board of Equalization (2008) 160 Cal.App.4th 514.