Ruling 92-6

Petroleum Products Gross Earnings Tax

This Ruling has been clarified by AN 92(6); amplified and clarified by Ruling 99-2

FACTS:

1. A company which is engaged in the refining or distribution of petroleum products distributes a product commonly known as number 2 heating oil [hereinafter, "the heating oil"] to a customer.
2. The heating oil meets the specification for Heating Oil D396-69 that have been established by the American Society for Testing and Materials.
3. The customer uses the heating oil in its heating system to heat the interior space of its buildings. Those buildings are used for commercial and manufacturing purposes.
4. The customer also uses the heating oil to generate heat that is used in its manufacturing process. The process requires that the manufacturing materials be heated in order to remove moisture therefrom.
5. The customer also uses the heating oil to heat the interior space of a container in which the manufactured product is stored prior to its sale. If the manufactured product is not kept at a certain temperature, it becomes unusable and cannot be resold.

ISSUE:

Whether number 2 heating oil is a "petroleum product", as defined in Conn. Gen. Stat. §12-587(a)(4), if it is to be used exclusively for heating interior space or for heating tangible personal property.

DISCUSSION:

Conn. Gen. Stat. §12-587(a)(4) provides in pertinent part:

"petroleum products" means those products which contain or are made from petroleum or a petroleum derivative, but shall not mean (A) the product designated by the American Society for Testing and Materials as "Specification for Heating Oil D396-69," commonly known as number 2 heating oil, to be used exclusively for heating purposes .... [Emphasis furnished]

This excerpted language was added as part of a new subsection (a) to Conn. Gen. Stat. §12-587 by 1985 Conn. Pub. Acts 381. Prior to the passage of 1985 Conn. Pub. Acts 381, Conn. Gen. Stat. §12-587 provided in pertinent part:

"petroleum products" includes any product which contains or is made from petroleum or a petroleum derivative, but shall not include the product designated by the American Society for Testing and Materials as "Specification for Heating Oil D396-69," commonly known as number 2 heating oil except when said product is sold for use as fuel for diesel engine motor vehicles ....

The Connecticut Supreme Court has noted that:

[A] cardinal rule of statutory construction is that statutes are to be construed to give effect to the apparent intention of the lawmaking body. Farms Country Club, Inc. v. Carini, 172 Conn. 439, 444, 374 A.2d 1094; Jarvis Acres, Inc. v. Zoning Commission, 163 Conn. 41, 46, 301 A.2d 244; McAdams v. Barbieri, 143 Conn. 405, 416, 123 A.2d 182; 2A Sutherland, Statutory Construction (4th Ed.) §45.05. If the language of the statute is clear, it is assumed that the intention is expressed by the words themselves and therefore there is no need to construe the statute; Anderson v. Ludgin, 175 Conn. 545, 552, 400 A.2d 712; for where the wording is plain, courts will not speculate as to any supposed intention because the question before a court then is not what the legislature actually intended but what intention it expressed by the words that it used. Doe v. Institute of Living, Inc., 175 Conn. 49, 68, 392 A.2d 491; Lee v. Lee, 145 Conn. 355, 358, 143 A.2d 154.

Robinson v. Unemployment Security Board of Review, 181 Conn. 1, 6, 434 A.2d 293 (1980).

In the instant matter, the wording of Conn. Gen. Stat. §12-587(a)(4) is plain: number 2 heating oil "to be used exclusively for heating purposes" is not a petroleum product. Even if, arguendo, the statements made in the course of debate on the floor of the House and the Senate concerning Substitute House Bill No. 7759 (which became 1985 Conn. Pub. Acts 381) were clearly indicative of legislative intent, there is no justification here for taking notice thereof.

If the phrase "to be used exclusively for heating purposes" is construed according to the commonly approved usage of the language; Conn. Gen. Stat. §1-1(a); the verb "heat" means "to make warm or hot: raise the temperature of [heat the oven to 350 degrees] [water heated by the sun] ...." Webster, Third New International Dictionary. The uses that the customer makes of the heating oil all involve the raising of the temperature, and the making warm or hot, of space or tangible personal property: heating interior building space, heating manufacturing materials to remove moisture, and heating the interior of a container in which the manufactured product is stored.

Furthermore, "when a taxpayer's claim 'concerns the imposition of a tax rather than a claimed right to an exemption or a deduction, the issue must be resolved by strictly construing the statute against the taxing authority and in favor of the taxpayer.' [Citations omitted.]" Plasticrete Block & Supply Corporation v. Commissioner, 216 Conn. 17, 25, 579 A.2d 20 (1990). Like the definition of "gross receipts"; Conn. Gen. Stat. §12-407(9); involved in Plasticrete, supra, the language pertaining to "petroleum products"; Conn. Gen. Stat. §12-587(a)(4); "is definitional in nature, and serves to determine whether certain [products] are taxable, not whether certain [products] that are ordinarily taxable should be exempt from taxation as a matter of legislative grace." Id., at 26.

RULING:

Number 2 heating oil to be used exclusively for heating interior space or for heating tangible personal property is not a "petroleum product", as defined in Conn. Gen. Stat. §12-587(a)(4).

LEGAL DIVISION

April 16, 1992