AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

The Public Service Company of New Mexico (PNM), a public utility generating and selling electricity, purchased turbines and related equipment for a generating plant project in Lordsburg, New Mexico. The project was financed through industrial revenue bonds, and PNM planned to convey the equipment and site to the City of Lordsburg, which would lease the plant back to PNM. PNM paid compensating tax on the equipment but later sought a refund, arguing the transaction qualified as a resale in the "ordinary course of business" (paras 2-4).

Procedural History

• District Court of Santa Fe County: Granted summary judgment in favor of the New Mexico Taxation and Revenue Department, finding that PNM's purchase and resale of the turbines and equipment were not in the ordinary course of business and rejecting PNM's estoppel claim (paras 1, 8).

Parties' Submissions

• Appellant (PNM): Argued that the resale of turbines and equipment was in the ordinary course of business, entitling it to a compensating tax refund. Alternatively, PNM claimed the Department was estopped from denying the refund based on prior regulations and rulings (paras 7, 9).
• Appellee (New Mexico Taxation and Revenue Department): Contended that PNM's transaction was not in the ordinary course of business as it was highly unusual and not routine. The Department also argued that estoppel did not apply (paras 7-8).

Legal Issues

• Was PNM's resale of turbines and related equipment in the "ordinary course of business" under the Gross Receipts and Compensating Tax Act?
• Was the Department estopped from denying PNM's refund claim based on prior regulations or rulings?
• Did the Department impermissibly change its interpretation of "ordinary course of business" contrary to its longstanding policy?

Disposition

• The Court of Appeals affirmed the district court's decision, holding that PNM's resale of the turbines and equipment was not in the ordinary course of business and rejecting PNM's estoppel and administrative gloss arguments (paras 1, 54).

Reasons

Per Pickard J. (Fry J. concurring):

• Ordinary Course of Business: The court held that PNM's resale of turbines and equipment was not in the ordinary course of business because the transaction was highly unusual, not routine, and not part of PNM's regular business activities. PNM had never engaged in similar transactions before or since, and the transaction was not typical within the industry (paras 17-19, 27-28).
• Estoppel: The court rejected PNM's estoppel argument, finding that the Department's regulations did not support PNM's claim. Specifically, the cited regulation (3.2.205.17 NMAC) did not establish that PNM's transaction was in the ordinary course of business (paras 37-39).
• Administrative Gloss: The court found no evidence of a longstanding Department policy interpreting "ordinary course of business" in a manner favorable to PNM. The Department's prior rulings cited by PNM did not address the issue or establish a consistent interpretation (paras 40-52).
• Policy Considerations: The court emphasized the presumption in favor of taxation and the narrow construction of tax exemptions and deductions. PNM failed to clearly demonstrate its entitlement to a refund (paras 32-35).

Per Kennedy J. (concurring in part and dissenting in part):

• Kennedy J. dissented on the issue of "ordinary course of business," arguing that businesses should be allowed to include new entrepreneurial activities as part of their ordinary course of business. He contended that PNM's transaction, though novel, was consistent with its business purpose of generating electricity and adapting to changing regulatory environments (paras 56-57).