Appeal from the Circuit Court of Cook County. Honorable Joanne L. Lanigan, Judge Presiding.
As Corrected March 21, 1996.
The Honorable Justice Tully delivered the opinion of the court: Rizzi, P.j., and Greiman, J., concur.
The opinion of the court was delivered by: Tully
JUSTICE TULLY delivered the opinion of the court:
Plaintiff, City Suburban Electric Motors, Inc., appeals from orders of the circuit court of Cook County granting summary judgment in favor of defendants, Raymond T. Wagner, Jr., as director of the Illinois Department of Revenue, Patrick Quinn, as treasurer of the State of Illinois, and the Illinois Department of Revenue (collectively hereinafter the State), in this action brought under the State Officers and Employees Money Disposition Act (Ill. Rev. Stat. 1989, ch. 127, par. 170 et seq.). Jurisdiction is vested in this court pursuant to section 6 of article VI of the Illinois Constitution (Ill. Const. 1970, art. VI, § 6) and Supreme Court Rule 301 (134 Ill. 2d R. 301).
For the reasons which follow, we reverse and remand.
Plaintiff is engaged in the business of selling and repairing electric motors. Plaintiff's customers were manufacturing companies which hired it to repair electric motors for machines used in their manufacturing processes. Plaintiff supplied the labor for repair as well as the necessary repair parts. Plaintiff used stock repair parts obtained from electrical supply houses. These repair parts were generally identical to the old parts being replaced.
As a repair service, plaintiff's business was subject to the Service Occupation Tax (hereinafter SOT) (see Ill. Rev. Stat. 1989, ch. 120, par. 439.101 et seq.) and is registered with the Illinois Department of Revenue (hereinafter the Department) under the Retailers' Occupation Tax Act (see Ill. Rev. Stat. 1989, ch. 120, par. 440 et seq.). Plaintiff did not charge its customers the SOT on the sale of stock parts used in the course of its repair work where the client claimed that it was exempt from these taxes based on the manufacturing machinery and equipment exemption contained in SOT.
On June 30, 1989, the Department, after conducting an audit, issued a notice of tax liability finding that plaintiff failed to pay $17, 912.11 in taxes, penalties and interest for the period between July 1985 through August 1988. Of this amount, $11,839 represented the SOT on standard or stock machinery parts sold in the course of plaintiff's repair business and on which plaintiff did not pay the tax. On July 19, 1989, plaintiff paid, under protest, the amount of the tax, interest and penalties.
On July 20, 1989, plaintiff initiated this action by filing a four-count complaint in the circuit court seeking declaratory and injunctive relief against the State. In its complaint, plaintiff contended that the Department miscalculated the amount of tax owed, based upon a misinterpretation of the relevant statutory provisions and that such interpretation places the legislation in conflict with the Illinois Constitution's Uniformity Clause (Ill. Const. 1970, art. IX, § 2). On January 18, 1994, plaintiff added a fifth count to its complaint alleging that a subsequent amendment to the Department's regulations were contrary to the statutory provisions and, therefore, invalid. See 86 Ill. Adm. Code § 140.125(o) (1990).
Plaintiff filed a motion for summary judgment, and the State filed a cross-motion for summary judgment. On June 23, 1994, the circuit court denied plaintiff's motion and granted the State's cross-motion. After the filing of a post-judgment motion for rehearing, which was denied, the instant appeal followed.
ISSUE PRESENTED FOR REVIEW
On appeal, plaintiff argues that the trial court erred in holding that it was not entitled to an exemption from the SOT for stock parts sold incident to the sale of ...