FUELCELL ENERGY, INC. v. TOWN OF GROTON, SC 20804

Judicial District of New Britain

 

Administrative Appeal; Tax; Whether Fuel Cells Constitute "Class I Renewables" for Purposes of Personal Property Tax Exemption; Whether Plaintiff's Fuel Cells Were Goods in Process of Being Manufactured as of October 1, 2016 Grand List and Exempt from Taxation; Whether Person Claiming Exemption under General Statutes 12-81 (57) Must File Personal Property Declaration under General Statutes 12-40. The plaintiff Fuelcell Energy, Inc., owns and operates certain fuel cells and related equipment (fuel cells) used to generate electricity and heat for Pfizer, Inc.'s campus in Groton. In January 2017, the defendant, the town of Groton (town), published its grand list containing the assessed values of all property in the town as of October 1, 2016. Since installation of the fuel cells had not been completed by October 1, 2016, the town determined that construction of the fuel cells was 80 percent complete and assessed their value as "construction in progress." Thereafter, the town increased its valuation by 25 percent as a penalty for the plaintiff's failure to file a personal property declaration under General Statutes 12-40. After the valuation and penalty were upheld by the town's assessment board of appeals, the plaintiff filed an appeal in the Superior Court, which it thereafter amended multiple times to challenge the interceding assessments and penalties for the grand list years of 2017 to 2021. The trial court subsequently rendered summary judgment in favor of the plaintiff on its claims related to grand list years 2017 to 2021, concluding that the fuel cells were exempt from taxation under General Statutes 12-81 (57) as a "Class I renewable energy source." The court rejected the town's argument that the inclusion of a heat system recovery generator as part of the fuel cells transformed them into a nonexempt "cogeneration system" under 12-81 (63). The court also rejected the town's argument that it was entitled to assess a penalty for the plaintiff's failure to declare the fuel cells as personal property pursuant to 12-40, concluding that 12-40 only requires that taxable personal property be declared. The parties thereafter proceeded to trial on the plaintiff's remaining claim concerning the 2016 assessment. Following the trial, the court found that the plaintiff was in the process of manufacturing the fuel cells until October 8, 2016, and that, therefore, the 2016 assessment and penalty were improper because the fuel cells were exempt from taxation under 12-81 (50), which provides an exemption from taxation of "goods in process of manufacture." Accordingly, the court rendered judgment in favor of the plaintiff with respect to its remaining claim. The town thereafter appealed to the Appellate Court, and the Supreme Court transferred the appeal to itself. On appeal, the town claims that the trial court incorrectly determined that the fuel cells constituted an exempt class I renewable energy source under 12-81 (57) rather than a nonexempt cogeneration system under 12-81 (63). The town also claims that the court incorrectly found that the fuel cells were exempt from inclusion on the October 1, 2016 grand list as "goods in process of manufacture" under 12-81 (50). The town further claims that the trial court incorrectly determined that, because the fuel cells are exempt from taxation, the plaintiff was not required to file a personal property declaration with respect thereto pursuant to 12-40.