261 Kan. 901
(933 P2d 698)
No. 76,097
BOARD OF COUNTY COMMISSIONERS OF LEAVENWORTH COUNTY, KANSAS, et al., Appellants, v. MCGRAW FERTILIZER SERVICE, INC., Appellee, and BOARD OF COUNTY COMMISSIONERS OF LEAVENWORTH COUNTY, KANSAS, et al., Appellants, v. GEIGER READY-MIX CO., INC., Appellee.
SYLLABUS BY THE COURT
1. In ascertaining the meaning of a constitutional provision, the primary duty of the courts is to look to the intention of the makers (the legislature) and the adopters (the voters) of that provision.
2. A constitutional provision is not to be narrowly or technically construed, but its language should be interpreted to mean what the words imply to persons of common understanding. Words in common usage are to be given their natural and ordinary meaning in arriving at a proper construction.
3. The power to levy taxes is inherent in the power to govern, but the exercise of that power is dependent upon the existence of legislation designating the kinds of property to be taxed. Nothing is taxable unless clearly within the grant of the power to tax.
4. Taxing statutes will not be extended by implication beyond the clear import of the language employed therein; their operation will not be enlarged so as to include matters not specifically embraced.
5. Uniformity in taxation implies equality in the burden of taxation, and this equality cannot exist without uniformity in the basis of valuation. Uniformity in taxation does not permit a systematic, arbitrary, or intentional higher valuation than that placed on other similar property within the same taxing district.
6. In Kansas, the sales tax is a "debt" from the consumer to the retailer. Because the Kansas sales tax is, by statute, not a cost to the retailer, it cannot be considered as simply another cost of doing business.
7. All costs normally passed on to the consumer in setting the retail sales price are to be included in the valuation of personal property.
8. Although costs contributing to the retail price are part of the value of an item, add-on costs incurred by the consumer after the retail price has been set have less to do with the value of the item and more to do with how and where the consumer is going to use the item. As long as these add-on costs are charged separately and readily discernible from the actual sales price of the item, these add-on costs are based on a separate contract for services and are not included in the "retail cost when new" in determining ad valorem tax values.
9. Applying the well-established principle of common understanding to the valuation standard "retail cost when new" contained in art. 11, § 1(b) of the Kansas Constitution, we find that for purposes of ad valorem taxation, the phrase never includes sales tax and does not always include the addition of freight and installation charges to the purchase price of an item.
Appeal from Leavenworth district court; DAVID J. KING, judge. Opinion filed March 7, 1997. Affirmed as modified.
William E. Waters, of Division of Property Valuation, Kansas Department of Revenue, argued the cause and was on the briefs for appellant Director of Property Valuation.
Keyta D. Kelly, Leavenworth County Counselor, argued the cause and was on the briefs for appellant Board of County Commissioners of Leavenworth County.
Carol B. Bonebrake, of Cosgrove, Webb & Oman, of Topeka, argued the cause and was on the brief for appellee McGraw Fertilizer Service, Inc.
Linda Terrill, of Neill, Scott, Terrill & Embree, L.L.C., of Lenexa, argued the cause and was on the brief for appellee Geiger Ready Mix Co., Inc.
Clarence D. Holeman, assistant county counselor of Sedgwick County, was on the brief for amicus curiae Board of Sedgwick County Commissioners.
Robert J. O'Connor and Dwight D. Dumler, of Morrison & Hecker L.L.P., of Wichita, were on the brief for amici curiae certain Sedgwick County taxpayers.
The opinion of the court was delivered by
LOCKETT, J.: The Board of Leavenworth County Commissioners (County) and the Director of the Division of Property Valuation (Director) seek review of the Board of Tax Appeals' (BOTA) and the Leavenworth County District Court's construction of the valuation standard "retail cost when new" of art. 11, § 1(b), class 2 (E), of the Kansas Constitution implemented in K.S.A. 79-1439(b)(2)(E). BOTA and the district court held that the phrase "retail cost when new," as applied to the ad valorem taxation of commercial and industrial machinery and equipment, does not include charges for installation, freight, and sales tax. In addition, the County and Director claim that the appeal of Geiger Ready-Mix Co., Inc., (Geiger) to BOTA should have been dismissed for lack of jurisdiction.
Appellees McGraw Fertilizer, Inc., (McGraw) and Geiger are taxpayers in Leavenworth County who own commercial and industrial personal property required to be valued by the county appraiser pursuant to class 2(E) as set forth in subsection (b) of art. 11, § 1 of the Kansas Constitution and as implemented by K.S.A. 79-1439(b)(2)(E). Under the applicable constitutional and statutory provisions, the county appraiser is required to determine the "retail cost when new" of commercial and industrial personal property. Guidelines prescribed by the Director require county appraisers to include sales tax and freight and installation costs in the "retail cost when new" of commercial and industrial personal property when valuing such property for property tax purposes.
In 1993, the County contracted with an outside auditor to review and audit the commercial and industrial personal property renditions of various taxpayers, including McGraw and Geiger, on a contingent fee basis. As a result of that audit, the County determined that "retail cost when new" included sales tax as well as expenses associated with freight and installation of various items of commercial and industrial property owned by both taxpayers. The County assessed additional tax and penalties.
McGraw disputed the amount of additional tax assessed and filed an Equalization Appeal of Property Value pursuant to K.S.A. 79-1448 with BOTA. BOTA converted the equalization of tax appeal to a protest of payment of tax action pursuant to K.S.A. 79-2005. Following an evidentiary hearing, BOTA issued an order concluding that "add-on costs incurred by the consumer after the retail price is paid (such as sales tax, installation, and freight charges to the ultimate destination), are not included in the 'retail cost when new.'" The County filed a petition for reconsideration, which BOTA denied. The County appealed to the district court pursuant to K.S.A. 74-2426(c)(4).
In a separate action, Geiger also disputed the additional amount of tax assessed. The auditor claimed Geiger owed taxes of $50,000. Although not completely clear from the record, it appears Geiger filed both a tax protest and a tax grievance with BOTA. Geiger raised numerous issues, but not the issue of the interpretation of the phrase "retail cost when new." During the grievance proceeding, the County was granted permission to brief other legal issues, including the interpretation of the phrase "retail cost when new." On April, 5, 1995, BOTA, as in the McGraw action, again concluded that "add-on costs incurred by the consumer after the retail price is paid (such as sales tax, installation, and freight charges to the ultimate destination), are not included in the 'retail cost when new.'" In addition, BOTA determined that Geiger did not owe the County $50,000; instead, Geiger was entitled to a $4,000 refund.
The County appealed both BOTA orders to the district court. The district court consolidated the appeals and allowed intervention of the Director. The district court then affirmed BOTA's interpretation that the phrase "retail cost when new" did not include add-on costs for sales tax, freight, and installation. The County and the Director appealed, and the appeal was transferred to this court. This court granted certain Sedgwick County taxpayers and the Board of Sedgwick County Commissioners permission to file amicus curiae briefs. The Sedgwick County taxpayers presently have appeals pending in the Court of Appeals raising the issue of the interpretation of the "retail cost when new" standard.
STANDARD OF REVIEW
The County and the Director argue that BOTA "erroneously interpreted or applied the law." See K.S.A. 77-621(c)(4). BOTA is the highest administrative agency on property tax matters. BOTA has the power and authority to exercise its judgment anew and independent of the Director in determining the assessment of state assessed property. See Mobil Pipeline Co. v. Rohmiller, 214 Kan. 905, 920, 522 P.2d 923 (1974). BOTA orders are subject to judicial review under the Act for Judicial Review and Civil Enforcement of Agency Actions, K.S.A. 77-601 et seq. K.S.A. 74-2426(c). Here, we are not asked to interpret a statute. We are required to interpret the Kansas Constitution.
In ascertaining the meaning of a constitutional provision, the primary duty of the courts is to look to the intention of the makers (the legislature) and the adopters (the voters) of that provision. State ex rel. Stephan v. Finney, 254 Kan. 632, 654, 867 P.2d 1034 (1994). A constitutional provision is not to be narrowly or technically construed, but its language should be interpreted to mean what the words imply to persons of common understanding. 254 Kan. at 654; Colorado Interstate Gas Co. v. Board of Morton County Commr's, 247 Kan. 654, 660, 802 P.2d 584 (1990). Words in common usage are to be given their natural and ordinary meaning in arriving at a proper construction. Farmers Co-op v. Kansas Bd. of Tax Appeals, 236 Kan. 632, 635, 694 P.2d 462 (1985).
There are well-established rules of construction applicable to tax matters. The power to levy taxes is inherent in the power to govern, but the exercise of that power is dependent upon the existence of legislation designating the kinds of property to be taxed. Nothing is taxable unless clearly within the grant of the power to tax. See Robbins-Leavenworth Floor Covering, Inc. v. Leavenworth Nat'l Bank & Trust Co., 229 Kan. 511, 512, 625 P.2d 494 (1981). The right to tax is penal in nature, and this right must be strictly construed in favor of the taxpayer. J.G. Masonry, Inc. v. Department of Revenue, 235 Kan. 497, 500, 680 P.2d 291 (1984). Tax statutes will not be extended by implication beyond the clear import of the language employed therein; their operation will not be enlarged so as to include matters not specifically embraced. Director of Taxation v. Kansas Krude Oil Reclaiming Co., 236 Kan. 450, 455, 691 P.2d 1303 (1984). Where there is reasonable doubt as to the meaning of a taxing act, it will be construed most favorably to the taxpayer. National Cooperative Refinery Ass'n v. Board of McPherson County Comm'rs, 228 Kan. 595, 597, 618 P.2d 1176 (1980).
JURISDICTION
For the first time on appeal, the Director argues that BOTA had no jurisdiction, pursuant to K.S.A. 79-1702, to consider the property valuation issues raised by Geiger because no clerical error was alleged and the taxes were not paid in protest as provided by K.S.A. 79-2005. The Director asserts Geiger's grievance should be remanded to the district court with instructions to vacate BOTA's order for lack of jurisdiction. We note that even if Geiger's protest was dismissed for lack of jurisdiction because the Director has not challenged McGraw's protest, the question presented requires a decision of this court.
Although it is not totally clear from the record, it appears that Geiger paid its disputed taxes under protest and filed a tax grievance covering the identical issues raised in the protest. Since Geiger paid the disputed taxes under protest, BOTA had jurisdiction to consider Geiger's appeal.
"RETAIL COST WHEN NEW"
In Kansas, only "tangible" personal property is taxable for ad valorem purposes. Kan. Const. art. 11, § 1. Under Kansas law, "personal property" includes "every tangible thing which is the subject of ownership, not forming part or parcel of real property." K.S.A. 79-102. "Tangible" is not defined in the tax statutes, but this court has adopted the view that "tangible" is "'descriptive of such things as have an objective, material existence; perceptible by the senses of sight and touch; possessing a real body.'" In re Tax Protest of Strayer, 239 Kan. 136, 142, 716 P.2d 588 (1986) (quoting Black's Law Dictionary 310 [5th ed. 1979]).
In 1985, the Kansas Legislature adopted House Concurrent Resolution 5018, which was submitted to the voters in the 1986 general election as a proposed amendment to art. 11, § 1 of the Kansas Constitution. The amendment changed the uniform and equal rate of assessment and taxation standard of the Kansas ad valorem taxation system and substituted a classification system. The subsection of the amended provision dealing with the classification of commercial and industrial equipment changed the concept of "fair market value" to "retail cost when new." Under art. 11, § 1(b), class 2 (E), of the Kansas Constitution, commercial and industrial property is to be valued at its "retail cost when new." The relevant section of art. 11 provides:
"Article 11. -- FINANCE AND TAXATION
"§ 1. (a) System of taxation; classification; exemption. The provisions of this subsection (a) shall govern the assessment and taxation of property until the provisions of subsection (b) of this section are implemented and become effective, whereupon subsection (a) shall expire. The legislature shall provide for a uniform and equal rate of assessment and taxation, except that the legislature may provide for the classification and the taxation uniformly as to class of motor vehicles, mineral products, money, mortgages, notes and other evidence of debt or may exempt any of such classes of property from property taxation and impose taxes upon another basis in lieu thereof. All property used exclusively for state, county, municipal, literary, educational, scientific, religious, benevolent and charitable purposes, and all household goods and personal effects not used for the production of income, shall be exempted from property taxation.
"(b) System of taxation; classification; exemption. (1) The provisions of this subsection (b) shall govern the assessment and taxation of property on and after January 1, 1989, and each year thereafter. Except as otherwise hereinafter specifically provided, the legislature shall provide for a uniform and equal basis of valuation and rate of taxation of all property subject to taxation. The provisions of this subsection (b) shall not be applicable to the taxation of motor vehicles, except as otherwise hereinafter specifically provided, mineral products, money, mortgages, notes and other evidence of debt and grain. Property shall be classified into the following classes for the purpose of assessment and assessed at the percentage of value prescribed therefor:
. . . .
"Class 2 shall consist of tangible personal property. Such tangible personal property shall be further classified into six subclasses, shall be defined by law for the purpose of subclassification and assessed uniformly as to subclass at the following percentages of value:
. . .
"(E) Commercial and industrial machinery and equipment which, if its economic life is seven years or more, shall be valued at its retail cost when new less seven-year straight-line depreciation, or which, if its economic life is less than seven years, shall be valued at its retail cost when new less straight-line depreciation over its economic life, except that, the value so obtained for such property, notwithstanding its economic life and as long as such property is being used, shall not be less than 20% of the retail cost when new of such property....................20%."
K.S.A. 79-1439(b)(2)(E), which was later enacted and follows the constitutional provision verbatim, requires the appraiser to use the "retail cost when new" of an item as the starting point when appraising commercial and industrial machinery and equipment.
A. Decisions Below
Does the phrase "retail cost when new" include variable add-on (post-acquisition) amounts for sales tax, freight and installation? To understand BOTA's ruling on this issue, BOTA's analysis in its March 15, 1995, decision is quoted in detail:
"11. The above referenced constitutional provision and statute does not define what it means by 'retail cost when new.' We have found no Kansas case law attempting to provide a definition. The Board notes, however, that there are other tax statutes that refer to what is included in the word 'cost.' K.S.A. 79-3602, 79-3602a and 79-3602b of the Kansas Retailers Sales Tax Act all define the term 'selling price' as: '. . . the total cost to the consumer exclusive of discounts allowed and credited, but including freight and transportation charges from retailer to consumer.' Thus, for sales tax purposes, total cost includes freight and transportation charges from retailer to consumer. Leavenworth County produced a memorandum from the Division of Property Valuation (PVD) dated March 25, 1993, adopting the sales tax definition for use in setting the ad valorem tax value of commercial personal property. County Exhibit #3. No authority or reasoning is provided by either the memorandum or the county as to why the sales tax definition is being adopted for ad valorem tax purposes.
"12. When a specific section of a tax statute does not provide a definition, there is some authority to look to other taxation sections within Chapter 79 of the Kansas Statutes Annotated for guidance. The Kansas Supreme Court examined this technique for ascertaining definitions within a legislative package such as Chapter 79. First Page, Inc. v. Cunningham, 252 Kan. 593, 600, 847 P.2d 1238 (1992). However, the Board notes that the high court (while not disapproving) did not specifically approve the use of this technique in interpreting Kansas statutes.
"13. The Board is reluctant to use the First Page technique to apply definitions found in the Kansas Retailers' Sales Tax Act to the statutes regarding ad valorem property tax. While both are found in chapter 79 of the Kansas statutes, these two kinds of taxes have distinctly different characteristics and purposes. The sales tax is a tax on the privilege of engaging in the business of selling tangible personal property at retail in this state, and is levied on the gross receipts of sales transactions. K.S.A. 70-3603. Ad valorem property taxes, on the other hand, are taxes on the ownership of property and are levied on the value of property. Kan. Const. Art. 11, Sec. 1(a) and K.S.A. 79-1439 both state that commercial equipment shall be valued at its 'retail cost when new.' One is a tax on the transaction and the other a tax on the value of the item sold. It does not follow that what is included in one must also be included in the other. It is not clear to this Board that charges added to the retail price for freight, installation and particularly for sales tax are related to the value of the product sold. Therefore, the Board finds that the definition of 'sales price' for retail sales tax purposes is not the same as, and is not an appropriate definition for, 'retail cost when new' as applied to ad valorem taxation of commercial personal property.
"14. Another troublesome feature of the proposition that freight, installation and sales tax be included in the 'retail cost when new' for calculating ad valorem property taxes is that ad valorem taxes must be based on valuations that are uniform and equal. For example, suppose two companies, A and B, purchase the same piece of equipment with a retail cost of $1,000. Taxpayer A has the equipment delivered by the same company they bought it from for a delivery fee of $75. Added to the $1,075 is a sales tax of 6.5% for a total of $1,144.87. Company B, on the other hand, purchases the equipment from an out-of-state firm (thus paying no Kansas sales tax) and pays a third party to ship the equipment. On January 1 (and every year thereafter for the life of the equipment), Taxpayer A (cost = $1,144.87) would have a higher valuation than B (cost = $1,000) for the exact same item, purchased on the same day and for the same sale price.
"15. There are no Kansas cases directly on point. A review of case law from other jurisdictions since 1980 shows very little litigation on the issue at hand. What few cases were found have decided that the term 'cost,' when used for valuation of personal property for ad valorem taxation purposes, included all costs actually paid by the consumer. This includes installation costs Crown Cork and Seal Co., Inc. v. South Carolina Tax Commission, 394 S.E. 2d 315 (S.C. 1990); current data, transportation and set up costs, IBM Credit Corporation v. Board of County Commissioners of the County of Jefferson, 870 P.2d 535 (Colo. App. 1993); the foregoing, as well as the price of the asset, site preparation and sales tax. Xerox Corp. v. County of Orange, 136 Cal. Rptr. 583 (1977); and State Department of Assessments and Taxation v. Metrovision of Prince George's County, Inc., 607 A.2d 110 (Md. App. 1992). Critical to the reasoning in these cases was the law in these jurisdictions that the sales tax was a direct obligation of the retailer. As such, it was just another cost passed on to the consumer. Kansas statutes require a different result.
"16. In Kansas, the sales tax is by statute not a cost to the retailer. K.S.A. 79-3604 provides that the sales tax shall be paid by the consumer; that sales tax shall be a debt from consumer to retailer; and that it is recoverable at law in the same manner as other debts. If the sales tax is not paid by the consumer, the director of taxation may proceed directly against the consumer to collect the full amount of the tax due. This statute has two important applications to the issue at hand. First, the Kansas sales tax is not a cost to the retailer which can be considered as simply another cost of doing business which is passed on to the consumer. Second, the Kansas sales tax is, by statute, a 'debt' from the consumer to the retailer. K.S.A. 79-3604. In Kansas, 'Money, notes and other evidence of debt are . . . exempt from all ad valorem and other property taxes levied under the laws of the state. . . .' By defining sales taxes as a 'debt' of the consumer, our statutes have specifically exempted sales taxes from ad valorem taxation.
"17. This Board understands and agrees that all costs passed on to the consumer in setting the retail price are to be included in the valuation of personal property. These costs will appropriately include intangibles such as import and export taxes, excise taxes, freight, labor, commissions, advertising and other overhead expenses. However, the Board also sees a point at which amounts paid by a consumer are beyond the retail cost of the item being purchased. The cost new to a consumer of an item with a retail price of $100.00, for example, can reasonably be construed to be $100.00. Such a cost includes all the costs of production and marketing as well as a profit to producers and retailers. It is not at all clear that additional costs paid after the retail price has been paid by the consumer should also be included in the words 'retail cost when new.' All costs contributing to the retail price are part of the value of an item. Add-on costs incurred by the consumer after the retail price has been paid, however, have less to do with the value of the item and more to do with how and where the consumer is going to use the item. As long as these add-on costs are separately listed and readily discernible from the actual retail price of the item, there is no reason why these add-on costs cannot also be separated from the 'retail cost when new' in determining ad valorem tax values.
"18. The analysis in the previous paragraph is supported by Kansas tax statutes. The Board notes that the Kansas Retailers' Sales Tax Act defined the term 'selling price,' in part, as '. . . the total cost to the consumer. . . .' K.S.A. 79-3602, 79-3602a, 79-3602b. In explaining 'total cost to the consumer,' the above referenced statutes continue with these words: '. . . exclusive of discounts allowed and credited, but including freight and transportation charges from retailer to consumer.' Id. The first thing the Board takes from this statutory language is that the legislature must have understood the words 'total cost to the consumer' to not include freight and transportation costs; otherwise, there would have been no reason to specifically add these costs to the definition. The second thing the Board takes from the statutory language is that the legislature knows how to include the cost of freight and transportation in the words 'total cost to the consumer.' It did so in the Retailers' Sales Act. No such language can be found in the property valuation statutes. K.S.A. 79-1439 provides that commercial machinery and equipment is to be valued at its '. . . retail cost when new . . . .' In this statute, the legislature declined to include the cost of freight and transportation, as it had done in the sales tax act. The Board will not read into statutes words that are not there.
"19. As the Board considers this matter, it does so with the knowledge that strict construction is required as tax statutes are considered penal in nature. In re Tax Protest of Strayer, 239 Kan. 136, 141, 716 P.2d 588 (1986). One of the effects of strict construction is that:
'Tax statutes will not be extended by implication beyond the clear import of language employed therein, and their operation will not be enlarged so as to include matters not specifically embraced. The rule of strict construction means that ordinary words are to be given their ordinary meaning. Such a statute should not be so read as to add that which is not readily found therein or to read out what as a matter of ordinary English language is in it.' In re Tax Appeal of Atchison, Topeka & Santa Fe Railway Company, 17 Kan. App. 2d 794, Syl. ¶ 5, 844 P.2d 756 (1933).
Another effect of strict construction is that: 'If there is a reasonable doubt about the meaning of a taxing act, it will be construed most favorably to the taxpayer.' Executive Aircraft Consulting, Inc. v. City of Newton, 252 Kan. 421, Syl. ¶ 4, 845 P.2d 57 (1992).
"20. For all the reasons stated above, the Board finds that add-on costs incurred by the consumer after the retail price is paid, (such as sales tax, installation and freight charges to the ultimate destination), are not included in the 'retail cost when new.' When separately listed so that they can be readily discerned from the actual retail price, these add-on costs should not be included in the tax valuation of commercial machinery and equipment."
It is noteworthy that this decision is contrary to BOTA's prior position on the issue. In In the Matter of the Protest of Wickham Industries, Inc., Docket No. 88-3202-PR (June 14, 1989), BOTA ruled that the county appraiser had properly included freight and installation as a portion of the taxpayer's cost of personal property. In In the Matter of the Protest of Northrock Lanes, Inc., Docket Nos. 88-6075-PR and 90-8223-PR (December 4, 1991), BOTA, relying on Wickham, ruled that sales tax, freight, and installation costs were assessable. The Northrock decision relied upon the Director's guidelines, which stated that sales tax, freight, and installation costs were to be included. However, in deciding Wickham and Northrock, BOTA did not undertake the depth of analysis subsequently undertaken in McGraw and Geiger.
The BOTA ruling in the McGraw case included a dissent. The dissent was premised, in part, on the Kansas Retailers' Sales Tax Act's definition of "selling price" as "the total cost to the consumer exclusive of discounts allowed and credited, but including freight and transportation charges from retailer to consumer." K.S.A. 1996 Supp. 79-3602(g). The dissent found no difference between the terms "selling price" and "retail cost when new." The dissent relied upon case law from other jurisdictions in concluding that the term "cost," when used for valuation of personal property for ad valorem tax purposes, includes all costs actually paid by the consumer. It reached this conclusion even though the other jurisdictions had not adopted Kansas' "retail cost when new" standard.
The Leavenworth County District Court, in affirming BOTA, did not engage in lengthy analysis, but stated in part:
"In my judgment, and this is my decision, ["retail cost when new" is] the amount necessary to acquire the property itself. It does not include incidental and optional charges for services in connection with the purchase of the item, such as freight and installation charges. And it, likewise, does not include sales tax. That is not a cost of the item; it is something that must be paid to acquire the item, but not a cost which is inherent in the item. It is not a common and understood item which would be included in what an ordinary person would understand an item to cost. If you consider, What does a television set cost?, you may say $375. You would not consider that cost to include sales tax.
"I do find, as well, that the opinion and the briefs which distinguish sales tax and note that it is considered in Kansas law as a debt and not a part of the value of property to be persuasive in that regard." Board of County Commr's of Leavenworth County, Kansas v. McGraw, No. 9504CV238 (Jan. 17, 1996).
B. Other Authority
The Director argues that BOTA's interpretation that "retail cost when new" of commercial and industrial machinery and equipment does not include taxes, freight, and installation charges is erroneous as a matter of law. The Director's point is that to "men of common understanding," the term "cost" means "total acquisition cost" to the consumer. The Director bases this contention upon the fact that the total acquisition cost of commercial and industrial machinery and equipment for accounting, federal income tax, and appraisal purposes includes sales tax as well as freight and installation charges. For authority, the Director relies upo