The Taxpayer is an “S” corporation, incorporated in South Carolina and doing business in New Mexico. The Taxpayer does not have a retail office, representatives, dealers, or a sales office in New Mexico. The Department conducted an audit of Taxpayer for gross receipts tax, compensating tax, withholding tax and income tax for tax period September 1, 1999 to August 31, 2004. When the audit was concluded, the Department assessed the Taxpayer for gross receipts tax and interest. The Taxpayer’s filing reports show a history of filing withholding taxes, but no filing of gross receipts taxes. The Taxpayer specializes in making precast concrete products, including concrete modular prison cells. The design, engineering and building of these prison cells takes place at the Taxpayer’s plant in Georgia. All of the Taxpayer’s New Mexico customers are local governments. The prison cells are shipped into New Mexico by train or truck. This transportation is arranged by the Taxpayer. Once the cells arrive in New Mexico, the Taxpayer has a small group of employees who travel to the destination and has specialized training with cranes to unload and move the prison cells off the rail cars and get them into trucks to move to the customer’s site. The Taxpayer’s crew is responsible for erecting the prison cells on concrete slabs provided by the customer. The Taxpayer paid sales and use tax to the State of Georgia on the materials used in the construction of the prison cells sold to New Mexico customers. The issues to be decided in the protest hearing were whether the Taxpayer was performing a construction service in New Mexico, or selling tangible personal property. The Department argued that, if the hearing officer found that this was the sale of tangible personal property, not a construction service, then the sale was of construction materials, and would be taxable. The hearing officer found that the sale of the prison cells was not the sale of construction materials, but the sale of tangible personal property, which is deductible when sold to a government entity. Receipts from performing services in New Mexico are taxable, so receipts from the moving and installation of the prison cells would be taxable. The Taxpayer’s protest was granted in part and denied in part.