STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RADIANT OIL COMPANY OF )

JACKSONVILLE, )

)

Petitioner, )

)

vs. ) CASE NO. 78-185

) STATE OF FLORIDA, DEPARTMENT OF ) REVENUE, MOTOR FUEL TAX BUREAU, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice a hearing was held before Charles C. Adams, a Hearing Officer with the Division of Administrative Hearings, at the Conference Room, Suite 205, Building "B", 6501 Arlington Expressway, Jacksonville at 10:15 a.m., April 26, 1978.

APPEARANCES

For Petitioner: Jack G. Hand Jr., Esquire

1320 Atlantic Bank Building Jacksonville, Florida 32202

For Respondent: Maxie Broome, Jr., Esquire

Assistant Attorney General Department of Legal Affairs The Capitol

Tallahassee, Florida 32304

ISSUE

Whether or not the Petitioner, Radiant Oil Company of Jacksonville, is responsible to pay $4,466.64, plus the penalty and interest currently due from a proposed assessment by the Respondent, State of Florida, Department of Revenue, Motor Fuel Tax Bureau, under the alleged authority of Chapter 206, Florida Statutes.

FINDINGS OF FACT

1. The Radiant Oil Company of Jacksonville is a dealer in special fuels within the meaning of Chapter 206, Florida Statutes. The Respondent, State of Florida, Department of Revenue, Motor Fuel Tax Bureau is responsible for the enforcement of the tax provisions found in Chapter 206, Florida Statutes.

   
   

2. On October 6, 1977, the Respondent issued a notice of proposed assessment against the Petitioner claiming the amount of tax due to be

   $4,837.92. This notice of proposed assessment may be found as part of the Composite Exhibit 1 of the Respondent, admitted into evidence. There remains in

   dispute $4,466.64 together with a possible penalty and interest that would be assessed. This amount of disputed tax, penalty and interest pertains to transactions between the Petitioner and the Boam Company, one of its customers.

   
   

3. Specifically, the Respondent is asserting a tax on the amount of 55,833 gallons of diesel fuel which was sold to the Boam Company by the Petitioner. Diesel fuel is a "special fuel" within the meaning of Section 206.86(1), Florida Statutes. The Boam Company is not a dealer within the meaning of Chapter 206, Florida Statutes, it has executed an exemption certificate for the benefit of the Petitioner on a form provided by the Respondent. The certificate is Petitioner's Exhibit 1, admitted into evidence.

   
   

4. The facts in the transaction which lead the Respondent to believe that the tax is owed are constituted through the method of Boam Company sending their tanker truck to the depot/business compound of the Radiant Oil Company for purposes of picking up the diesel fuel in question. After the individual deliveries of diesel fuel were made at the compound, that fuel was then taken by the Boam Company's tanker truck to be delivered for utilization by certain off road equipment owned by Boam Company. None of the fuel in dispute was used by any form of over the road vehicle which requires a motor vehicle license. (The 55,833 gallons in dispute does not involve the first 110 gallons of diesel fuel delivered on each pickup made by the Boam Company tanker at the Petitioner's compound.)

   
   

5. The Petitioner takes the position that Section 206.87 (4)(a) exempts the questioned transactions from the taxes set forth in Chapter 206, Florida Statutes. That provision of Chapter 206 reads as follows:

   
   

   206.87 Levy of tax.-

   1. The following sales shall not be subject to the tax herein imposed:

      1. Sales by a dealer when the special fuel is delivered for home, industrial, commercial, agricultural, or marine purposes, for consumption other than use, or for resale pursuant to paragraph (c) hereof.

         
         

         In particular the Petitioner contends that the sale by Radiant Oil Company to the Boam Company constitutes deliveries for commercial purposes other than use or other than for resale pursuant to paragraph (c) of the same section of Chapter 206, Florida Statutes. That paragraph (c) pertains to sales of five gallons or less by a person not a dealer, when that person does not have facilities for placing this special fuel in the fuel supply system of a motor vehicle, and would not fit the facts of this case.

         
         

6. To understand the continuation of the argument by the Petitioner, it is necessary to look at the meaning of the word "use." In Section 206.86(5), Florida Statutes, "use" is defined in this fashion:

   
   

   206.86 Definitions.- As used in this part:

   1. "Use" means the placing of special fuel into any receptacle on a motor vehicle from which fuel is supplied for the propulsion thereof.

   It is also necessary to understand what "motor vehicle" means within the definition of Chapter 206, Florida Statutes. "Motor vehicle," is defined in Section 206.86(2), Florida Statutes, as being:

   
   

   208.86 Definitions.- As used in this part:

   (2) "Motor vehicle" means any form of vehicle machine, or mechanical contrivance which is propelled by any form of engine or motor which utilizes special fuel and is required, or which would be required, to be licensed under the motor vehicle license law if owned by a resident.

   
   

   It is the Petitioner's position that the vehicles which ultimately used the diesel fuel in question, did not require any form of license under the motor vehicle license law in the State of Florida, if they had been owned by a resident, and consequently did not constitute "motor vehicles" within the meaning of the definition found in the aforementioned section. Accordingly, from the point of view of the Petitioner this utilization of the motor fuel was for purposes of consumption other than "use."

   
   

7. The Respondent replied to the Petitioner by stating that the exempt category which would apply in this instance is that found in Section 206.87(4)(b), Florida Statutes. That provision reads as follows:

   
   

   206.87 Levy of Tax. -

   (4) The following sales shall not be subject to the tax herein imposed:

   (b) Sales at the dealer's place of business if not more than 110 gallons by a dealer into a receptacle not connected to the fuel supply system of a motor vehicle for consumption other than use.

   
   

8. In the mind of the Respondent, this provision of the law creates an exemption for the sale of the first 110 gallons by a dealer, delivered into a receptacle not connected to the fuel supply system of a motor vehicle for consumption other than "use;" and acts to the exclusion of any possible exemption under 206.87(4)(a), Florida Statutes, which has been claimed by the Petitioner. Moreover, the Respondent relied strongly on a portion of the language of Section 206.87, Florida Statutes, which states ". . . unless expressly provided to the contrary in this part, every sale shall be deemed to be for use in this state . . . " Consequently, according to the Respondent, because Section 206.87 (4)(b), Florida Statutes, addresses the kind of transaction that the petitioner is involved in, this exemption creates the only possible exclusion from tax consequences that is available to the Petitioner. The Respondent expresses a retreating argument to the effect that the use of the word "delivered" found in Section 206.87 (4)(a), Florida Statutes, would mean direct delivery to the site of the place of consumption other than "use."

   
   

9. After examining the position of the two parties, it is the undersigned's conclusion that Section 206.87(4)(a), Florida Statutes, creates an exemption from the possible tax consequences noted in Chapter 206, Florida Statutes. This conclusion is reached because the use of the word "delivered" in Section 206.87(4)(a) is followed by the word, "for" which creates the impression that delivery could be made either at the business location of the vendor, or at the location of the equipment that would be consuming the fuel for purposes

   other than "use." Had the legislature intended to limit the exemption found in the quoted provision to only those transactions involving deliveries to the home, industrial location, commercial location, agricultural location, or marine location, it would seem that they would have expressed it in the terms of the necessity to deliver "to the location" as opposed to stating it in terms of delivering "for purposes." In addition, the Section 206.87 (4)(b) Florida Statutes, does not exclude the right of the Petitioner to claim an exemption under Section 206.87(4)(a), Florida Statutes, nor is it inconsistent with that prior provision. Section 206.87(4)(b) , Florida Statutes, when read in pari materia with Section 206.87(4)(a) Florida Statutes, stands on its own and involves a different category of exemption. This category of exemption would include utilization of the special fuel for home, industrial, commercial, agricultural, or marine purposes, as well as any other utilization of the special fuel other than "use." Had it been intended for this provision, Section 206.87(4)(b), Florida Statutes, to exclude the right to exemption found in Section 206.87(4)(a), Florida Statutes, there would have been a connecting phrase between the two subsections (a) and (b) such as the word "or," such as the phrase "unless it exceeds the 110 gallon exemption found in the following subsection," or some similar comment. Since that type of language does not appear, it is unreasonable to assume that the legislature intended to have the prospective exempt organization or person required to accede to the exemption which affords the least advantage.

   
   

10. For the reasons stated above the assessment in the amount of $4,466.64 plus the possible penalty and interest asserted under Chapter 206, Florida Statutes, should be rejected.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction in this cause.

    
    

12. For the reasons outlined in the findings of fact, the notice of proposed assessment to the extent of $4,466.64, together with the penalty and interest is not supported under the theories found in Chapter 206, Florida Statutes, and no tax should be levied.

RECOMMENDATION

It is recommended that the portion of the proposed assessment to the extent of $4,466.64 together with the penalty and interest be denied, and the Petitioner not be required to make such payment.

DONE and ENTERED this 19th day of May, 1978, in Tallahassee, Florida.

CHARLES C. ADAMS

Hearing Officer

Division of Administrative Hearings

530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 19th day of May, 1978.

COPIES FURNISHED:

Jack G. Hand, Jr., Esquire 1320 Atlantic Bank Building Jacksonville, Florida 32202

Maxie Broome, Jr., Esquire Assistant Attorney General Department of Legal Affairs The Capitol

Tallahassee, Florida 32304

John D. Moriarty, Esquire Department of Revenue

Room 104, Carlton Building Tallahassee, Florida 32304

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RADIANT OIL COMPANY OF JACKSONVILLE,

Petitioner,

vs. CASE NO. 78-185

STATE OF FLORIDA, DEPARTMENT OF REVENUE, MOTOR FUEL TAX BUREAU,

Respondent.

/

NOTICE

You will please take notice that the Governor and Cabinet of the State of Florida, acting as head of the Department of Revenue, at its meeting on the 18th day of July, 1978, refused to approve and accept the proposed Final Order of the Department of Revenue in the above captioned case which modified the Division of Administrative Hearings' Recommended Order dated May 19, 1978 and in lieu thereof accepted the Division of Administrative Hearings' Recommended Order dated May 19, 1978.

JOHN D. MORIARTY, ATTORNEY DIVISI0N OF ADMINISTRATION DEPARTMENT OF REVENUE

ROOM 104, CARLTON BUILDING TALLAHASSEE, FLORIDA 32304

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing Notice as furnished by mail to Jack G. Hand, Jr. Esquire, 1320 Atlantic Bank Building, Jacksonville, Florida 32202, Attorney for Petitioner; Maxie Broome, Jr., Esquire, Assistant Attorney General, The Capitol, LLO4, Tallahassee, Florida 32304 and Charles C. Adams, Esquire, Hearing Officer, Division of Administrative Hearings, Room 530, Carlton Building, Tallahassee, Florida 32304 this 20th day of July , 1978.

JOHN D. MORIARTY, ATTORNEY

Docket for Case No: 78-000185

Orders for Case No: 78-000185