S. SUGAR CORPORATION, )
)
Petitioner, )
)
vs. ) CASE NO. 78-1891RX
)
DEPARTMENT OF REVENUE and )
DEPARTMENT OF BANKING AND )
FINANCE )
)
Respondent. )
)
FINAL ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a Public hearing in the above- styled case on November 21, 1978, at Tallahassee, Florida. This case was consolidated with Case No. 77-2304 for hearing. The latter case was conducted pursuant to Section 120.57(1), Florida Statutes, and a recommended order will be issued thereon. The instant case was conducted pursuant to Section 120.56, Florida Statutes.
APPEARANCES
For Petitioner: K. Lawrence Gragg, Esquire
1600 Southeast First National Bank Building Miami, Florida 33131
For Respondents: Cecil L. Davis, Jr., Esquire
Assistant Attorney General The Capitol
Tallahassee, Florida 32304
By Petition forwarded October 9, 1978, the U.S. Sugar Corporation, Petitioner, seeks a determination that the Department of Revenue's, Respondent, policy respecting shipments by contract carrier of cattle sold by Petitioner to out-of-state buyers is a rule and invalid because not promulgated in accordance with Chapter 120, Florida Statutes. The policy involves the determination that sales to out-of-state buyers are deemed out-of-state sales if the cattle are shipped by common carrier but are deemed in-state sales if shipment is by contract carrier.
Respondent, on the other hand, contends that the distinction made between common carriers and contract carriers by it is not a rule and that Petitioner's in-state sales as opposed to its out-of-state sales are controlled solely by the provisions of Section 214.71(3)(a), Florida Statutes, and Rule 12C- 1.15(4)(d)(4), Florida Administrative Code.
Respondent's Motion to Dismiss the Department of Banking and Finance from the rule challenge portion of this consolidated hearing was granted. There is no allegation that the Department of Banking and Finance has promulgated any rule involving the issues which are the subject of this hearing.
There is no dispute as to the facts here involved. The parties submitted a Joint Pre-hearing Stipulation and thereafter one witness was called by the Petitioner, one witness was called by the Respondent and two exhibits were admitted into evidence.
FINDINGS OF FACT
Petitioner is engaged in the cattle business and sells these cattle to in-state and out-of-state buyers who purchase the cattle at Clewiston, Florida, and have them transported either by the purchaser's own equipment or by a commercial carrier to their in-state or out-of-state destination.
Those sales determined to be out-of-state sales are not included in the numerator of the fraction used to compute what percentage of Petitioner's income results from Florida sales and is therefore subject to Florida income tax.
In making the determination respecting out-of-state sales Respondent applies the destination test if the cattle are shipped by common carrier but treats all other carriers as agents of the buyer to whom the cattle are delivered at Clewiston, thereby making such sales in-state sales. It is this policy determination which Petitioner contends is a rule. The policy has not been promulgated in accordance with Chapter 120, Florida Statutes, and, if this interpretation constitutes a rule, it is invalid because it was never promulgated as required.
In determining whether certain sales are subject to the Florida sales tax, the Legislature in Section 212.06(5)(a), Florida Statutes, excluded from tax that tangible property imported or manufactured for export and provided such tangible property shall not be considered as being manufactured for export unless the manufacturer delivers the same to a licensed exporter for exporting or to a common carrier for shipment outside the State or mails the same by United States Mail to a destination outside the State.
The rationale of the sales tax provision is used by Respondent in determining whether the sales are in-state sales for the purpose of computing Florida income tax.
Respondent has promulgated, to its auditors, as a policy and as an interpretation of the statute, the directive to apply the destination test in determining out-of-state sales only when the merchandise sold is shipped by common carrier to a destination out of state.
It is this policy determination or interpretation of the statutes that Petitioner contends is a rule and attacks in these proceedings.
In the testimony Respondent acknowledged that this policy determination is uniformly applied. It also has application both within and outside the agency. Respondent further testified that if the merchandise (here cattle) had been delivered by Petitioner to the buyer outside the State of Florida by any means of transportation Petitioner chose, it would have treated the sale as an out-of-state sale.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of these proceedings.
Section 120.52(14), Florida Statutes, provides: 'Rule' means each agency statement of
general applicability that implements,
interprets, or prescribes law or policy or describes the organization, procedure, or practice requirements of an agency
and includes any form which imposes any requirement or solicits any information not specifically required by statute or an existing rule.
Section 214.71(3)(a), Florida Statutes, in defining, for the purposes of ascertaining income subject to Florida tax, in-state sales, provides:
Sales of tangible personal property are
in this state if the property is delivered or shipped to a purchaser within this state, regardless of the f.o.b. point or other conditions of the sale.
Respondent's determination that if the cattle sold are picked up by common carrier at Petitioner's loading yard for shipment outside Florida, it is an out-of-state sale whereas if picked up by contract carrier or the purchaser's equipment, it is an in-state sale interprets the above-quoted statute. Furthermore, his interpretation of the statute has capability both within and without the Department of Revenue.
The statute makes no distinction between common and contract carriers and Respondent's determination that "shipped" in the above-quoted statute contemplates movement by common carrier is certainly an interpretation of the statutes not readily apparent from the face of the statute. Since this is an interpretation of the statute, it falls squarely within the definition of a rule as such determination also has general applicability.
From the foregoing it is concluded that the determination by Respondent that cattle sold to out-of-state buyers and picked up at Clewiston, Florida, by common carrier (if any) are out-of-state sales while those picked up by contract carrier are in-state sales, for the purpose of computing Florida income subject to tax, is a rule. Since this rule has never been promulgated, the rule is invalid. It is, therefore,
