STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GRAYBAR ELECTRIC COMPANY, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 76-045

) STATE OF FLORIDA, DEPARTMENT OF ) REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in the above-captioned case, after due notice to the parties, at Miami, Florida, on April 13, 1976.

APPEARANCES

For Petitioner: George A. Buchmann, Esquire For Respondent: Patricia S. Turner, Esquire

ISSUE PRESENTED

Petitioner's liability for tax, interest, and penalty, pursuant to Chapter 212, Florida Statutes, as set forth in Notice of Assessment, dated December 9, 1975.

At the hearing, it was stipulated that the sale by Petitioner to one Norady as set forth in Paragraph B of the Petition was no longer in issue, and accordingly this count was withdrawn by Petitioner.

The amount of sales by Petitioner to Triumpho Electric as shown in Paragraph C of the Petition was stipulated to be in the amount of $243,724.34 instead of $248,255.26.

In view of the above Stipulations, the Hearing Officer requested that a revised assessment be prepared and submitted after the hearing to reflect the amount now sought by Respondent and to indicate thereon the taxes, penalty aid interest attributable to sales to Ivan Alexander, Triumpho Electric, Grand Bahama Development Company, and Agregados de Cal, purchasers from Petitioner. The revised schedule in the total amount of $12,358.37 was submitted on April 30, 1976, received by the Hearing Officer on May 4, 1976, and is marked as Respondent's Exhibit 1. The parties stipulated at the hearing that the method of computation was correct and Petitioner has filed no objections to the counts of the revised assessment. Accordingly, it is deemed to reflect the amount due and owing if imposition of tax is valid.

FINDINGS OF FACT

1. During the period November 1, 1973 to February 28, 1975, Petitioner made sales of merchandise to the following: Ivan Alexander, Triumpho Electric, Grand Bahama Development Company and Agregados de Cal. the circumstances of each of these transactions are set forth below.

   
   

2. Ivan Alexander Construction Co., Ltd.

   
   

   a. Petitioner made sales of electrical equipment in amount of $1,646.50 to Ivan Alexander Construction Co., Ltd. Freeport, Grand Bahamas1 on September 24, 1974. Petitioner delivered e merchandise to Lindsley-RBC, Miami, Florida. Lindsley-RBC was not licensed exporter, but acted in an agency capacity for the purchaser. Subsequent to Petitioner's delivery, Lindsley-RBC consolidated the merchandise with other purchases made by Ivan Alexander, for shipping purposes. After consolidating the merchandise, Lindsley-RBC delivered the merchandise to the shipping vessel, the Tropic Day. It was received by the purchaser in Freeport on October 11, 1974. (Stipulation, Petitioner's Composite Exhibit 7).

   
   

3. Triumpho Electric, Inc.

   
   

   Petitioner made sales of electrical construction equipment n the amount of

   $237,634.57 to Triumpho Electric, Inc., Christiansted, St. Croix, Virgin Islands, during the period under consideration. The procedures used in purchasing, delivering and shipping the merchandise are s follows:

   
   

   Ivan M. Bauknight, an employee of Triumpho, placed the order or the merchandise "on behalf of Triumpho" personally at Petitioner's - place of business, by telephonic communication with a salesman employed by Petitioner, or by contacting its sales representative who took the order in person from Bauknight. In August of 1972, Triumpho had formed Caribbean Supply Company, Inc., a wholly-owned subsidiary, for purposes of purchasing merchandise, consolidating said merchandise in its own warehouse, and shipping. To further effectuate their purposes, warehouse pace was secured at Miami International Airport. Although Bauknight as in charge of Caribbean Supply Company, Inc., he was not an employee of that company. In fact, Caribbean Supply Company, Inc., had no employees during the period in question, excepting casual labor at intervals who were supervised by Mr. Bauknight. Although it was not a "licensed exporter", Caribbean possessed an export sales tax number issued by Respondent. Subsequent to the placing of orders in the above-described manner, Petitioner delivered the merchandise to Caribbean Supply Company, Inc.'s warehouse located at Miami International Airport where the merchandise was consolidated with other purchases. After delivery, and after packaging and consolidating the merchandise in Caribbean Supply Company, Inc.'s warehouse, Bauknight contacted a shipping company and requested that a "piggyback" trailer be provided on which to load the merchandise. The shipping company then placed the trailer upon Caribbean Supply Company, Inc.`s loading lock where Bauknight and laborers would load the merchandise onto the trailer, seal it, and then inform the shipping company which would take it to Dodge Island Seaport, Miami, Florida, and load it upon a ship. During the assessment period in question, all trailers were loaded at Caribbean Supply Company, Inc.

   
   

   Another method of transportation was shipment by air from Miami International Airport. In such cases, the merchandise was delivered by Petitioners to Caribbean's warehouse where it was packaged and taken to commercial airlines for shipment. (Testimony of Bauknight, Petitioner's Composite Exhibits 1-4).

4. Grand Bahama Development Company, Ltd.

   
   

   Petitioner made sales of merchandise in the amount of $21,407.55 to Grand Bahama Development Company, Ltd., during the period in question. Procedures used in purchasing, delivering and shipping were as follow: America Devco, Inc., Miami, Florida, a wholly-owned company of Grand Bahama Development Company, Ltd., was created by the latter to represent its interests in the United States. At all times pertinent to the instant transactions, America Devco, Inc., was not a licensed exporter but was acting as Grand Bahama Development Company, Ltd's agent. It did, however, possess an export sales tax number issued by Respondent. America Devco, Inc., contacted Petitioner's sales representative by telephone and placed orders subsequently issuing a confirming purchase order to Petitioner. In about 60 percent of the transactions, Petitioner delivered the merchandise to America Devco, Inc.'s warehouse. In about 40 percent of the transactions, America Devco, Inc., went to Petitioner's business site, picked up the merchandise and took it to its warehouse. By both methods, the merchandise usually remained at America Devco, Doc's warehouse from one to three days in order to create shipping documents or to take advantage of the hundred pounds air shipping minimum. America Devco, Inc., utilized its trucks to deliver the merchandise to the airline cargo loading platform. All supplies were kept in the original containers supplied by Petitioner and America Devco, Inc., only affixed shipping label. Shipping documents were prepared by the shipping company.

   
   

   In one transaction, Petitioner delivered purchased merchandise to Alco Shipping Company at the dock in Port Laudania, Florida. (Testimony of Gomez, Petitioner's Composite Exhibit 5).

   
   

5. Agregados de Cal.

   
   

   Petitioner made sales of merchandise in the amount of 905.90 to Agregados de Cal during the period in question. The merchandise was delivered by Petitioner to Mr. Robert de la-Puirtilla, in employee or representative of Agregados de Cal, at Petitioner's lace of business, at which time he took possession of the merchandise nd delivered it to the airport. (Stipulation, Petitioner's Composite Exhibit 6).

   
   

   CONCLUSIONS OF LAW

   
   

6. Respondent asserts tax due under the provisions of the allowing applicable statutes and rules:

   
   

   1. Section 212.05, Florida Statutes:

      
      

      "It is hereby declared to be the legislative intent that every person is exercising a tax- able privilege who engages in the business of selling tangible personal property at retail in this state, or who rents or furnishes any of the things or services taxable under this chapter, or who stores for use or consumption in this state any item or article of tangible personal property as defined herein and who

      leases or rents such property within the state. For the exercise of said privilege a tax is levied on each taxable transaction or incident and shall be due and payable

   2. Section 212.06(5)(a) states in pertinent part:

      
      

      "It is not the intention of this chapter to levy a tax upon tangible personal property imported, produced or manufactured in this state for export, provided that tangible personal property shall not be considered as being imported, produced or man- ufactured for export unless the importer, producer or 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; or in the case of aircraft being exported under their own power to a destination outside

      the continental limits of the United States, or in the case of parts and equipment installed on aircraft or foreign registry, by submission to the department of duly authenticated copies of

      an aircraft manifest and duly signed and validated United States customs declaration, each showing

      the departure of the aircraft and the export of the parts and equipment from the continental United States; and further with respect to aircraft,

      the canceled United States registry of said aircraft; nor is it the intention of this chapter to levy a tax on radio and television broadcasting, or any

      sale which the state is prohibited from taxing under the constitution or laws of the United States.

      Every retail sale made to a person physically present at the time of sale shall be presumed to have been delivered in this state." (Emphasis supplied).

      
      

   3. Rule 12A-1.64(2)(b), Florida Administrative Code, provides:

      
      

      "(2) If goods are sold within the state of Florida, but possession is taken by the pur- chaser without the state, the sales tax does not apply. Possession will be considered to

      be taken by the purchaser without the state if:

      
      

      (b) The dealer is required by the terms of the sale contract to deliver the goods to a common carrier or to the mails for transporta- tion outside this state. Sales by a Florida dealer are exempt when the dealer delivers

      the merchandise to the transportation terminal for shipment outside this state and secures a dock or warehouse receipt and a copy of the bill of lading. On shipments to points outside the

      United States, a shipper's export declaration shall also be obtained." (Emphasis supplied).

      
      

   4. Rule 12A-1.64(3), Florida Administrative Code states:

      "If goods are sold within this state and pos- session is taken by the purchaser within this state, the sales tax applies, irrespective of the fact that the goods are to be transported outside of Florida by the purchaser immediately upon delivery, except as provided in paragraphs

      (5) and (23) below. For example: If goods are sold by a Florida dealer from his place of busi- ness in Florida to a nonresident purchaser who accepts delivery in Florida for immediate ship- ment to points beyond, the sales tax applies. (Emphasis supplied).

      
      

7. The following are conclusions based upon the application of the above- cited provisions of law and regulation to the facts of each group of transactions:

   
   

   1. Ivan Alexander Construction Co., Ltd.

      
      

      Petitioner delivered the goods in question to Lindsley-RBC. It was not a licensed exporter or common carrier, but agent for the purchaser. The merchandise was delivered by the purchaser's agent to the shipping vessel after consolidation with other purchases made by Alexander. Accordingly, the merchandise cannot be considered produced or manufactured for export under Section 212.06(5) or Rule 12A-1.64(2). Tax is due under the provisions of Rule 12A-1.64(3) a sale within the State of Florida and possession taken by the purchaser therein.

      
      

   2. Triumpho Electric, Inc.

      
      

      Again goods were delivered by Petitioner to the purchaser -- in this case, Caribbean Supply Company, Inc., a wholly-owned subsidiary of Triumpho - and delivered to its warehouse at the Miami International Airport for either further processing as air freight or loading On a "piggyback" trailer by the purchaser's employees for delivery shipping vessels at the Dodge Island Seaport, Miami, Florida. The livery thus was not made to a common carrier by Petitioner.

      Caribbean Supply Company, Inc. was not a licensed exporter. Although the parties stipulated at the hearing that Caribbean was, in fact a licensed exporter, concessions made by Petitioner's counsel at the hearing contradict this statement and a late-filed Motion by Respondent For Relief From The Mistaken Stipulation is considered unnecessary to resolve the issue. Although Caribbean possessed an export sales tax number from the State Department of Revenue to acquire property for the purpose of exporting tax-free, this, in itself, did not make Caribbean a "licensed exporter", as contemplated under Section 212.06(5)(a). Petitioner's response to Respondent's Motion in this respect makes reference to Caribbean's listing an exporter in the classified Miami Telephone Directory. However, this hardly constitutes sufficient evidence to create such a status. Although the term "licensed exporter" is not defined in the statutory provision, the hearing, Petitioner's counsel, in referring to America Devco, Inc., stated as follows:

      
      

      "A licensed exporter, from what I understand, sir, is one who is in the business for the profit of acquiring of merchandise and transshipping it, and that is how they make their living.

      That is a commercial venture as opposed to their doing it, for their own use." (Tr-67)

      
      

      In view this statement, it hardly can be contended that Caribbean occupied the status of a licensed exporter.

      
      

   3. Grand Bahama Development Company, Ltd.

      
      

      Here, Petitioner either delivered the merchandise to America Devco, Inc., which was not a licensed exporter or common carrier, but was a wholly-owned company and agent for the purchaser, or America Devco picked up the merchandise at Petitioner's place of business and took it to its own warehouse. It was not until America Devco created shipping documents or took advantage of the 100 lbs air shipping minimum over a period of one to three days that it then utilized its trucks to deliver the merchandise to an airline for export. In view of this procedure, there is no basis for tax exemption under the above-referenced statutes and rules.

      
      

   4. Agregados de Cal

   
   

   In this instance, Petitioner delivered the merchandise to an employee of the purchaser at Petitioner's place of business at which time the employee took possession of the goods and delivered it to the airport for export. Such transactions clearly do not fall within the exemptions of the statutes and rules in question because the merchandise was accepted at Petitioner's place of business, therefore creating the presumption, which was unrebutted, that the goods were delivered within Florida under Section 212.06(5)(a).

   
   

8. In view of the foregoing, it is concluded that all of the transactions are taxable under Section 212.05, and also that interest and penalties are due and owing under the provisions of Section 212.12(2) & (3). Petitioner relies upon State ex rel. Sunair Electronics, Inc., a Florida Corporation vs. Ray E. Green as Comptroller of State of Florida, 177 So. 2d 490 (1965) , affirmed by Supreme Court of Florida, 180 So.2d 464 (1965). That holding apparently prompted the legislature to amend Section 212.06(5) (a) to a limited extent by adding language concerning aircraft and also by adding the presumption set forth in the ultimate sentence concerning deliveries in the State by virtue of retail sales made to a person physically present at the time of sale. The revised statute did not change the basic proposition that controls the instant case, i.e.., that tax relief is not available to a producer or manufacturer of goods unless it delivered 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. None of the foregoing took place in these transactions. Constitutional attacks against the statute in question must be resolved in a judicial forum.

RECOMMENDATION

That the tax assessment of $12,358.37 against Petitioner under the provisions of Section 212.05, F.S., including interest and penalties be imposed by the Department of Revenue and enforcement thereof be effected in accordance with the provisions of law.

DONE and ENTERED this 12th day of July, 1976, in Tallahassee, Florida.

THOMAS C. OLDHAM

Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

Patricia S. Turner Assistant Attorney General Department of Legal Affairs The Capitol

Tallahassee, Florida 32304

George A. Buchmann Penthouse B2

7000 S.W. 62 Avenue

South Miami, Florida 33143 Attorney for Petitioner

Docket for Case No: 76-000045

Orders for Case No: 76-000045