STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

KELLY BOAT SERVICES, INC., CAPE ) KENNEDY CHARTER BOATS, et al., )

)

Petitioner, )

)

vs. ) CASE NO. 76-1021

) STATE OF FLORIDA, DEPARTMENT ) OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, James E. Bradwell, held a public hearing in this case on April 9, 1979, in Tallahassee, Florida.

APPEARANCES

For Petitioner: David W. Palmer, Esquire

Post Office Box 95 Crestview, Florida 32536

For Respondent: Harold F. X. Purnell, Esquire

Department of Legal Affairs The Capitol

Tallahassee, Florida 32301

ISSUE

At issue herein is whether or not the Petitioner, Kelly Boat Service, Inc.'s and Cape Kennedy Charter Boats, et al's activities fall within the admissions tax liability imposed by Section 212.04, F.S. (1973).

Based upon the pleadings filed herein, the documentary evidence introduced during the course of the hearing, the other evidence of record including the arguments of counsel, the following relevant facts are found.

FINDINGS OF FACT

1. In the instant matter, the Department of Revenue issued two sales tax assessments. The first such assessment is against Cape Kennedy Charter Boats and covers the audit period of March 1, 1973, through February 29, 1976. The Department also assessed Kelly Boat Service, Inc., in a series of three separate assessments covering the audit periods August 1, 1970, through January 31, 1976. Based on such assessments, a tax liability resulted in the amount of $25,072.37. Of this amount, $10,000 was paid by the tax payer on July 21, 1976 (Respondent's Composite Exhibit No. 1). The remaining tax liability plus interest which has accrued from July 21, 1976, is outstanding and continues to accrue.

2. During the course of the hearing, the parties agreed that the specific liabilities as set forth in the assessment were not at issue. Rather, Petitioner solely challenged the legal authority of the Department of Revenue to impose the assessments in question.

   
   

3. The Petitioners are owners and operators of a fleet of deep sea fishing boats in and around Destin, Florida, which, for a fee, carry individual fishermen to certain fishing banks which lie beyond the three-league limit in the Gulf of Mexico. While there, the Petitioners sell food and drinks to the fishermen and rent them fishing equipment. The fishing is done at the snapper banks in the Gulf of Mexico or in the vicinity of those banks. The fishing equipment and tackle used on these trips are mainly used beyond the three-league limit in the waters of the Gulf of Mexico; and most, if not all, of the food and drinks sold at the galley of the refreshment stand on the boat was outside the three-league limit of the State of Florida.

   
   

4. In an earlier summary final judgment, the Circuit Court of Appeal declared, as authorized by Chapter 86, Florida Statutes, 1973, the liability of Kelly Boat Services, Inc., for payment of the admissions tax by Section 212.04, F.S., 1973, from which the Department of Revenue filed an appeal. In that decision, the Court held that Kelly, whose boats take on passengers at Destin for fishing in the Gulf of Mexico beyond the territorial limits of Florida, is taxable at the statutory rate on the admission fare charged at the dock, but that the State is foreclosed from assessing Kelly for taxes that should have been paid between August, 1970, and the first day of August, 1973, the period in which the Department demanded the production of Kelly's records for audit. Section 212.14(6), F.S., 1973. Kelly cross-appealed and urged that its activities were not subject to the tax, citing Straughn v. Kelly Boat Service, Inc., 210 So.2d 266 (Fla.App. 1st 1968). In its decision, the First District Court of Appeal in Dept. of Revenue v. Kelly B Boat Service, Inc., 324 So.2d 351 (Fla. 1976), indicated that the trial court was correct in its reading of its decision in Dept. of Revenue v. Pelican Ship Corp., 257 So.2d 56 (Fla.App 1st 1972), Cert. Denied, 262 So.2d 682 (Fla. 1972), Cert. Dismissed, 287 So.2d 93 (Fla. 1974), and in hold that Kelly's commercial activities, as evidenced by the record, render it liable to assessment for the admissions tax. The Court noted that the trial court was incorrect, however, in foreclosing the Department of Revenue from making the assessment for the full three-year period authorized by Subsection 212.14(6), F.S., 1973. The decision goes on to read that the State is not foreclosed by reason of the Court's 1968 decision in Straughn v. Kelly Boat Service, Inc., or otherwise to assert that on the facts evidenced by record, Kelly should satisfy its full tax liability incurred three years prior to August 1, 1973. North American Company v. Green, 120 So.2d 603 (Fla. 1960); Jackson Grain Company v. Lee, 139 Fla. 93, 190 So. 464 (1939).

   
   

5. Based on the above decision of the First District Court of Appeal, the Department's assessment, which the parties admit is factually correct, is valid both as to the August 1, 1970, through July 31, 1973, and the August 1, 1973, through January 31, 1976, audit periods. Since this matter has previously been adjudicated, the same is res judicata as to the legal validity of the Department's assessment. Further, since the assessment relative to Cape Kennedy Charter Boats is based upon the same factual circumstances and legal authority as the one against Kelly Boat Service, Inc., which was upheld as aforementioned in the case of the Dept. of Revenue v. Kelly Boat Service, Inc., supra, there is no factual challenge to the validity of the Department's assessment and there being no assertion by the Petitioner that any rules of law other than those enunciated by the District Court of Appeal in Dept. of Revenue v. Kelly Boat

   Service, Inc., supra, are applicable, such assessment must likewise be upheld. I shall so recommend. 1/

   
   

   CONCLUSIONS OF LAW

   
   

6. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action. Chapter 120.57(1), Florida Statutes.

   
   

7. The parties were duly noticed pursuant to the notice provisions of Chapter 120, Florida Statutes.

   
   

8. The authority of the Department is derived from Chapter 212, Florida Statutes.

   
   

9. Competent and substantial evidence was offered to sustain the Department's tax assessment imposed upon Petitioners herein, pursuant to Chapter 212, Florida Statutes.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is, hereby,

RECOMMENDED:

That the Department of Revenue's assessment in the instant matter against the Petitioners be UPHELD.

Additionally, in view of the Petitioners' letter of April 11, 1979, Petitioners' motion to treat this matter as a class action is hereby DISMISSED.

RECOMMENDED this 31st day of May, 1979, in Tallahassee, Leon County, Florida.

JAMES E. BRADWELL

Hearing Officer

Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301

(904) 488-9675

ENDNOTE

1/ During the hearing, Petitioner filed a motion requesting that this matter be regarded as a class action. However, during the course of the hearing, Petitioner's counsel was afforded an opportunity to study the decision in the State of Florida, Dept. of Health and Rehabilitative Services v. Alice P., 367 So.2d 1045. After a reading of such decision, by letter dated April 11, 1979, to the undersigned, a copy of which was provided the Department's counsel, the motion requesting treatment of the petition filed herein as a class action suit was withdrawn.

COPIES FURNISHED:

David W. Palmer, Esq. Post Office Box 95 Crestview, Florida 32536

Harold F. X. Purnell, Esq. Department of Legal Affairs The Capitol

Tallahassee, Florida 32301

E. Wilson Crump, II, Esq. Department of Legal Affairs The Capitol

Tallahassee, Florida 32301

John D. Moriarty, Esq. Department of Revenue

Room 104, Carlton Building Tallahassee, Florida 32301

Docket for Case No: 76-001021

Orders for Case No: 76-001021