STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ELI WITT COMPANY, as successor to ) HAVANATAMPA CORPARATION, )

)

Petitioner, )

)

vs. ) CASE NO. 79-1432

) OFFICE OF THE COMPTROLLER, STATE ) OF FLORIDA, and DEPARTMENT OF ) BUSINESS REGULATION, )

)

Respondents. )

)

RECOMMENDED ORDER

A hearing was held in the above captioned matter, after due notice, on September 21, 1979, at Tallahassee, Florida, before Thomas C. Oldham, Hearing Officer.

APPEARANCES

For Petitioner: Ronald C. LaFace, Esquire

Post Office Drawer 1838 Tallahassee, Florida 32302

For Comptroller: E. Wilson Crump, II, Esquire

Assistant Attorney General Department of Legal Affairs The Capitol

Tallahassee, Florida 32301

Department of Harold F. X. Purnell Business General Counsel

Regulation: Department of Business Regulation

725 South Bronough Street Tallahassee, Florida 32301

ISSUE

Whether Petitioner's claim for refund under Chapter 210, Florida Statutes, pursuant to Section 215.26, Florida Statutes, should be approved.

The Petition herein was originally filed solely against the Comptroller of the State of Florida. Thereafter, pursuant to nation of the Respondent for a more definite statement, an

amended petition was filed on July 27, 1979. Subsequently, pursuant to stipulation, Department of Business Regulation, Division of Alcoholic Beverages and Tobacco was joined as a party respondent.

This case was consolidated for purposes of hearing with the case of Eli Witt Company, as successor to Havatampa Corporation, Petitioner, v. Department of Business Regulation, Division of Alcoholic Beverages and Tobacco, Respondent, Case No. 79-1984R. The said petition alleged the invalidity of the Division of Alcoholic Beverages and Tobacco's Rule 7A- 10.25, Florida Administrative Code. A Final Order in that case has been issued on this date.

FINDINGS OF FACT

1. Petitioner Eli Witt Company is a wholesale dealer in cigarettes in some eight states, including Florida. During the year 1976 and at the present time, Petitioner acts under the authorization of the Division of Alcoholic Beverages and Tobacco as an agent to buy or affix tax stamps pursuant to Section 210.05, Florida Statutes, and to collect and remit cigarette tax to the Division after sale to various retailers in the State. Petitioner has some twenty-five branch offices located throughout the State who place orders for cigarettes with Petitioner on a daily basis. The cigarettes are invoiced by Petitioner to each branch and, upon arrival, the various branch offices affix the tax stamps upon the cigarette packages, primarily by means of a stamping machine. Each of Petitioner's stamping offices maintains its own records and files required reports, and are audited Individually by employees of the Division. Each branch office is listed separately on a rider to the surety bond of Petitioner which is required under Chapter 210. Monthly checks are signed by each branch manager to remit tax collected to the Division. (Testimony of Hoyland)

   
   

2. Since at least 1962, Petitioner had stamped cigarettes and collected cigarette taxes for the State of Florida. It had been allowed a discount as compensation for its services and expenses pursuant to Section 210.05(3)(a), Florida Statutes, of 2.9 percent on the first two million cigarette packs stamped at each of its stamping locations. On March 1, 1976, the Division promulgated Rule 7A-10.25, Florida Administrative Code, which provided that a wholesaler who stamps cigarettes at more than one location would only be entitled to receive the maximum discount for a single agent doing business at a single location. Accordingly, although each of Petitioner's twenty-five stamping locations purchased more than two million stamps from the Division during the fiscal year July 1, 1976 through June 30, 1977, Petitioner retained the 2.9 percent discount as if it had done business at only one location. It filed a protest against the effect of the rule with the Division on July 1, 1976. A refund claim was filed with the State Comptroller on March 16, 1979, and denied on June 12, 1979. (Testimony of Hoyland, case pleadings, Exhibits 2-3, 5)

   
   

3. In 1977, the state legislature enacted Chapter 77-421, Laws of Florida, effective June 29, 1977, which provided in part in Section B thereof that: "Stamping locations approved by the division shall be responsible for computing the discount provided for each aid every stamping location by ss. 210.05(3)(a), Florida Statutes . . ." The Division thereafter permitted discounts under the policy in effect prior to the promulgation of Rule 7A-10.25, but did net repeal the rule. On March 16, 1979, Petitioner requested the State Comptroller to refund the $64,900 paid under protest in fiscal year 1976-77 which represented the amount it could have retained as a discount if Rule 7A-10.25 had not been in effect. (Case pleadings, Exhibits 1, 4)

   
   

   CONCLUSIONS OF LAW

   
   

4. Petitioner seeks a refund of $64,800 from the State Comptroller pursuant to Section 215.26, Florida Statutes, which was paid under protest and is claimed as discounts to which the Petitioner is properly entitled as a

   cigarette tax stamping agent under Section 210.05(3)(a) Florida Statutes. Section 215.26 provides as follows:

   
   

   215.26 Repayment of funds paid into State Treasury through error, etc.---

   1. The Comptroller of this state may refund to the person who paid same . . . any moneys paid Into the State Treasury which constitute:

      1. An over payment of any tax, license or account due;

      2. A payment where no tax, license or account is due; and

      3. Any payment made into the State Treasury in error; . . . .

   2. Applications for refunds as provided by this section shall be filed with the Comptroller except as otherwise provided here, within 3 years after the right to such refund shall have accrued else such rights shall be barred . . . .

   
   

5. The funds in question were paid to the Department of Business Regulation by Petitioner during the fiscal year period July 1, 1976 - June 30, 1977. Petitioner's request for refund was made on March 16, 1979 and was denied by the Comptroller on June 12, 1979. Petitioner's right to any refund accrued at the time the tax payments were made commencing with fiscal year 1976 and accordingly the application for refund was timely filed within the three-year statutory period. The nature of the refund sought, although not specified in the amended petition, is obviously an overpayment of cigarette tax collected and remitted to the Department of Business Regulation by Petitioner.

   
   

6. Petitioner claims entitlement to the requested refund based on the fact that Department of Business Regulation Rule 7A-10.25, Florida Administrative Code, which limits a wholesaler/stamping agent with multiple stamping locations to the maximum discount under Section 210.05(3)(a), Florida Statutes, to that for a single location, is not in accord with pre-rule Departmental policy nor with Chapter 77-421, Laws of Florida. The latter statute which was enacted after the time period in question contained language later incorporated into Section 210.05(3)(a) that was in accord with the earlier policy and which prompted the Department of Business Regulation to cease enforcing the rule. Petitioner therefore maintains that the later statute, in effect, nullified the rule and that it should not be applied in determining its right to the refund.

   
   

7. In the separate rule challenge filed by Petitioner, the Hearing Officer upheld the validity of Rule 7A-10.25 as it was applied during fiscal year 1976- 1977. It is probably true that if the rule were to be applied today, a person having a substantial interest in its application could prevail In an attack against it in the light of the present version of Section 210.05(3)(a). However, this case must be determined by the existing law in force during the period in question. Regardless of the wisdom of the rule at that time, it had been promulgated in effectuation of the statutory provision, and the Division of Alcoholic Beverages and Tobacco was obliged to apply it in a consistent manner. In fact, the Division had no choice since it is patent that agencies must follow their own substantive rules until or unless they are amended or abrogated pursuant to Chapter 120. Gadsden State Bank v. Lewis, 348 So 2d 343 at fn.1,

page 344, (Fla. 1st DCA 1977) It is therefore concluded that Petitioners claim for refund under Section 215.26, F.S., is not meritorious.

RECOMMENDATION

That the Comptroller, State of Florida, deny Petitioner's claim for refund. DONE and ENTERED this 14th day of November, 1979, in Tallahassee, Florida.

THOMAS C. OLDHAM

Hearing Officer

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

(904) 488-9675

COPIES FURNISHED:

E. Wilson Crump, II Assistant Attorney General Department of Legal Affairs The Capitol

Tallahassee, Florida 32301

Harold F.X. Purnell General Counsel

Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

Ronald C. LaFace, Esquire Post Office Drawer 1838 Tallahassee, Florida 32302

John D. Moriarty, Esquire Department of Revenue

Room 104, Carlton Building Tallahassee, Florida 32304

Docket for Case No: 79-001432

Orders for Case No: 79-001432