Apollo Travel Services v. Gwinnett County Board of Tax Assessors

• Decision Date: 26 February 1998
• Docket Number: No. A97A2279.,A97A2279.
• Citation: 498 S.E.2d 297,230 Ga. App. 790
• Parties: APOLLO TRAVEL SERVICES v. GWINNETT COUNTY BOARD OF TAX ASSESSORS.
• Court: Georgia Court of Appeals

498 S.E.2d 297

230 Ga. App. 790

APOLLO TRAVEL SERVICES v. GWINNETT COUNTY BOARD OF TAX ASSESSORS.

No. A97A2279.

Court of Appeals of Georgia.

February 26, 1998.

Certiorari Denied June 5, 1998.

Holland & Knight, Raymond P. Carpenter, Keith J. Reisman, James R. McCain, Jr., Atlanta, for appellant.

Carothers & Mitchell, Richard A. Carothers, Thomas M. Mitchell, Buford, Caryl Sumner, Lawrenceville, for appellee.

BIRDSONG, Presiding Judge.

Apollo Travel Services appeals from the grant of summary judgment to the Gwinnett County Board of Tax Assessors. This case concerns the denial of Apollo's request for an inventory/freeport ad valorem tax exemption under OCGA § 48-5-48.2. The Board of Tax Assessors denied the request because the property on which the exemption was claimed was leased equipment which the Board determined was not eligible for a freeport exemption.

Apollo appealed this decision to the Gwinnett County Board of Equalization, and when that appeal was unsuccessful, further appealed to the superior court. After considering the parties' cross-motions for summary judgment, the superior court ruled that "the computer equipment at issue is leased for a term of years and upon completion of the lease term returned to the State of Georgia for storage and re-rental, and therefore, under OCGA § 48-5-48.2(b)(3) the equipment would not meet the requirement that the goods be destined for shipment `to a final destination outside this state.'" Therefore, the superior court granted the Board of Tax Assessors' motion for summary judgment and denied Apollo's motion. Apollo now appeals contending that the trial court erred by considering an issue not raised before the Board of Equalization, by holding that all of Apollo's inventory failed to have a final destination outside of Georgia, by granting summary judgment in a manner allowing for discriminatory taxation, and by deciding that the freeport exemption is not available on leased equipment which were fixed assets and not inventory. Apollo, a national distribution company for a computer reservation system, sought a personal property ad valorem tax exemption on more than 99 percent of its computer inventory that was stored in its Gwinnett County warehouse and which would be shipped to destinations outside of Georgia. Apollo is a licensed national distributor of computer hardware and software for the computer travel reservation system owned by Galileo International Partnership. Apollo owns the computer hardware and stores the hardware in its Gwinnett warehouse until it is leased and shipped to users of the Galileo system. According to Apollo, at least 97 percent of the computer hardware is shipped outside the state and remains there during the computer's useful life. Although some of the computers may eventually be returned to Apollo at its Gwinnett County facility until it is placed with another user of the Galileo reservation system, some computers are scrapped at the end of their leases and others are redeployed to other Galileo users without returning to Georgia.

Apollo leases the computers only in connection with the Galileo system. The user fees paid for use of the system comprises 70 percent of Apollo's income; the other 30 percent is derived from fees paid for use of the computers and software. Further, if the lessee meets certain quotas, there is a 100 percent discount on the rental fees.

Apollo's computers are not sold or leased separately from the Galileo system but are only leased to travel agencies in connection with the Galileo system. Additionally, Apollo's lease places several restrictions on the lessees: the equipment may be used only at the location specified; Apollo installs and removes the equipment; and Apollo provides all support, repair and maintenance for the leased equipment and limits the personnel who may use the equipment. Additionally, the lease agreement describes the leased equipment as "Apollo Equipment." Held:

1. The burden of proof in a tax appeal to the superior court is on the party who initiated the appeal. Hawkins v. Grady County Bd. of Tax Assessors, 180 Ga.App. 834(3), 350 S.E.2d 790. Therefore, in this case the burden was on Apollo. Further, laws granting an exemption from taxation must be construed strictly in favor of the taxing authority (Rayle Elec. Membership Corp. v. Cook, 195 Ga. 734, 735(2), 25 S.E.2d 574; Chilivis v. Cleveland Elec. Co., etc., 142 Ga.App. 751, 752(1), 236 S.E.2d 872), and all doubts must be resolved against the taxpayer. Blackmon v. Screven County Indus. Dev. Auth., 131 Ga.App. 265, 267, 205 S.E.2d 497. Consequently, no exemption will be allowed unless the exemption is clearly and distinctly intended by the legislature. Chilivis v. Marble Products Co., 135 Ga.App. 187(1), 217 S.E.2d 441.

2. Further, the standards applicable to motions for summary judgment generally are announced in Lau's Corp. v. Haskins, 261 Ga. 491, 405 S.E.2d 474. On appeal, a grant of summary judgment will be affirmed if it is right for any reason (Malaga Mgmt. Co. v. John Deere Co., 208 Ga.App. 764, 767, 431 S.E.2d 746), and when reviewing the grant or denial of a motion for summary judgment, this Court conducts a de novo review of the law and the evidence. Boulware v. Quiktrip Corp., 226 Ga.App. 399, 486 S.E.2d 662; Goring v. Martinez, 224 Ga.App. 137, 138(2), 479 S.E.2d 432.

3. Disposition of this appeal requires us to determine what property the General Assembly intended to be covered by the freeport exemption. "In construing a legislative act, a court must first look to the literal meaning of the act. [Cit.] If the language is plain and does ...