Branson Scenic Railway v. Director of Revenue

• Decision Date: 03 August 1999
• Citation: Branson Scenic Railway v. Director of Revenue, 3 S.W.3d 788 (Mo. App. 1999)
• Parties: (Mo.App. W.D. 1999) Branson Scenic Railway, Appellant, v. Director of Revenue, Respondent. WD56277 0
• Court: Missouri Court of Appeals

3 S.W.3d 788 (Mo.App. W.D. 1999)

Branson Scenic Railway, Appellant, v. Director of Revenue, Respondent.

WD56277

Missouri Court of Appeals Western District

08/03/99

Appeal From: Administrative Hearing Commission

Counsel for Appellant: Thomas Bradshaw

Counsel for Respondent: Evan Buchheim

Opinion Summary: Branson Scenic Railway appeals the Administrative Hearing Commission's determination that its excursion train rides into Arkansas were amusements and not exempt from sales tax as interstate commerce.

Division holds: The railway's business was to entertain people by giving them rides on its railroad, which most often, but not necessarily, included routes into Arkansas. It was not in the business of transporting people to particular destinations although its trips most often went the same route. When a carrier offers rides for fun, as opposed to offering them for the purpose of actually getting the rider to a particular place, then the carrier is providing amusement rides. It is not in the transportation business, even though its mode of amusement is mobile. The subjective intent of the persons riding the railway's trains do not work to convert the railway's rides into transportation rather than amusement. The tickets to ride the railway, therefore, were properly taxed under section 144.020.1(2), RSMo 1994, as fees paid to a place of amusement or entertainment.

Smith, P.J., and Hanna, J., concur.

Paul M. Spinden, Judge

Branson Scenic Railway appeals the Administrative Hearing Commission's determination that its excursion train rides into Arkansas were amusement rides which were not exempt from sales tax as interstate commerce. The commission concurred with the Department of Revenue director's rejection of the claim. We concur and affirm the commission's determination.

Although a "judgment" as defined by Rule 74.01 has not been entered in this case, we have jurisdiction to consider the railway's appeal pursuant to Article V, section 18, of Missouri's constitution and section 621.189, RSMo 1994. Article V, section 18, says, "All final decisions, findings, rules and orders on any administrative officer or body existing under the constitution or by law, which are judicial or quasi-judicial and affect private rights, shall be subject to direct review by the courts as provided by law[.]" In section 621.189, the General Assembly said, "Final decisions of the administrative hearing commission in cases arising . . . under the provisions of section 621.050 shall be subject to review pursuant to a petition for review to be filed in the court of appeals in the district in which the hearing . . . is held[.]" The commission held its hearing in this case in Jefferson City; hence, the appeal is properly in the Western District.

Article V, section 3, of Missouri's constitution grants "[t]he supreme court . . . exclusive appellate jurisdiction in all cases involving . . . the construction of the revenue laws of this state." This provision "speaks to the seriousness with which the people of this state view the efforts of government to reach into their pockets and pocketbooks. . . . [T]he people of this state intend their highest appellate court to determine the meaning and validity of laws by which the tax collector exacts tribute for the support of government." Kuyper v. Stone County Commission, 838 S.W.2d 436, 438 (Mo. banc 1992). We assume jurisdiction of this case nonetheless because it does not involve construction of a revenue law. To be a case involving construction of a revenue law, "the construction of a revenue law must itself be in issue." Housing Authority of Poplar Bluff v. Eastwood, 736 S.W.2d 46 (Mo. banc 1987). Construction of neither section 144.020.1, RSMo 1994, nor section 144.030.1, RSMo 1994, is at issue in this case; this case's determination turns on application of the facts of the case to the law as previously construed by the Supreme Court. See Lynn v. Director of Revenue, 689 S.W.2d 45 (Mo. banc 1985); Columbia Athletic Club v. Director of Revenue, 961 S.W.2d 806 (Mo. banc 1998).

At issue in this case is $100,584.59 in taxes that the Branson Scenic Railway paid on its ticket sales from August 1993 through December 1994 pursuant to section 144.020.1(2).¹ Believing its sales to have been in interstate commerce and, therefore, exempted by section 144.030.1,² the railway asked the director to refund the taxes. The director denied the request, and the railway appealed to the commission. The commission issued findings of fact and conclusions of law affirming the director's denial, and the railway appealed to this court. We affirm.

The dispute concerns the railway's roundtrip excursions from Branson to view the scenery of the Ozarks' foothills in southern Missouri and northern Arkansas. All of the trips began and ended at its station in Branson and typically were 40-miles long and lasted about an hour and 45 minutes. The railway preferred for its trips to travel a particularly scenic route that went 9 and one-half miles into northern Arkansas because it perceived the scenery in Arkansas to be especially pleasing to its riders, but about three percent of the trips remained wholly in Missouri because of repair to or unavailability of tracks for the Arkansas route. It did not know until immediately before each departure whether its train would be travelling through Arkansas or remaining wholly in Missouri. If, as happened a few times, a customer asked for a refund because a trip was not going to Arkansas, the railway granted the request. On the trips to Arkansas, the railway paid sales tax to Arkansas for sales on board the train while the train was in Arkansas. The railway promoted its train rides throughout the United States and Canada, and it highlighted the appealing scenery riders would see. In the trips to Arkansas, the trains stopped at a point while the engineer moved to the other end of the train for the return trip to Branson. The stop was not at a particular station, and the railway did not permit anyone to get off the train during the brief stop. Branson was the only place where passengers could board or end their trip.

The railway claims exemption for its ticket sales for these trips under section 144.030.1 on the ground that, although its train was an amusement ride, the excursions were part of interstate commerce. Because the railway seeks exemption from tax, we must construe section 144.030.1 strictly against the railway, and the railway has the burden of proving that its sales were exempt. House of Lloyd, Inc. v. Director of Revenue, 824 S.W.2d 914, 919 (Mo. banc 1992), abrogated in part, Sipco, Inc. v. Director of Revenue, 875 S.W.2d 539 (Mo. banc 1994); Mississippi River Fuel Corporation v. Smith, 164 S.W.2d 370, 377 (Mo. 1942). We are obligated to affirm the commission's findings of fact so long as they are supported by competent and substantial evidence. Wetterau, Inc. v. Director of Revenue, 843 S.W.2d 365, 367 (Mo. banc 1992). The railway does not take issue with the commission's findings of fact.

Determination of this case turns on the nature of what the director sought to tax. If it was taxing only the fee that the railway charged to get a ride on its trains, the tax was permissible as a fee paid to, or in, a place of amusement, entertainment or recreation. Lynn, 689 S.W.2d at 48. If, however, the director was seeking to tax the railway's fee for transporting people to see the sights in Arkansas, the tax was not permissible as a tax on sales in interstate commerce. Id.

We concur with the commission's conclusion that the railway's business was to entertain people by giving them rides on its railroad which most often, but not necessarily, included routes into Arkansas. It was not in the business of transporting people to particular destinations although its trips most often went the same route. It was in the entertainment business, not in the railroad business. Its train always traveled a circuitous route beginning and ending at the same point, and the railway never knew until immediately before leaving Branson what route that particular trip would take. It promised its customers only that it would try to travel to Arkansas, but, wherever the train went, it would end up at the same place as where it started. This makes apparent that its riders were not seeking to be transported to any particular place as much as they were wanting to be amused by a ride on...