Hi-Way Dispatch, Inc. v. Dept. of State Revenue, 49T10-9606-TA-63.

CourtTax Court of Indiana
Citation756 N.E.2d 587
Docket NumberNo. 49T10-9606-TA-63.,49T10-9606-TA-63.
Decision Date29 August 2001

Norman R. Garvin, Lynne D. Lidke, Scopelitis, Garvin, Light & Hanson, Indianapolis, IN, Attorneys for Petitioner.

Steve Carter, Attorney General of Indiana, Joel Schiff, Deputy Attorney General, Indianapolis, IN, Attorneys for Respondent.


Petitioner Hi-Way Dispatch, Inc. (Hi-Way) challenges the final determination of the Indiana Department of State Revenue (Department) denying Hi-Way's protest of motor carrier fuel tax assessed against Hi-Way for the tax years 1992, 1993, and 1994. In their cross-motions for summary judgment, the parties raise various issues, which the Court restates as:

I. Whether the Department properly included within Hi-Way's total fuel consumed those gallons of fuel consumed by Hi-Way's vehicles during "idle time;"1
II. Whether genuine issues of material fact exist with respect to the affirmative defenses of equitable estoppel and laches raised by Hi-Way, which thereby preclude summary judgment on the issue of "idle time" fuel consumption;2
III. Whether Hi-Way was entitled to the tax-paid credit for fuel purchased in Indiana but consumed out-of-state in jurisdictions that were not members of the International Fuel Tax Agreement (IFTA), where Hi-Way failed to provide evidence to the Department that it had paid a gasoline, special fuel, or road tax with respect to the fuel consumed to the non-IFTA member jurisdictions.
A. Whether INDIANA CODE § 6-6-4.1-6 conflicts with the provisions of IFTA and thus cannot be used to deny Hi-Way the tax-paid credit for fuel consumed in non-IFTA member jurisdictions;3 and
B. Whether INDIANA CODE § 6-6-4.1-6 discriminates against interstate commerce and is therefore unconstitutional.4

For the reasons stated below, the Court DENIES Department's motion for summary judgment solely on the basis of laches and DENIES the taxpayers' partial motion for summary judgment.


The following facts are undisputed. Hi-Way is a for-hire authorized motor carrier. Its primary business facilities are located in Marion, Indiana. Hi-Way operates commercial motor vehicles within and through Indiana.

The Department conducted an audit of Hi-Way regarding Hi-Way's liability for fuel taxes collected under IFTA for the calendar years 1992, 1993, and 1994. In its audit summary, dated October 11, 1995, the Department gave the following explanations for adjusting Hi-Way's fuel tax liability: (1) the Department added back into Hi-Way's total fuel figures those gallons deducted by Hi-Way for "idle time" and (2) Hi-Way could not receive Indiana's tax-paid credit for gallons consumed in but not reported to non-IFTA jurisdictions ("excess credit gallons"). (Stipulation, Ex. A at 5.) On November 21, 1995, the Department issued a proposed assessment against Hi-Way for $83,901.35 in fuel taxes, penalty, and interest.

Hi-Way protested the proposed assessment, and the Department conducted a hearing on the protest on February 15, 1996. On April 15, 1996, the Department issued a letter of finding. The letter of finding granted Hi-Way's protest of the proposed ten percent penalty but denied the protest in all other respects. Thereafter, the Department requested that Hi-Way pay a total of $80,354.30 in taxes and interest. On April 26, 1996, Hi-Way requested a rehearing of its protest. By a letter dated May 23, 1996, the Department again denied Hi-Way's protest.

Hi-Way filed this original tax appeal on June 13, 1996. On March 7, 1997, the Department filed a motion for summary judgment. On this same date, Hi-Way filed a motion for partial summary judgment. The Court conducted a hearing on these cross-motions on May 30, 1997. The Court then took the matter under advisement.

Standard of Review

Summary judgment is appropriate only when no genuine issues of material fact exist and a party is entitled to judgment as a matter of law. IND. TRIAL R. 56(C); Roehl Transp. v. Indiana Dep't of State Revenue, 653 N.E.2d 539, 541 (Ind. Tax Ct.1995). Cross motions for summary judgment do not alter this standard. Id.


The Court first reviews the relevant statutes and provisions from IFTA prior to discussing the issues in this case.

Indiana's "Road" & "Pump" Taxes
A. Road Tax

The motor carrier fuel tax is "imposed on the consumption of motor fuel by a carrier in its operations on highways in Indiana."5 IND.CODE § 6-6-4.1-4(a). See also IND. ADMIN. CODE tit. 45, r. 13-4-1 to -7 (2001) (addressing imposition and calculation of motor carrier fuel tax). The purpose of the motor carrier fuel tax is "to charge motor carriers for the use of the public roads in Indiana." Area Interstate Trucking, Inc. v. Indiana Dep't of Revenue, 605 N.E.2d 272, 277 (Ind. Tax Ct.1992),cert. denied, 510 U.S. 864, 114 S.Ct. 183, 126 L.Ed.2d 142 (1993). INDIANA CODE § 6-6-4.1-4(a) states that the rate for the motor fuel tax is the "same rate per gallon as the rate per gallon at which special fuel is taxed," which is sixteen cents per gallon. See IND.CODE § 6-6-2.5-28(a). For the purpose of this opinion, the motor carrier fuel tax will be called the "road tax." In addition to the road tax, INDIANA CODE § 6-6-4.1-4.5(a) imposes an eleven-cent per gallon surcharge tax on motor fuel consumed by carriers operating on Indiana's highways. Thus, combining the road tax with the surcharge tax, carriers effectively pay twenty-seven cents per gallon on motor fuel consumed in their operations on Indiana's highways.

The formula for calculating the amount of fuel consumed on Indiana's highways is as follows:

Total amount of Motor Fuel Consumed in Carrier's Total Amount of Entire Operations Within Miles Traveled on and Without Indiana X Highways In Indiana _____________________ Total Number of Miles Traveled Within and Without Indiana

IND.CODE § 6-6-4.1-4(b). See also Roehl Transp., 653 N.E.2d at 545 (citing Area Interstate Trucking, 605 N.E.2d at 276). A carrier's tax liability is then calculated by multiplying the tax rate (i.e., twenty-seven cents per gallon) by the amount of fuel consumed by the carrier in its operations on Indiana highways. IND.CODE § 6-6-4.1-4(c). However, the gallons for which the carrier has paid the gasoline or special fuel taxes (i.e., the "pump taxes") imposed under INDIANA CODE §§ 6-6-1.1 or 6-6-2.5, see infra, are not included within this calculation. Id. See also Area Interstate Trucking, 605 N.E.2d at 277 n. 9

(noting that "motor fuel upon which pump taxes are paid is not included in amount of fuel subject to the tax").

Carriers are obligated to pay the road tax and surcharge tax quarterly. IND. CODE §§ 6-6-4.1-4(a) & 4.5(a). Moreover, they must maintain certain books and records with respect to the motor fuel they purchase and consume. IND.CODE § 6-8.1-5-4. INDIANA CODE § 6-6-4.1-20 subjects carriers to penalties if they do not properly maintain the books and records required by INDIANA CODE § 6-8.1-5.

B. Pump Taxes

The term "pump taxes" refers to the gasoline and special fuel taxes imposed by INDIANA CODE §§ 6-6-1.1-201 and 6-6-2.5-28 respectively. Gasoline includes, among other things, "all products commonly or commercially known or sold as gasoline...." INDIANA CODE § 6-6-1.1-103(g)(1). INDIANA CODE § 6-6-1.1-201 provides that a "license tax of fifteen cents ($0.15) per gallon is imposed on the use of all gasoline used in Indiana, except as otherwise provided by [IND.CODE § 6-6-1.1]." Distributors of gasoline initially pay the tax, which is then passed along to the purchaser. IND.CODE § 6-6-1.1-201.

Special fuel is "all combustible gases and liquids that are: (1) suitable for the generation of power in an internal combustion engine or motor; or (2) used exclusively for heating, industrial, or farm purposes other than for the operation of a motor vehicle." IND.CODE § 6-6-2.5-22. INDIANA CODE § 6-6-2.5-28(a) imposes a "license tax of sixteen cents ($0.16) per gallon ... on all special fuel sold or used in producing or generating power for propelling motor vehicles...." IND.CODE § 6-6-2.5-28(a). The tax is imposed at the time the special fuel enters Indiana and is collected and remitted to the state by the supplier who receives it; the supplier who sells the special fuel must then collect the tax from the purchaser of the fuel. IND.CODE §§ 6-6-2.5-28 & -35.

C. Credit

The road tax is the "functional compliment to the pump taxes." Area Interstate Trucking, 605 N.E.2d at 277. Through the road tax, "motor carriers are prevented from purchasing fuel outside Indiana and then operating tax-free on the state's roads." Id. Thus, regardless of where carriers purchase fuel, they are charged for their use of Indiana's roads. Id.

The connection between the road and pump taxes is further evidenced by the credit permitted by INDIANA CODE § 6-6-4.1-6(a). This section provides in part:

A carrier is entitled to a credit against the [road tax] if the carrier, or a lessor operating under the carrier's annual permit has:
(1) paid the [gasoline or special fuel] tax... on motor fuel purchased in Indiana;
(2) consumed the motor fuel outside Indiana; and
(3) paid a gasoline, special fuel, or road tax with respect to the fuel in one (1) or more other states or jurisdictions.

The amount of this tax-paid fuel credit is equal to the amount of the pump tax paid. IND.CODE § 6-6-4.1-6(b). To qualify for the credit, the carrier "shall submit any evidence required by the department of [the carrier's] payment of the [gasoline or special fuel tax]." IND.CODE § 6-6-4.1-6(c).

As noted supra, the road tax calculation formula excludes from its "amount of motor fuel consumed" total those gallons for which a carrier has already paid either of the pump taxes. IND.CODE § 6-6-4.1-4(c). Because these gallons are never part of the formula, they are never taxed. Thus, carriers who pay a pump tax and then...

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