Klosters Rederi A/S v. State, Dept. of Revenue
Decision Date | 02 August 1977 |
Docket Number | No. 77-230,77-230 |
Citation | 348 So.2d 656 |
Parties | KLOSTERS REDERI A/S, d/b/a Norwegian Caribbean Lines, Petitioner, v. The STATE of Florida, DEPARTMENT OF REVENUE, Respondent. |
Court | Florida District Court of Appeals |
Patton, Kanner, Segal, Zeller, LaPorte & King, Miami, for petitioner.
Robert L. Shevin, Atty. Gen., and E. Wilson Crump, II, Asst. Atty. Gen., for respondent.
Before HENDRY, C. J., and PEARSON and BARKDULL, JJ.
This is a petition for certiorari seeking review of a final order of the Department of Revenue of the State of Florida, as approved by the Governor and the State Cabinet, which upheld a use tax assessment against the petitioner.
Petitioner is a Norwegian corporation which operates three cruise vessels out of the Port of Miami. At the port, petitioner leases various passenger boarding facilities and has a holding area for the ship's supplies. Petitioner has considered itself exempt from sales tax on items purchased from vendors and delivered to its port facilities for use as ship's supplies during the course of cruises conducted outside of the state and in foreign commerce. It obtained a sales tax registration certificate number, and issued certificates of exemption to its vendors, who in reliance thereon, did not charge petitioner sales tax on the items delivered to the port.
In August of 1975, respondent caused an audit to be made of petitioner's vendors' records and sales invoices for the period from August 1, 1972, through July 31, 1975. Determining that petitioner was not exempt from the sales tax, respondent served a notice of assessment on petitioner for the sum of $175,653.51. An amendment to the original assessment was issued by respondent adjusting the amount allegedly owed as tax to $83,767.29.
Petitioner paid a portion of the assessment and filed a petition for formal administrative proceeding, contesting the remaining portion of the assessment. Proceedings were commenced before a hearing officer on June 23, 1976. Following the conclusion of said proceedings, the hearing officer issued his recommended order which held that the items were not taxable in that "they are used and consumed outside the state of Florida," pursuant to Section 212.05, Florida Statutes (1975).
Respondent filed exceptions to the recommended order and prepared an alternate final order which overruled the hearing examiner's recommended order and adjudicated petitioner liable for the assessment. Said alternate final order was approved by the Governor and the Cabinet, sitting as head of the Department of Revenue, on January 6, 1977. Petitioner thereupon sought review by filing its petition for certiorari in this court.
Petitioner has raised seven points in its brief in support of petition for certiorari. After carefully reviewing the record and briefs, and having had benefit of counsels' arguments, we find the following two points deserving of discussion.
Firstly, petitioner contends that pursuant to Section 212.05, Florida Statutes (1975) the hearing examiner correctly found that the use tax assessed against petitioner was void in that the specific items taxed were all to be used and consumed on the cruise ship, during the course of the voyage, after the vessel had left the state and proceeded in foreign commerce. Section 212.05 provides, in pertinent part, as follows:
Respondent, on the other hand, contends that notwithstanding the "consumption" of the items outside the territorial waters of the state of Florida, pursuant to Section 212.02(8), Florida Statutes (1975), the tax was valid in that for purposes of taxation, a use occurred within this state. Section 212.02(8) defines the word "use" as:
" . . . the exercise of any right or power over tangible personal property incident to the ownership thereof, or interest therein, except that it shall not include the sale at retail of that property in the regular course of business."
Respondent argues that the withdrawal from storage of the items taxed coupled with the subsequent placement of said items on board the vessels for further utilization during the course of the voyage was a sufficient exercise of a "right or power over tangible personal property" so as to enable the state of Florida to assess a use tax on the property.
Initially, we note that the particular items taxed were all characterized by respondent's auditor as "expendable," and included, inter alia, kleenex, toilet paper, laundry bags and party supplies. Under the common usage of the word "use" we would have great difficulty in accepting respondent's argument that the mere removal from storage and subsequent placement on board ship of the above items amounted to a taxable "use." Nevertheless, the definition of "use," as set forth above, is broad enough to cover even the removal of property from a warehouse and loading of said property upon a vessel. Accordingly, we hold that pursuant to Section 212.05, petitioner did in fact "use" its personal property within the state of Florida. See United Air Lines v. Mahin, 410 U.S. 623, 93 S.Ct. 1186, 35 L.Ed.2d 545 (1973), wherein the Supreme Court of the United States held that, pursuant to an Illinois state statute defining the word "use" as an "exercise . . . of any right or power over tangible personal property incident to the ownership of that property," withdrawal from storage of fuel to be consumed by an interstate carrier afforded the state the right to impose a use tax on the stored fuel without offending the commerce clause of the Federal Constitution.
In the second and final point which we shall consider, petitioner argues that notwithstanding our ruling above, pursuant to Section 212.08(8), Florida Statutes (1975), a partial exemption from the use tax exists for vessels engaged in interstate or foreign commerce. Section 212.08(8) provides as follows:
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