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10/09/87 PERKINS PAVING AND TRUCKING v. INDIANA

October 9, 1987.

PERKINS PAVING AND TRUCKING, INC., PETITIONER,
v.
INDIANA DEPARTMENT OF REVENUE, RESPONDENT.



Order ON PETITION FOR INJUCTION PENDING ORIGINAL TAX APPEAL

Author: Fisher

Order ON PETITION FOR INJUNCTION PENDING ORIGINAL TAX APPEAL

FISHER, J.

Perkins Paving & Trucking, Inc. has filed a petition to enjoin collection of taxes pursuant to Ind. Code 33-3-5-11 (Supp. 1986). The Indiana Department of Revenue issued a "letter of findings" on May 13, 1987. The department determined that petitioner owed special fuel tax for the years 1983, 1984, and 1985, in the amount of $41,846.95 including penalty and interest.

The petitioner operated out of Portage, Indiana, with a home base approximately three miles from the entrance to Bethlehem Steel Company. The fuel in question was burned in tri-axle dump trucks which operated on private roads within Bethlehem. The petitioner had the trucks plated in a category which would make the maximum weight allowable for the truck and load to be 26,000 pounds. The trucks weighed 25,000 pounds when empty. The trucks also traveled empty each morning and evening on the three mile stretch of public road between the petitioner's home base and Bethlehem. The trucks were driven on this public road for maintenance and refueling at the home base.

The trucks were fitted with off-the-road tires which limited the speed at which they could be operated safely to 40 miles per hour. The petitioner reported and paid tax on all highway use, but did not pay the tax on fuel burned on property owned by Bethlehem.

The petitioner testified that if it were required to pay the tax, penalty, and interest pendente lite, the economic effect would be a disaster. No evidence to the contrary was presented by the department.

This Court's injunction power is governed by the general body of law dealing with injunctions, as well as by IC 33-3-5-11(c), which reads as follows:

After a hearing on the petition filed under subsection (b), the tax court may enjoin the collection of the tax pending the original tax appeal, if the tax court finds that:

(1) the issues raised by the original tax appeal are substantial;

(2) the petitioner has a reasonable opportunity to prevail in the original tax appeal; and

(3) the equitable considerations favoring the enjoining of the collection of the tax outweigh the state's interests in collecting the tax pending the original tax appeal.

I. The issue in the original tax appeal is substantial. The regulations 45 IAC 10-1-1 et seq. have been promulgated to excuse the paying of the tax on off-the-road use of vehicles used both on and off the road. Reconciling the regulations with the special fuel tax statute, IC 6-6-2.1-201, is an apparent issue. Also the "Instructions for Filing Special Fuel Dealers Tax Report" (Pet. Ex. #5) at least suggests deducting non-highway fuel consumption from taxable receipts. The resolution of these issues is of substantial importance to all similarly operating companies around the state.

II. The petitioner has a reasonable opportunity to prevail in this original tax appeal. IC 6-6-2.1-201 (1982) states in pertinent part that "[e]xcept as otherwise provided by this chapter, a license tax is imposed on the use of special fuel." The former statute, IC 6-6-2-4(a), imposed the tax for the privilege of use of public highways.[Footnote 1] The only case interpreting the former statute is Kentucky Stone Co. v. State (1979), Ind. App., 396 N.E.2d 951, in which the Court of Appeals held that "there [was] no language in [IC 6-6-2-4(a)] which [stated] that the tax [should be] imposed only in proportion to whatever degree of actual use is made of the public highways." Id. at 952 (emphasis in original). The Court based its determination ...


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