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Aztec Partners, LLC v. Indiana Dep't of State Revenue

Tax Court of Indiana

June 23, 2015

AZTEC PARTNERS, LLC, Petitioner,
v.
INDIANA DEPARTMENT OF STATE REVENUE, Respondent

Order Filed: July 30, 2015

Page 321

ON APPEAL FROM A FINAL DETERMINATION OF THE INDIANA DEPARTMENT OF STATE REVENUE.

ATTORNEY FOR PETITIONER: ROBERT A. ROMACK, Franklin, IN.

ATTORNEYS FOR RESPONDENT: GREGORY F. ZOELLER, ATTORNEY GENERAL OF INDIANA; EVAN W. BARTEL, DEPUTY ATTORNEY GENERAL, Indianapolis, IN.

OPINION

Page 322

WENTWORTH, J.

This case examines whether the electricity that Aztec Partners, LLC used to power certain equipment between January 1, 2010, and March 31, 2011 (the period at issue) was subject to Indiana sales tax.[1] The Court finds that it was not.

FACTS AND PROCEDURAL HISTORY

Aztec, a domestic limited liability company, operates nineteen Qdoba Mexican Restaurants in Indiana. (See Jt. Stip. ¶ 1; Resp't Des'g Evid., Ex. N at 1; Pet'r Trial Ex. 1 ¶ ¶ 1, 3.) Aztec's employees prepare certain food items, such as salsa, chicken, chorizo, eggs, rice, lettuce, and tortilla chips, that are ultimately combined into the entré es that are served at these restaurants. (See Jt. Stip. ¶ 6; Pet'r Trial Ex. 1 ¶ 4.) Aztec uses deluxe food warmers, hot food cabinets, food bar heating/cooling systems, walk-in coolers, and chip warmers (collectively, the electrical equipment) to hold and preserve the prepared food items at certain temperatures until they are combined into the entré es that are sold to customers. (See Jt. Stip. ¶ ¶ 3-6, 8; Pet'r Trial Ex. 1 ¶ 5.) Aztec does not use any of the electrical equipment to cook food. (Jt. Stip. ¶ 7.)

In June of 2011, Aztec filed twelve refund claims with the Department seeking, among other things, a refund of the sales tax it paid on the electricity it used to power the electrical equipment. (See Jt. Stip. ¶ 2; Resp't Des'g Evid., Exs. B-M; Trial Tr. at 10-11.) The Department, however, found that the electricity was taxable. (See Jt. Stip. ¶ 9; Resp't Des'g Evid., Exs. B-M.) Aztec protested the Department's refund claim denials. (Jt. Stip. ¶ 10.) On August 24, 2012, after holding a hearing, the Department issued a Memorandum of Decision denying Aztec's protest. (Jt. Stip. ¶ ¶ 10-11.)

On October 24, 2012, Aztec initiated an original tax appeal as a small tax case. On July 12, 2013, the parties tried the case before the Court. Additional facts will be supplied as necessary.

STANDARD OF REVIEW

The Court reviews refund claim denials of the Department de novo. Ind. Code § 6-8.1-9-1(c)-(d) (2015). Accordingly, the Court is not bound by the evidence or the issues presented at the administrative level. Horseshoe Hammond, LLC v. Indiana Dep't of State Revenue, 865 N.E.2d 725, 727 (Ind.Tax Ct. 2007), review denied.

LAW & ANALYSIS

On appeal, Aztec contends that the electricity it used to power its electrical equipment was exempt from sales tax under Indiana Code § 6-2.5-5-5.1 (the consumption exemption).[2] (See Pet'r Mem. Law Supp. Contentions (" Pet'r Br." ) at 6-8.) The Department contends, on the other hand, that the Court lacks subject matter

Page 323

jurisdiction over Aztec's claim. (See Resp't Br. Resp. [Pet'r Br.] (" Resp't Br." ) at 7-8.) Alternatively, the Department contends that Aztec's use of electricity to power the electrical equipment did not qualify for the ...


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