ATTORNEYS FOR PETITIONER: DONALD F. FOLEY TONY H. ABBOTT
FOLEY & ABBOTT Indianapolis, IN.
ATTORNEYS FOR RESPONDENT: CURTIS T. HILL, JR. ATTORNEY
GENERAL OF INDIANA, EVAN W. BARTEL DEPUTY
ATTORNEY GENERAL Indianapolis, IN.
ORDER ON RESPONDENT'S MOTION FOR SUMMARY
BLOOD WENTWORTH, JUDGE.
October 2009 and September 2012 (the period at issue),
Merchandise Warehouse Co., Inc. purchased certain freezer
equipment and electricity to power its freezer equipment.
Upon review, the Court finds that those retail transactions
were not exempt from Indiana sales tax under Indiana Code
§ 6-2.5-5-3 and Indiana Code § 6-2.5-5-5.1.
AND PROCEDURAL HISTORY
Warehouse, an Indiana corporation, operates a food storage
warehouse in Indianapolis, Indiana. Merchandise
Warehouse's customers are food manufacturers that deliver
to, and store, their products in Merchandise Warehouse's
facility. Their food products - meats, vegetables, and soups
specifically prepared for businesses like Panera,
Chili's, and Wendy's - arrive at Merchandise
Warehouse's facility already packaged and on pallets.
(First Jt. Stip. Facts, Ex. 5 at 14-15, 17, 19-20, 22-23;
Second Jt. Stip. Facts ¶¶ 17, 19, Ex. 23 at 8.)
Upon arrival, the food products are either at room
temperature, chilled, or even frozen. (See Second
Jt. Stip. Facts ¶¶ 11, 20.)
some of Merchandise Warehouse's customers want their
room-temperature or chilled food products stored in a frozen
state, Merchandise Warehouse provides them with either
"slow" or "blast" freezing services.
(See, e.g., First Jt. Stip. Facts, Ex. 5 at 7;
Second Jt. Stip. Facts ¶ 21.) With slow freezing,
Merchandise Warehouse simply places its customers'
pallets of food products in a freezer to freeze at their own
pace, typically five to twelve days. (First Jt. Stip. Facts,
Ex. 5 at 7; Second Jt. Stip. Facts ¶ 11.) With blast
freezing, however, Merchandise Warehouse uses specialized
equipment to freeze the pallets of food products within two
days. (Second Jt. Stip. Facts ¶¶ 12,
14, 25.) Either way, the food products are frozen to prolong
their shelf-life. (See First Jt. Stip. Facts, Ex. 5
at 7 (indicating that Merchandise Warehouse's customers
have a longer amount of time to store and then ship the food
products when frozen); Second Jt. Stip. Facts ¶¶
Warehouse stores the frozen food products until its customers
release them to their own customers or their designated
common-carriers. (See Second Jt. Stip. Facts
¶¶ 23, 26-27, 29-30.) The frozen products leave
Merchandise Warehouse's facility on the same pallets upon
which they arrived. (Second Jt. Stip. Facts ¶ 27.)
Merchandise Warehouse never takes title to its customers'
food products. (Second Jt. Stip. Facts ¶ 18.)
Merchandise Warehouse bills its customers for the storage
space and any freezing incident to that storage. (See,
e.g., First Jt. Stip. Facts, Exs. 5 at 9-10, 6 at 6.)
and 2012, Merchandise Warehouse filed two Forms ST-200
("Utility Sales Tax Exemption Applications") and
three Forms GA-110L ("Claims for Refund") with the
Department covering the period at issue. (See First
Jt. Stip. Facts ¶¶ 3, 8, 19, Exs. 1, 5, 12.) In
those Forms, Merchandise Warehouse asserted that the
electricity it purchased to operate its freezer equipment, as
well as certain purchases of freezer equipment, should have
been exempt from sales tax because "[t]he freezing of
the food constitutes the last stage in the [food's]
manufacturing process." (First Jt. Stip. Facts, Exs. 1,
5 at 4, 12 at 1.)
Department initially denied all three of Merchandise
Warehouse's Claims for Refund. (See, e.g., First
Jt. Stip. Facts ¶¶ 3-13, 19-21.) After two
subsequent administrative hearings, the submission of
evidence, and a supplemental audit, however, the Department
determined that Merchandise Warehouse was entitled to a 15%
refund with respect to its electricity purchases.
(See First Jt. Stip. Facts ¶¶ 11, 14-17,
21-23, Exs. 7, 9 at 3-5, 10.) The Department reaffirmed its
denial of Merchandise Warehouse's claim for refund on the
purchases of the freezer equipment. (See First Jt.
Stip. Facts ¶ 24.)
Warehouse timely filed an original tax appeal. The Department
subsequently moved for summary judgment, claiming that
Merchandise Warehouse's purchases of electricity and
freezer equipment were not exempt under either Indiana Code
§ 6-2.5-5-5.1 or Indiana Code § 6-2.5-5-3.
(See, e.g., Resp't Br. Supp. Mot. Summ. J.
("Resp't Br.") at 4; Hr'g Tr. at 6-7,
78-82.) The Court conducted a hearing on the Department's
motion on October 23, 2015. Additional facts will be provided
Court reviews refund claim denials by the Department de
novo. Ind. Code § 6-8.1-9-1(c) (2017). 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.
judgment is appropriate only when the designated evidence
demonstrates that no genuine issues of material fact exist
and that the moving party is entitled to judgment as a matter
of law. See Ind. Trial Rule 56(C). "When any
party has moved for summary judgment, the court may grant
summary judgment for any other party upon the issues raised