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WEEKS DREDGING & CONTRACTING, INC. v. MISSISSIPPI STATE TAX COMMISSION

MARCH 02, 1988

WEEKS DREDGING & CONTRACTING, INC.
v.
MISSISSIPPI STATE TAX COMMISSION



BEFORE DAN LEE, PRESIDING JUSTICE, ROBERTSON AND GRIFFIN, JJ.

DAN LEE FOR THE COURT:

Weeks Dredging & Contracting, Inc. (Weeks) seeks a refund of $94,861.33 in taxes and interest it paid to the Mississippi State Tax Commission for use and consumption of diesel fuel purchased in Alabama. Weeks used the fuel during its dredging operation on the Tennessee-Tombigbee Waterway.

Weeks paid the assessment, then filed suit in Hinds County Chancery Court after an unfavorable ruling by the full Commission. The chancellor heard the trial on numerous stipulations and other evidence on September 12, 1985. On March 17, 1986, the chancellor rendered an opinion and entered judgment denying

 Weeks a refund.

 Weeks appeals, assigning four errors:

 I. THE CHANCERY COURT ERRED IN DETERMINING THAT THE UNAMBIGUOUS LANGUAGE OF SECTION 27-67-7 OF THE MISSISSIPPI CODE OF 1972 DOES NOT APPLY TO PROVIDE A CREDIT FOR THE SALES TAX PAID BY APPELLANT TO ALABAMA.

 II. THE CHANCERY COURT ERRED IN DETERMINING THAT THE SALES OF FUEL TO APPELLANT WERE NOT COMPLETED IN ALABAMA.

 III. THE CHANCERY COURT ERRED IN DETERMINING THAT THE ALABAMA SALES TAX WAS IMPROPERLY IMPOSED AND COLLECTED BY ALABAMA.

 IV. THE CHANCERY COURT ERRED IN DETERMINING THAT THE REFUSAL BY APPELLEES TO ALLOW APPELLANT A CREDIT FOR THE SALES TAX PAID TO ALABAMA DID NOT RESULT IN AN UNCONSTITUTIONAL burdens AGAINST INTERSTATE COMMERCE.

 Finding that the chancellor committed no reversible error, we affirm.

 I.

 FACTS

 Weeks is a New Jersey corporation with its principal office in Cranford, New Jersey, qualified to do business in Mississippi. October 25, 1980, through September 30, 1982, Weeks performed dredging work for construction of the Tennessee-Tombigbee Waterway in northeast Mississippi. During this period Weeks ordered diesel fuel from its field office in Columbus, Mississippi, to complete its contract.

 Several times Weeks ordered fuel from Chevron, USA, Inc., by calling Chevron's California office. Chevron produced fuel at its refinery in Pascagoula, Mississippi, and subsequently stored it for distribution in Moundville, Alabama. After it received Weeks' orders, Weeks would prepare and mail a purchase order to the terminal and also issue a purchase order directly to a common carrier indicating pickup and delivery points. Chevron notified the carrier when it could make pickups.

 All fuel purchase orders listed terms as F.O.B., Moundville, Alabama. Chevron did not pay the common carrier or

 provide delivery.

 The common carrier would prepare a bill of lading identifying Chevron as the shipper, identifying Weeks as the consignee, and giving a Mississippi destination. Spaces for the shipper's signature on the bills of lading were left blank or marked refused.

 At the Chevron terminal the common carrier would receive a combination delivery receipt and" Original Invoice "when Chevron released fuel to it. Weeks would pay Chevron according to this invoice, and also would pay the carrier's shipment charges.

 Chevron collected Alabama state and local sales taxes on the purchases at a rate of 4% for state sales tax and 2% for local sales tax. These taxes were clearly shown on the invoices as separate items, and Chevron paid these collections to the State of Alabama.

 July 3, 1983, the Mississippi State Tax Commission notified Weeks by letter of a $74,312.55 use tax assessment, with interest of $15,346.90, making a total deficiency of $89,659.45. The assessment covered consumption of diesel fuel in Mississippi. Weeks proceeded to seek administrative relief from what it viewed as an improper assessment. Concurrently, on August 8, 1983, Weeks and Chevron filed with the Alabama Department of Revenue a joint petition for a tax refund. This petition was denied November 23, 1983. The record does not reflect that Weeks or Chevron ever appealed this decision. There was no stipulation to the total amount of tax paid to Alabama.

 The Mississippi assessment was appealed to the Board of Review pursuant to Miss. Code Ann. 27-67-23 on July 27, 1983, and the assessment was upheld by a Board order dated August 9, 1983. Weeks filed an appeal of the Board of Review's determination to the entire Commission pursuant to 27-67-23. The Commission affirmed the assessment November 30, 1983, and tacked on interest totalling $5,201.88, for a total deficiency of $94,861.33. Weeks paid this amount on February 8, 1984, and began this refund suit on June 26, 1984.

 The suit came on for hearing September 12, 1985. The only live testimony the chancellor heard came from Ed Chamblee, director of the State Tax Commission Revenue Bureau. He testified that a tax credit pursuant to Miss. Code Ann. 27-67-7 was not given because in Mississippi a similar sale would have been exempt from the state sales tax and, thus, the Alabama tax was not properly collected. It has been the Tax Commission's position, for as long as Chamblee could remember, that had the sale occurred here and an exemption been allowed under Mississippi

 law, then a tax credit is not allowed. Chamblee also stated that to his knowledge the Commission has never given tax credit for paying local taxes in other states.

 The chancellor rendered an opinion, which he incorporated by reference into his decree, stating that the Alabama sales tax paid by Weeks was a burden on interstate commerce, that the Commission was justified in determining that these taxes were improper, and, thus, Mississippi's use tax should be imposed without giving Weeks credit. The court's judgment affirming the assessment and interest reflected this opinion.

 From this judgment Weeks has timely perfected ...


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