458 S.W.3d 818
Mo.2015Background
- Five Delta Alpha, LLC (FDA) purchased a Bombardier Challenger 300 and immediately leased it to JetSelect, which based and operated the aircraft in Missouri under an FAA Part 135 common-carrier certificate.
- FDA paid Missouri use tax (~$1.396 million) under protest and sought a refund, claiming the purchase was for resale because the lease to JetSelect qualified as a sale to a common carrier exempt under section 144.030.2(20).
- The Director of Revenue denied the refund; FDA appealed to the Administrative Hearing Commission (AHC), which found JetSelect to be a common carrier but held FDA’s lease was not a “sale” for resale exemption purposes, and denied the refund.
- The Director later dismissed her cross-appeal challenging JetSelect’s common-carrier status and, at oral argument before the Supreme Court, conceded the record supports that JetSelect is a common carrier and that leases can be “sales” for resale purposes in some circumstances.
- The Supreme Court reviewed statutory definitions of “purchase,” “sale,” and the resale exemption, compared the facts to precedent (notably Brambles), and concluded the lease transferred the right of use and therefore constituted a sale for resale to a common carrier.
- Court reversed the AHC, finding FDA proved entitlement to the exemption, and remanded the matter for further proceedings consistent with that holding.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FDA's purchase was "for resale" (i.e., whether leasing to JetSelect constituted a "sale") | Lease transferred full right of use to JetSelect, so purchase was for resale and exempt | Lease is not a "sale" for resale exemption purposes | Held: Lease constituted a "sale" because right of use was fully transferred; exemption applies |
| Whether JetSelect is a "common carrier" under §144.030.2(20) | JetSelect is a common carrier (FAA Part 135 ops, holds out service to public) | Director originally disputed common-carrier status | Held: AHC already found JetSelect is a common carrier; Director conceded record supports that finding |
| Admissibility of exhibits O, P, Q relevant to common-carrier status | Exhibits (FAA circular, pricing screenshot, contract of carriage) show negotiable pricing/individual contracts do not defeat common carriage | Director objected as irrelevant under Missouri common-carrier analysis | Held: AHC excluded exhibits but any error was harmless because JetSelect was found to be a common carrier and conceded as such |
| Burden of proof for tax exemption claim | FDA must show clear and unequivocal proof it qualifies for exemption; it met burden | Director relied on statutory requirement that doubts be resolved against taxpayer | Held: FDA met the statutory burden based on record and concessions; exemption granted |
Key Cases Cited
- Brambles Indus., Inc. v. Dir. of Revenue, 981 S.W.2d 568 (Mo. banc 1998) (lease can be treated as a sale for resale when right of use is fully transferred)
- Fall Creek Const. Co. v. Dir. of Revenue, 109 S.W.3d 165 (Mo. banc 2003) (aircraft are tangible personal property subject to Missouri sales tax)
- Westwood Country Club v. Dir. of Revenue, 6 S.W.3d 885 (Mo. banc 1999) (tax treatment of aircraft sales/use tax principles)
- Weather Guard, Inc. v. Dir. of Revenue, 746 S.W.2d 657 (Mo. Ct. App. 1988) (rentals of tangible personal property can be "sales" for resale exemption purposes)
- Circuit City Stores, Inc. v. Dir. of Revenue, 438 S.W.3d 397 (Mo. banc 2014) (standard of review for Administrative Hearing Commission decisions)