1. (a) The tax imposed under this chapter does not apply to the following types of sales or other dispositions:

   1. (1) Except as provided in subsection (b), sales or other dispositions of cigarettes to the United States government or its agencies and instrumentalities.
   2. (2) Cigarettes that are shipped from within Indiana to a point outside Indiana, not to be returned to Indiana.
2. (b) Sales or other dispositions of cigarettes within Indiana to individuals, private stores, or concessionaires located upon federal areas and engaged in the business of selling cigarettes are subject to the tax imposed under this chapter. In these situations, the distributor must affix tax stamps to each individual package of cigarettes sold or dispositioned to individuals, private stores, or concessionaires located upon federal areas as required by section 14 of this chapter before delivery pursuant to a sale or other disposition.

3. (c) Distributors do not need to affix tax stamps to the individual packages of cigarettes that are sold or dispositioned that qualify under subsection (a). The burden of proof, however, is at all times upon the Indiana distributor to show that such cigarettes actually were:

   1. (1) sold or dispositioned to the United States government or its agencies and instrumentalities; or
   2. (2) sold and shipped outside Indiana and did not return to Indiana.

As added by P.L.128-2026, SEC.49.