ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
F. PEN COSBY STEVE CARTER
ATTORNEY AT LAW ATTORNEY GENERAL OF INDIANA
Indianapolis, IN Indianapolis, IN
DEPUTY ATTORNEY GENERAL
IN THE INDIANA TAX COURT
INDIANAPOLIS WELDING SUPPLY, INC., ) ) Petitioner, ) ) v. ) Cause No. 49T10-0011-TA-119 ) INDIANA DEPARTMENT OF STATE ) REVENUE, ) ) Respondent. )______________________________________________________________________
Ind. Code Ann. § 6-2.5-5-27 (West 2004). A carrier provides public transportation
when it move[s], transport[s], or carr[ies]  persons and/or property for consideration.
Ind. Admin. Code tit. 45, r. 2.2-5-61 (1992) (1996). IWS claims that
its purchases of transportation equipment and replacement parts are exempt from sales and
In 1994, this Court explained that in order to qualify for the public transportation exemption, someone other than the transporter must own the property being transported. Natl Serv-All, Inc. v. Indiana Dep't of State Revenue, 644 N.E.2d 954, 956 (Ind. Tax Ct. 1994). Furthermore, [i]f a taxpayer is not predominately [sic] engaged in transporting the property of another, it is not entitled to the exemption. Panhandle E. Pipeline Co. v. Indiana Dep't of State Revenue, 741 N.E.2d 816, 819 (Ind. Tax Ct. 2001)
(emphasis added), review denied. See footnote
IWS claims that it is entitled to the public transportation exemption because its customers own the gas prior to it being delivered to them. ( See Petr Br. at 10, 12.) The Department claims, on the other hand, that IWSs customers do not own the gas until it has been delivered to them. (See Respt Br. at 8-11.) Thus, in the Departments view, the gas IWS delivers is its own product, and IWS is not engaged in public transportation. The Court is left, therefore, with the task of determining at what point IWSs customers own the gas they purchase from IWS.
In an effort to support its claim that its customers own the gas prior to delivery, IWS submitted a delivery invoice indicating FOB: OUR DOCK. See footnote ( See J. Ex. 4, Dep. Ex. 2.) The Department, however, asserts that although the billing invoice contain[s] the terms F.O.B: OUR DOCK, the actual operation [of IWS] is not consistent with those terms and delivery is part of the bargain between IWS and its customers. (Respt Br. at 8, 10.) To support its claim, the Department submitted three IWS service agreements. (See J. Ex. 4, Dep. Exs. 3-5.)
Ownership is a malleable concept; [i]n addition to possession, the chief incidents of ownership . . . are the rights of use and enjoyment, and of disposition. Natl Serv-All Inc., 644 N.E.2d at 957 (internal quotations omitted) (citation omitted). Because IWS did not have an explicit agreement designating when ownership of the gas transferred from IWS to its customers, the Court will refer to the law of sales for guidance in determining the ownership status of the parties. See Monarch Beverage Co. v. Indiana Dep't of State Revenue, 589 N.E.2d 1209, 1212 (Ind. Tax Ct. 1992); see also A.G.G. Enters., Inc. v. Washington County, Oregon, 145 F. Supp. 2d 1215, 1223-24 (D. Or. 2001) (refuse haulers contract specifically stated that it would not acquire title to materials loaded onto its vehicles and/or equipment; court found no reason why ownership, and the risks it entails, [could] not be a matter of contract between the hauler and customer.). Furthermore, the Court will look to the written agreements as well as the entire transaction to determine the intent of the parties. See Hardware Wholesalers, Inc. v. Indiana Dept. of State Revenue, 597 N.E.2d 1339, 1344 (Ind. Tax Ct. 1992), revd on other grounds, 622 N.E.2d 930 (Ind. 1993).
When a contract requires or authorizes [a] seller to send  goods to [a] buyer but does not require him to deliver them at destination, title passes to the buyer at the time and place of shipment[.] Ind. Code Ann. § 26-1-2-401(2)(a) (West 2004). Alternatively, if the contract requires delivery at destination, title passes on tender there. A.I.C. § 26-1-2-401(2)(b). Therefore, in this instance, the determination of ownership hinges on whether IWS was required to deliver the gas to its customers.
In reviewing the billing invoice and service agreements, the Court follows the rules of contract construction. Like the language of a statute, the language of a contract is generally given its plain and ordinary meaning, unless the contract makes clear the parties intended a different meaning. Natl Serv-All, Inc., 644 N.E.2d at 957. Furthermore, [t]he court must accept an interpretation of the contract which harmonizes its provisions as opposed to one which causes them to be conflicting. McCae Mgmt. Corp. v. Merchants Natl Bank & Trust Co. of Indianapolis, 553 N.E.2d 884, 887 (Ind. Ct. App. 1990) (citation omitted).
In reviewing the evidence, one service agreement states that [IWS] shall deliver the [e]quipment within twenty-four (24) hours after verbal order from [the customer]. This delivery requirement applies twenty-four (24) hours per day, seven (7) days per week. . . . Equipment and [s]upplies shall be delivered to locations specified by [the customer]. (J. Ex. 4, Dep. Ex. 5 (emphases added).) Another service agreement states that [IWS] agrees to supply [customers] requirements of [gas] utilizing a bulk method of delivery to buyers location(s)[.] (J. Ex. 4, Dep. Ex. 3 (emphasis added).) The delivery notice, along with the FOB: OUR DOCK stamp, includes a statement that [t]he above material will remain the property of [IWS] until final payment has been made. (J. Ex. 4, Dep. Ex. 1,2.) Additionally, IWS charges all of its customers a delivery fee, regardless of whether they choose to waive delivery and pick up the orders themselves. (See J. Ex. 4, Petr Dep. Ex. A at 7-8.)
The Court concludes that delivery was part of the bargain between IWS and its customers. To find otherwise, the Court would have to reject the plain meaning of the language contained in the service agreements they explicitly call for IWS to deliver the ordered product to the customers destination. Moreover, because the delivery invoice is not signed by the customer until delivery has been completed, the Court simply cannot find that IWS customers accepted the FOB: OUR DOCK delivery terms. See footnote See Mason Metals Co. v. Indiana Dep't of State Revenue, 590 N.E.2d 672, 675 (Ind. Tax Ct. 1992) ([t]he substance, rather than the form, of transactions determines their tax consequences" (citing Meridian Mortgage Co. v. State, 395 N.E.2d 433, 440 (Ind. Ct. App. 1979), rev. denied)). Accordingly, the Court finds that IWS was required to deliver the gas to its customers destination; therefore, IWS owned the gas at the time it was being transported, and it is not entitled to the public transportation exemption. See Sam & Mac, Inc. v. Treat, 783 N.E.2d 760, 765 (Ind. Ct. App. 2003) (court found that when seller did not deliver property to an agreed upon destination point, title did not pass to the buyer).