ATTORNEYS FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
STEPHEN H. PAUL STEVE CARTER
ROBERT K. STANLEY ATTORNEY GENERAL OF INDIANA
DANIEL R. ROY Indianapolis, IN
BAKER & DANIELS
Indianapolis, IN KAREN L. HSU
DEPUTY ATTORNEY GENERAL
WILLIAM D. PELTZ Indianapolis, IN
SHELL OIL COMPANY
INDIANA TAX COURT
SHELL OIL COMPANY, )
v. ) Cause No. 49T10-0004-TA-43
INDIANA DEPARTMENT OF )
STATE REVENUE, )
ON APPEAL FROM A FINAL DETERMINATION
OF THE INDIANA DEPARTMENT OF STATE REVENUE
NOT FOR PUBLICATION
October 15, 2001
The Petitioner, Shell Oil Company (Shell), challenges the Indiana Department of State Revenues
(Department) finding that, under a tax precollection agreement, Shell owed special fuel tax
on import sales into Indiana. Shell raises several issues in its motion
for partial summary judgment; however, the Court finds that the dispositive issue is
whether the Departments tax precollection agreement was ambiguous.
For the reasons stated below, the Court DENIES Shells motion for partial summary
judgment and GRANTS the Departments cross motion for partial summary judgment.
FACTS AND PROCEDURAL HISTORY
The facts of this case are undisputed. Shell holds an Indiana special
fuel suppliers license. Prior to July 1, 1994, Shell did not collect
the special fuel tax
from its customers on import sales into Indiana.
In 1994, the Department sent Shell a Form SF-10A, which consisted of a
Tax Precollection Agreement Application and a question and answer instructional document entitled Tax
Precollection Agreement on Imported Fuel Transactions.
Form SF-10A provided Shell with three
options regarding the collection of the special fuel tax. Shell chose option
one, which stated, I choose option 1 and agree to treat all out-of-state
terminal removals of undyed special fuel, for export into Indiana, as if they
were received in Indiana, and will collect the Indiana special fuel tax from
(Petr Summary Judgment Ex. A at 16.) The
Department received Shells Form SF-10A on September 22, 1994. Shell did not,
however, collect the special fuel tax on any of its import sales into
Indiana pursuant to its Form SF-10A.
The Department later conducted an audit of Shells special fuel tax liability for
the period from October 1, 1993 to December 31, 1994, and determined that
Shell owed the special fuel tax for that period. After Shell protested
the proposed tax liability, the Department conducted supplemental audits. The Department found
that Shell was not liable for the special fuel tax on all unreported
imports before September 22, 1994 (the day that the Department received Shells Form
SF-10A). However, the Department found that Shell was liable for the special
fuel tax on any import sales made on or after September 22, 1994.
Shell filed this original tax appeal on April 19, 2000. Shell then
filed a motion for partial summary judgment.
The Department filed its response
opposing the summary judgment motion and asked the Court to enter summary judgment
in its favor.
The Court heard oral arguments and took the matter
under advisement. Additional facts will be supplied as needed.
ANALYSIS AND OPINION
Standard of Review
Summary judgment is proper only when no genuine issues of material fact exist
and the moving party is entitled to judgment as a matter of law.
See Ind. Trial Rule 56(C). See also Salin Bancshares, Inc. v.
Indiana Dept of State Revenue, 744 N.E.2d 588, 591 (Ind. Tax Ct. 2000).
Cross motions for summary judgment do not alter this standard. Salin,
744 N.E.2d at 591. This Court reviews final determinations of the Department
de novo and is not bound by either the evidence presented or issues
raised at the administrative level. Id.
The Department contends that Shell is liable for the special fuel tax
because Shell agreed to collect the tax on all import sales to Indiana
when it chose option one on Form SF-10A. While Shell does not
dispute that it checked option one or that option obligated it to collect
the Indiana special fuel tax from every purchaser, (Petr Summary Judgment Br.
at 4-5; see also Petr Summary Judgment Ex. A at 16), it contends
that it is not liable for the tax because Form SF-10A was ambiguous.
Shell argues that any ambiguity should be resolved in its favor and
against the Department.
Whether the Form SF-10A agreement was ambiguous, like whether a contract or a
statute is ambiguous, is a question of law for the Court. See
Art Country Squire, L.L.C. v. Inland Mortgage Corp., 745 N.E.2d 885, 889 (Ind.
Ct. App. 2001) (pertaining to a contract); Spears v. Brennan, 745 N.E.2d 862,
869 (Ind. Ct. App. 2001), rehg denied (pertaining to a statute). A
writing is not ambiguous merely because each party favors a different interpretation.
Bernstein v. Glavin, 725 N.E.2d 455, 459 (Ind. Ct. App. 2000), trans. denied.
Rather, a writing is ambiguous if it is susceptible to more than
one reasonable interpretation. Bosecker v. Westfield Ins. Co., 724 N.E.2d 241, 244
(Ind. 2000); Rice v. Meridian Ins. Co., 751 N.E.2d 685, 688 (Ind. Ct.
The meaning of an agreement is to be determined from an examination of
all of its provisions, not from a consideration of individual words, phrases, or
even paragraphs read alone. Art Country Squire, 745 N.E.2d at 889.
Thus, the Court may consider a writing[ ] executed at the same time
and relating to the same transaction. Id. This Court will, therefore,
consider both Form SF-10As application and instruction pages in determining whether Form SF-10A
Shell argues that Form SF-10A was ambiguous because option one on the forms
application page instructed Shell to collect the tax while option one on the
forms instruction page instructed Shell to continue to refrain from collecting the tax.
(Petr Summary Judgment Br. at 5 (internal quotation marks omitted).) More
specifically, Shell argues because it did not collect the special fuel tax prior
to July 1, 1994, it interpreted option one to mean that it should
continue to act in the same manner that it had prior to July
1, 1994, which meant not [to] collect the tax. (Petr Summary Judgment
Br. at 2-3 (emphasis in original).) Shells interpretation is not reasonable.
Shells interpretation ignores the plain language of the forms instruction. The plain
language of Form SF-10A required Shell to collect the Indiana special fuel tax.
Indeed, Shell chose option one on the application page, which stated that
Shell would collect the Indiana special fuel tax from every purchaser. (Petr
Summary Judgment Ex. A at 16 (emphasis added).) Moreover, the requirement
to collect the special fuel tax is buttressed by the explanation of option
one in the instruction pages, which stated that Shell, as a supplier, would
continue to collect Indiana special fuel tax due on import sales into Indiana
in the same manner which [it had] prior to July 1[, 1994].
(Petr Summary Judgment Ex. A(1) at 1 (emphasis added).) Form SF10-A did
not say that Shell could continue to act in the same manner as
before July 1. Form SF10-A must be read to mean what it
plainly expresses and will not be enlarged. See McDonalds Corp. v. Indiana
State Bd. of Tax Commrs, 747 N.E.2d 654, 657 (Ind. Tax Ct. 2001);
Ind. Code § 1-1-4-1 (explaining that words and phrases shall be taken in
their plain, or ordinary and usual, sense). Thus, the Court will not
hold Form SF-10A to be ambiguous merely because Shell favored a different interpretation.
See Bernstein, 725 N.E.2d at 459.
Moreover, after examining all of the provisions of Form SF-10A, including the other
two options available to Shell,
it is clear that Shells choice of option
one unambiguously required it to collect the special fuel tax. Option one
required a taxpayer to collect the special fuel tax from all of its
customers on import sales into Indiana, option two required a taxpayer to collect
the special fuel tax from only some it customers, and option three allowed
a taxpayer not to collect the special fuel tax. (Petr Summary Judgment Ex.
A at 16; Petr Summary Judgment Ex. A(1) at 1.) Shells interpretation
was not reasonable given the plain meaning of the language. The language
of option one can only be reasonably interpreted in one way Shell
was required to collect the special fuel tax. Thus, the form was
unambiguous, and Shell was required to collect the special fuel tax because it
opted to do so under Form SF-10A.
For the aforementioned reasons, this Court holds that, as a matter of law,
Form SF-10A, which Shell signed agreeing to collect the special fuel tax from
all customers for import sales into Indiana, was not ambiguous. Therefore, this
Court DENIES Shells motion for partial summary judgment and GRANTS the Departments cross
motion for partial summary judgment.
See footnote This case will continue on the other
issues raised in Shells original tax appeal petition.
Indiana imposes a special fuel tax of sixteen cents per gallon
on all special fuel sold or used in producing or generating power for
propelling motor vehicles[.]
Ind. Code § 6-6-2.5-28(a).
Under Indiana Code § 6-6-2.5-35, the Department may enter into a
tax precollection agreement with a supplier or permissive supplier for the collection of
the special fuel tax.
See Ind. Code § 6-6-2.5-35(j).
Option two stated, I choose option 2 and enter into a tax
precollection agreement with the following importer(s). I have notified customers according to
department guidelines. Option three stated, I choose option 3 and will not
be collecting tax on any imports. I have notified customers according to
department guidelines. (Petr Summary Judgment Ex. A at 16.)
Footnote: Shells motion for partial summary judgment is based only on Count
I of its original tax appeal petition. (Petr Summary Judgment Motion at
1; Petr Summary Judgment Br. at 3, 5.)
Footnote: Pursuant to Indiana Trial Rule 56(B), t
he Court treats the State
as a cross-motion for summary judgment. Salin Bancshares, Inc. v. Indiana Dept
of State Revenue, 744 N.E.2d 588, 591 n.6 (Ind. Tax Ct. 2000).
Shell argues that it is not liable for the special fuel
tax because: (1) Form SF-10A was an agreement drafted by the Department,
and any ambiguity in it should be construed against the Department; (2) the
Department is using Form SF-10A to impose a tax on Shell, and any
ambiguity in it should be construed against the Department; and (3) Form SF-10As
ambiguity should estop the Department from holding Shell liable for the tax.
(Petr Summary Judgment Br. at 3-4.)
Form SF-10As instruction page stated, in pertinent part:
What are my options?
Effective July 1, 1994 each [supplier/permissive supplier] S/PS will be required to elect
one of the following options:
Option One: Elect the blanket option. Under this option, the S/PS
will continue to collect Indiana special fuel tax due on import sales into
Indiana in the same manner which they have prior to July 1.
This alleviates administrative requirements, notice requirements, and reporting changes which are required under
Option Two or Option Three.
Option Two: Elect the selective option. Under this option, the S/PS
elects to collect the Indiana special fuel tax only for those customers which
it selects. Each S/PS electing this option must properly complete an SF-10A
(see attached) for each customer from whom it will collect the tax on
import sales into Indiana. Additionally, each S/PS must provide notice to each
customer from whom it will not collect the tax on import sales into
Indiana. This notice will be in the form of a notice drafted
by the Department and which the S/PS will distribute to each of its
customers. Each S/PS selecting this option will also be required to use
a different reporting form to report import sales into Indiana on which Indiana
tax was not collected.
Option Three: Elect the no collection option. Under this option, the
S/PS elects not to collect the Indiana special fuel tax due on any
of its import sales into Indiana. Under this option, each supplier will
be required to give notice to each customer as required under Option Two.
Each S/PS must also report its import sales into Indiana in the
same manner discussed under Option Two.
(Petr Summary Judgment Ex. A(1) at 1 (emphasis in original).)
If any of Shells customers have already paid the special fuel
tax on an import sale into Indiana, Shell would not be liable for
the tax on those sales. (
See Trial Tr. at 32.) Thus,
the Department should determine if any of these customers have already paid the
special fuel tax and adjust Shells liability accordingly.