Opinion ID: 1909529
Heading Depth: 2
Heading Rank: 3

Heading: State Department of Revenue v. Orange Beach Marina, Inc.

Text: The Department of Revenue and the lower court relied upon State Department of Revenue v. Orange Beach Marina, Inc., 699 So.2d 1279 (Ala.Civ.App.1997). However, the facts in that case are substantially different from the facts of this case. In Orange Beach Marina, the marina challenged the sales tax on diesel fuel sold to vessels that traveled into foreign waters but that did not travel to another state's port or to a foreign port under § 40-23-4(a)(10), Ala.Code 1975. 699 So.2d at 1280-81. The marina had three basic types of diesel-fuel customers: charter fishing vessels, vessels owned by businesses, and pleasure craft. 699 So.2d at 1280. For the tax period in question, 40% of the marina's sales of diesel fuel was to charter fishing vessels, 40% to pleasure craft, and 20% to vessels owned by businesses. Id. Those vessels traveled into federal and international waters but did not travel to foreign ports or to ports of other states. Id. The only fact the marina provided for its argument that it met the requirements for the sales-tax exemption was that the vessels traveled into foreign waters. The facts of that case did not demonstrate that any other interstate activity was involved. The Court of Civil Appeals concluded that charter fishing vessels that did not travel to another state's port or to a foreign port were not engaged in interstate commerce and that vessels owned by businesses and those used for pleasure also were not engaged in interstate commerce and were thus not exempt from the sales tax. Orange Beach Marina, 699 So.2d at 1281. We first note that dredges are physically and materially different vessels than are charter fishing vessels, business vessels, and pleasure craft. The Court of Civil Appeals' decision is limited to those three types of vessels; it does not apply to dredges, which have a completely different purpose. It is understandable that for a fishing vessel to be engaged in interstate commerce it must visit a port outside of Alabama; it is also understandable that business vessels and pleasure craft cannot be considered engaged in interstate commerce when they merely enter federal or foreign waters and then return to an Alabama port. However, dredges are significantly different. A dredge, as previously stated, has a substantial relationship with interstate commerce because of the service it performs in removing silt to maintain interstate channels of commerce. In addition to Orange Beach Marina, the circuit court relied upon State v. Zewen, 270 Ala. 52, 116 So.2d 373 (1959). Yet that case is also inapplicable. Zewen involved only shrimp and fishing boats that did not transport cargo to ports in other states or to foreign ports. Id. Furthermore, the statute being interpreted in Zewen, Title 51, § 755(r), Code of Alabama (1940), is similar in purpose to § 40-23-4(a)(10), Ala.Code 1975, but contains very important and distinct differences. The language of the statute being interpreted in Zewen requires that the vessels seeking exemption be `plying on the high seas either in intercoastal trade between ports in the State of Alabama and ports in other states of the United States or its possessions or in foreign commerce between ports in the State of Alabama and ports in foreign countries.' 270 Ala. at 54, 116 So.2d at 374. This language is significantly different from the language of § 40-23-4(a)(10), Ala.Code 1975, which presumes that the transportation of cargo between Alabama ports and ports of other states or other countries is engaging in commerce. There is no such presumption in Title 51, § 755(r), Code of Alabama (1940); rather, the language states that travel from port to port is a requirement for the exemption. Therefore, Zewen is inapplicable to this case. For these reasons, we conclude that Orange Beach Marina and Zewen are inapplicable to this case and that Bean's dredges were engaged in interstate commerce pursuant to § 40-23-4(a)(10), Ala.Code 1975, and are thus exempt from fuel-and-supplies sales tax.