Opinion ID: 1141147
Heading Depth: 4
Heading Rank: 4

Heading: Foods Consumed in Hawai'i

Text: The Director also argues that HFM's GET refund should be limited to its sales of food that was actually consumed outside of the territorial waters of Hawai'i because HRS § 237-24(18)(C) is restricted to food sold for consumption out-of-state. He argues that because his auditors determined that only thirty-six percent of the food HFM sold to AHC was consumed outside of Hawai'i, it was entitled to a refund of only 36% of the GET paid on its sales to AHC. HFM counters that even though some portion of the food it sold to AHC may have been consumed in Hawai'i, those sales still should be exempt because their overall interstate character is not lost by short stops at various ports in Hawai'i. HFM's argument misconceives the basic nature of its claim. It seeks a refund of the GET it paid as retrospective relief for the violation of its rights under the Commerce Clause. It does not seek an exemption under HRS § 237-24(18)(C). The two are not the same. Consequently, HFM's argument that HRS § 237-24(18)(C) should be interpreted to apply to food that was consumed during a cruise ship's brief stops in Hawai'i is irrelevant. The only relevant inquiry for purposes of HFM's Commerce Clause claim is whether the Director's proposed adjustment would treat HFM and its competitors equally. A state treats taxpayers equally when it refund[s] to [a taxpayer] the difference between the tax it paid and the tax it would have been assessed were it extended the same rate reductions that its competitors actually received. McKesson, 496 U.S. at 40, 110 S.Ct. at 2252 (emphasis added). Thus, if HFM's competitors actually received exemptions only for their sales of food consumed outside of the territorial waters of Hawai'i, as the Director argues they were [4] , HFM's refund should be similarly circumscribed. The tax appeal court granted summary judgment in favor of the Director based on computations made by the Director that only thirty-six percent of the food that HFM sold to AHC was consumed out-of-state. The computations were based on certain schedules obtained from AHC. Those schedules were attached to an affidavit of counsel for the Director, declaring that they were true and correct copies of schedules received from AHC, but not stating that the affiant had personal knowledge of their contents. The schedules are plainly hearsay and the Director made no attempt to demonstrate that any hearsay exception applied. HRCP 56(e) requires that affidavits submitted in support of or in opposition to a motion for summary judgment be made on personal knowledge and set forth such facts as would be admissible in evidence. Accordingly, summary judgment in the Director's favor was improper because the tax appeal court had an insufficient basis to determine the specific amount of the refund reduction for foods consumed in-state. In sum, if the Director chooses the refund option, the amount of the refund should be limited to the GET imposed on sales of food that was consumed out-of-state, as long as the manner in which the Director makes that adjustment is consistent with way he made it for HFM's competitors during the relevant periods.