{
  "id": 12024286,
  "name": "Richard WEISS, Director of the Department of Finance and Administration v. CENTRAL FLYING SERVICE, INC.",
  "name_abbreviation": "Weiss v. Central Flying Service, Inc.",
  "decision_date": "1996-11-24",
  "docket_number": "96-151",
  "first_page": "685",
  "last_page": "690",
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      "cite": "326 Ark. 685"
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      "cite": "934 S.W.2d 211"
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      "reporter": "Ark.",
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      "year": 1989,
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      "category": "laws:leg_statute",
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      "reporter": "Ark. Code Ann.",
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      "cite": "242 Ark. 428",
      "category": "reporters:state",
      "reporter": "Ark.",
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      "year": 1967,
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      "cite": "Ark. Code Ann. \u00a7 26-52-401",
      "category": "laws:leg_statute",
      "reporter": "Ark. Code Ann.",
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    {
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      "category": "laws:leg_statute",
      "reporter": "Ark. Code Ann.",
      "year": 1995,
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    {
      "cite": "Ark. Code Ann. \u00a7 26-52-409",
      "category": "laws:leg_statute",
      "reporter": "Ark. Code Ann.",
      "year": 1995,
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  "analysis": {
    "cardinality": 452,
    "char_count": 10580,
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  "last_updated": "2023-07-14T22:12:03.555215+00:00",
  "provenance": {
    "date_added": "2019-08-29",
    "source": "Harvard",
    "batch": "2018"
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  "casebody": {
    "judges": [],
    "parties": [
      "Richard WEISS, Director of the Department of Finance and Administration v. CENTRAL FLYING SERVICE, INC."
    ],
    "opinions": [
      {
        "text": "Tom Glaze, Justice.\nAppellee Central Flying Service, Inc., is in the business of buying, selling, and leasing aircraft. Relevant to this case, Central purchased five airplanes which it held for resale. Under Ark. Code Ann. \u00a7 26-52-409 (Supp. 1995), Central was authorized to rent or lease these five airplanes for a period not to exceed one year from the date of purchase, and during that one-year period, it was exempt from paying a sales or use tax. None of the airplanes were resold until more than one year after their purchase. As a consequence, appellant Department of Finance and Administration assessed gross receipts tax on Central\u2019s purchase of the aircraft and requested payment. Central responded that, while \u00a7 26-52-409 established Central\u2019s liability for sales tax on the aircraft purchases at the end of the one-year period, the tax was not actually payable until each airplane was sold to another purchaser.\nAfter disputing payment of the tax assessment, Central paid the assessment under protest and filed its complaint for refund in the Pulaski County Chancery Court, which held in Central\u2019s favor. DF&A appeals the chancehor\u2019s determination, and its sole argument for reversal asserts that \u00a7 26-52-409 provides that the gross receipts tax on the purchase of an airplane used for rental or charter service and held for more than one year without resale must be paid immediately after the lapse of one year from the date of purchase. We conclude DF&A\u2019s argument is correct; therefore we reverse the chancellor.\nDF&A\u2019s and Central\u2019s arguments center on their respective interpretation of \u00a7 26-52-409, but we first allude to other statutory gross-receipts tax provisions which are helpful to an understanding of the terms and provisions contained in \u00a7 26-52-409. Thus, we initially note that the sale of all tangible personal property is generally taxable unless an exemption applies. Ark. Code Ann. \u00a7 26-52-301 (Supp. 1995). With respect to a purchaser regularly engaged in the business of reselling items purchased, a sale for resale exemption is provided which relieves him of paying tax on such purchases. See Ark. Code Ann. \u00a7 26-52-401 (12)(A) (Supp. 1995). However, if that purchaser withdraws and uses an item from his inventory rather than resell it, such an event constitutes a withdrawal from stock and the purchaser is deemed the consumer. Georgia Pacific Corp. v. Lay, 242 Ark. 428, 413 S.W.2d 868 (1967). Items withdrawn from stock become subject to gross-receipts tax, usually based on the purchase price of the items used. Ark. Code Ann. \u00a7 26-52-103(a)(4) (Supp. 1995). Once an item is withdrawn from stock, the protection of the resale exemption is lost, and the tax is due on or before the 20th of the month following the month in which the items or goods were withdrawn. Ark. Code Ann. \u00a7 26-52-501 (Supp. 1995).\nIn 1975, the General Assembly enacted \u00a7 26-52-409 which was obviously intended to give aircraft dealers, such as Central, some tax relief. Before enactment of \u00a7 26-52-409, a dealer who purchased a plane exempt from tax as a sale for resale, but who withdrew it from inventory for use in his business would have been required to pay the tax based on the purchase price of the plane, and the tax was due in the month following the plane\u2019s withdrawal from inventory. After \u00a7 26-52-409 was enacted, an aircraft dealer who purchases a plane for resale can now use it for rental or charter service without payment of sales or use tax for a period not to exceed one year from its purchase date. See \u00a7 26-52-409(a)(l). The full relevant text of \u00a7 26-52-409 reads as follows:\n(a)(1) Any person . . . engaged in the business of selling aircraft in this state . . . may purchase aircraft exempt for resale and use the aircraft for rental or charter service without payment of sales or use tax for a period of not to exceed one (1) year from the date of purchase of the aircraft.\n* * *\n(b) The use of the aircraft for rental or charter during the applicable one-year . . . holding period . . . shall not constitute a withdrawal from stock, and the purchaser shall not be required to pay the sales tax on the purchase price of the aircraft held in stock and used for such purposes.\n(c) The aircraft purchaser shall collect and remit gross receipts and short-term rental tax on the rentals and shall subsequently collect and remit the gross receipts tax on the aircraft at the time of subsequent sale in the manner required by law.\n(d) If the purchaser fails to sell the aircraft during the applicable holding period, the purchaser shall be liable for sales or use tax on his purchase price of the aircraft.\nProvision (b) above provides that an aircraft dealer\u2019s renting or chartering a plane during the prescribed one-year holding period does not constitute a withdrawal from stock, and he is not required to pay the sales tax on the plane\u2019s purchase price. However, under (d) above, if the dealer-purchaser fails to sell the aircraft during the one-year holding period, he shall be liable for the tax based upon the price he paid for the aircraft. Central argues that, under provision (d), it becomes liable for the sales tax based upon its purchase price of the aircraft, but it disagrees that it must remit payment immediately after its liability accrues. Instead, Central argues provision (c)\u2019s language suggests such taxes must be collected and remitted at the time of the subsequent sale. Central further submits that, since the airplanes at issue were not sold during the assessment period in this case, the chancellor correcdy held DF&A prematurely imposed and collected tax from Central. Central contends its interpretation of \u00a7 26-52-409 is supported by DF&A\u2019s own regulation, Gross Receipts Tax Regulation 14(F), which reads as follows:\nF. AIRCRAFT RENTAL\n1. Any person engaged in the business of selling aircraft in Arkansas who holds aircraft for resale in stock, may rent or use the aircraft in a charter service operated by that person for a period of one year from the date of purchase of the aircraft without remitting the tax on the aircraft so used. When the aircraft is eventually sold, however, the tax must be remitted at the time of sale. If the aircraft is sold within the one year period, the tax shall be computed on the actual sale price of such aircraft or the price paid for the aircraft by the seller, whichever is greater. If a year passes and the rented or chartered aircraft has not been sold, then the tax must be remitted by the person engaged in the business of selling aircraft in Arkansas on his purchase price.\nIn sum, Central claims that the only mention in \u00a7 26-52-409 as to when its tax liability must be paid is in provision (c) where it refers to \u201cthe time of subsequent sale.\u201d It also refers to GR14(F) language which provides, \u201cWhen the aircraft is eventually sold, however, the tax must be remitted at the time of sale.\u201d Thus, Central argues DF&A must await Central\u2019s sale of these planes before collecting the taxes that have accrued on them.\nCentral\u2019s argument tends to ignore that the exemption specifically awarded under \u00a7 26-52-409 is not to exceed one year from the date Central purchased the five airplanes in issue. That exemption is specifically provided in \u00a7 26-52-409(a)(l) and for that one-year period, Central\u2019s rental and lease of those aircraft did not constitute a withdrawal from stock, and therefore it was not required to pay the sales tax on the purchase price of the aircraft. Inferentially, that exemption ends and the airplanes are considered a withdrawal from stock when they have not been resold after the prescribed one year. Accordingly, the general gross-receipts tax provision, \u00a7 26-52-501, then becomes applicable, making Central\u2019s tax due on or before the 20th of the month following the end of the one-year period. This interpretation of \u00a7 26-52-409 is consistent with DF&A\u2019s GR 14(F)(1). The regulation first notes that a person, holding an aircraft for resale, may rent or use it for one year from the date of purchase without remitting the sales tax and then provides, if a year passes and the rented or chartered aircraft has not been sold, then the tax must be remitted.\nFinally, we should point out that Central\u2019s reading of \u00a7 26-52-409 tends to blur the statute\u2019s plain language. For example, Central argues the provision (c) language, \u201cthe aircraft purchaser shall collect and remit the gross-receipts tax on the aircraft at the time of subsequent sale,\u201d applies to the sales of aircraft made both during and after the one-year holding period. Again, we must disagree. First, if we accepted Central\u2019s interpretation, Central could avoid payment of any sales tax it owed on its five planes simply by not reselling them. Obviously, the General Assembly never intended such a consequence, and this court is duty bound to reject any interpretation of a statute that results in absurdity or injustice, leads to contradiction, or defeats the plain purpose of the law. Ragland v. Alpha Aviation, Inc., 285 Ark. 182, 686 S.W.2d 391 (1985). Central tries to explain that its interpretation of \u00a7 26-52-409 would not necessarily allow Central to avoid its liability for accrued sales taxes by not reselling the planes it purchased, and does so by suggesting Central would be the consumer and required to remit the tax payment within a reasonable time after the one-year holding period. Of course, no such language suggesting this procedure can be found either in \u00a7 26-52-409 or CR14(F)(1), and we are obliged to give a statute effect just as it reads, if no ambiguity exists. See Pledger v. Ethyl Corp., 299 Ark. 100, 771 S.W.2d 24 (1989).\nWe conclude that the reasonable construction of the \u201cat time of subsequent sale\u201d language in provision (c), relied on by Central, is that it refers only to those aircraft sold \u201cduring the one-year holding period.\u201d In other words, when a sale occurs during the one-year period, the purchaser must then remit payment. Otherwise, after the one-year period ends, the taxpayer must remit payment on or before the 20th day of the following month.\nFor the foregoing reasons, we reverse.\nShort-term rental taxes were also assessed on Central\u2019s rental of the aircraft, but these taxes are not at issue in this appeal.",
        "type": "majority",
        "author": "Tom Glaze, Justice."
      }
    ],
    "attorneys": [
      "Beth B. Carson, Revenue Legal Counsel, for appellant.",
      "Wright, Lindsey & Jennings, by: John R. Tisdale and Troy A. Price, for appellee."
    ],
    "corrections": "",
    "head_matter": "Richard WEISS, Director of the Department of Finance and Administration v. CENTRAL FLYING SERVICE, INC.\n96-151\n934 S.W.2d 211\nSupreme Court of Arkansas\nOpinion delivered November 24, 1996\nBeth B. Carson, Revenue Legal Counsel, for appellant.\nWright, Lindsey & Jennings, by: John R. Tisdale and Troy A. Price, for appellee."
  },
  "file_name": "0685-01",
  "first_page_order": 687,
  "last_page_order": 692
}