Taxpayer is an Indiana
business. In August of 2003, Taxpayer applied for a sales tax exemption on the
purchase of electricity as measure[d] by a meter located at its business. The
exemption was granted. Thereafter, the Indiana Department of Revenue
("Department") conducted an audit of Taxpayer's activities for the
2010 tax year. The Department determined that Taxpayer did not have a valid
exemption certificate for the meter currently listed with the utility,
determined that a predominant use exemption was not appropriate, and made a tax
assessment on ninety percent of the electric utility purchases–i.e., granting
Taxpayer a ten percent exemption.
...
Taxpayer protests the
assessment of use tax on its electric utility purchases. Taxpayer states that
it had a ST-109 exemption certificate ("ST-109") on file with the
utility provider and, therefore, the utilities in question are not subject to
sales and use tax. Taxpayer maintains that since it applied for the ST-109
nothing about its business has changed except it has replaced its equipment
with new equipment and, thus, if the use tax is assessed on the utility
purchases it should be on a prospective basis.
...
While the Department deemed
Taxpayer eligible for the exemption by issuing a ST-109 to Taxpayer in late
2003, this exemption was granted based upon the information presented in the
application to obtain the exemption certificate being accurate and current.
Since the issuance of the ST-109 in late 2003, Taxpayer obtained new equipment
from the qualifying equipment that was listed on its original application. On
the face of the ST-109, it states that "any change in... the addition or
deletion of equipment connected to the meter (for water, gas, electricity)
require(s) a new application." Since Taxpayer purchased new equipment from
and/or stopped using equipment that was listed on the application that Taxpayer
filed with the Department in August of 2003, Taxpayer was required to request a
new utility exemption that would account for these changes in equipment. However,
Taxpayer did not request a new utility exemption.
During the hearing,
Taxpayer presented a new utility study that was completed in August of 2012 to
demonstrate that Taxpayer qualifies for a greater exemption percentage than the
ten percent exemption granted in the audit. This study appears to show that
Taxpayer would be entitled to a greater exemption percentage than the ten
percent exemption granted in the audit. Therefore, Taxpayer's protest is
sustained in part to the extent the results of a supplemental audit review of
this new information demonstrates that a greater exemption is warranted for the
utility purchases. However, Taxpayer's protest is denied in part to the extent
that the supplemental audit review demonstrates that the utility purchases do
not quality for a greater exemption.
