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Lalani v. Director of Revenue

Supreme Court of Missouri, En Banc

December 9, 2014

MUMTAZ LALANI, Appellant,
v.
DIRECTOR OF REVENUE, Respondent

Petition for Review of a Decision of the Administrative Hearing Commission The Honorable Mary E. Nelson, Commissioner.

Lalani was represented by Jeffrey S. Damerall of St. Louis.

Solicitor General James R. Layton and Deputy General Counsel Andrew J. Hirth of the attorney general's office in Jefferson City.

OPINION

RICHARD B. TEITELMAN, JUDGE.

Page 148

Mumatz Lalani petitioned for review of an Administrative Hearing Commission (AHC) decision determining that he was liable for the 10-percent tax imposed on the " first sale of tobacco products, other than cigarettes, within this state ..." Section 149.160.[1] This Court has jurisdiction pursuant to article V, section 3, of the Missouri Constitution. The AHC decision is affirmed.

I. Facts

Lalani bought tobacco products from a Missouri wholesaler. Lalani did not sell the tobacco products at retail to consumers. Instead, Lalani sold the tobacco products to Missouri retailers. Lalani did not report his sale of tobacco products on his tax returns.

The director audited the wholesaler from whom Lalani purchased the tobacco products. The director noticed that the wholesaler had reported tax-exempt sales to Lalani while Lalani reported no taxable purchases or sales during that same period. The director determined that Lalani was responsible for the first sale of the tobacco products within the state because he purchased tobacco products from a wholesaler and then resold the products to Missouri retailers. The director sent Lalani notice of a tax lien in the amount of $42,863.19 for back taxes, penalties, and interest. Lalani sought administrative review of the director's decision from the AHC. The AHC agreed with the director's decision.

II. Standard of Review

The AHC decision will be affirmed if: (1) it is authorized by law; (2) it is supported by competent and substantial evidence based on the whole record; (3) mandatory procedural safeguards are not violated; and (4) it is not clearly contrary to the reasonable expectations of the legislature. Section 621.193. The AHC's interpretation of revenue statutes is subject to de novo review. Aquila Foreign Qualifications Corp. v. Dir. of Revenue, 362 S.W.3d 1, 3 (Mo. banc 2012).

III. Analysis

1. Lalani made the " first sale" and is subject to the 10-percent tax

Missouri law imposes a tax on " the first sale of tobacco products, other than cigarettes, within the state . . . at the rate of 10-percent of the manufacturer's invoice price before discounts and deals, [which] shall be paid by the person making the first sale within the state." Section 149.160.1. The " first sale within the state" is defined as " the first sale of a tobacco product by a manufacturer, wholesaler or other person to a person who intends to sell such tobacco ...


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