Czars, Inc v. Department of Treasury

Jansen, J.

(dissenting). I dissent from the holding that petitioner, Czars, Inc., “used” the aircraft within the meaning of MCL 205.92(b); MSA 7.555(2)(b) such that it is liable for use tax. I find that the record is devoid of any evidence that Czars used the aircraft; therefore, I would reverse the decision of the Tax Tribunal.

As noted by the majority, Czars purchased the aircraft in Arizona and registered it with the Federal Aviation Administration in Czars’ name. Czars, however, was not licensed to operate the aircraft. Tahir Cheema is the sole shareholder of Czars, a Delaware corporation that otherwise conducts no business, has no assets, and employs no one. Further, Czars transferred the aircraft to Grand Aire in Arizona. The aircraft was flown by a pilot employed by Grand Aire from Arizona to Michigan. While the aircraft was in Michigan, Grand Aire modified and operated it as a *646cargo plane in Grand Aire’s cargo business. Grand Aire held the license and maintained logs to comply with federal regulations.

The use tax applies to every person in this state “for the privilege of using, storing, or consuming tangible personal property in this state.” MCL 205.93(1); MSA 7.555(3)(1). Further, “it is presumed that tangible personal property purchased is subject to the tax if brought into the state within 90 days of the purchase date and is considered as acquired for storage, use, or other consumption in this state.” Id. I believe that Czars has rebutted this presumption because there is no record evidence that Czars used the aircraft within the meaning of MCL 205.92(b); MSA 7.555(2)(b), which defines “use” as

the exercise of a right or power over tangible personal property incident to the ownership of that property including transfer of the property in a transaction where possession is given.

In its decision, the Tax Tribunal stated the following with regard to finding that Czars used the aircraft:

There can be no dispute that, as owner, Czars must be deemed to have “used” the plane in question, in conformity with the definition contained in [MCL 205.92(b); MSA 7.555(2)(b)] of the use tax act, by means of “the exercise of a right or power over tangible personal property incident to the ownership of that property including transfer of the property in a transaction where possession is given.”

The majority concludes that Czars “allowed” Grand Aire to fly the aircraft to Michigan, thereby exercising ownership rights in Arizona, and “permitted” Grand Aire to modify the aircraft, obtain federal approval to fly the aircraft, and use the aircraft in the cargo trans*647port business. However, I do not find this to be evidence that Czars “used” the aircraft and find these conclusions to be too passive to constitute “use” as that word is defined in the statute. See, e.g., Sharper Image Corp v Dep’t of Treasury, 216 Mich App 698, 702-703; 550 NW2d 596 (1996) (the term “use” in the Use Tax Act does not include the distribution of catalogs from an out-of-state business).

I cannot conclude that there is sufficient evidence in the Tax Tribunal record that Czars exercised a right or power over the aircraft incident to its ownership of the aircraft. The Tax Tribunal seemed to conclude that the mere fact of Czars’ ownership of the aircraft is sufficient to find that it used the aircraft as that word is defined in the statute. But, mere ownership is not necessarily sufficient to conclude that the entity (Czars) exercised a right or power over the property. In this case, the evidence indicates that Czars did nothing more than purchase the aircraft. The Tax Tribunal also made much of the fact that Cheema possessed total control of his companies, including Czars and Grand Aire. This fact still does not provide evidence that Czars exercised a right or power over the aircraft incident to its ownership of that aircraft.

I am unable to conclude that Czars “used” the aircraft within the meaning of MCL 205.92(b); MSA 7.555(2)(b) and find no evidence of such use in the Tax Tribunal record or the Tax Tribunal’s decision. I would reverse the decision of the Tax Tribunal and find that Czars is not hable to pay a use tax on the aircraft in question. Because I would reverse on this *648basis, I find it unnecessary to address the other issues raised by petitioner.