Tivoli Enterprises v. Zehnder
Annotate this Case
No. 3--97--0495
_________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
_________________________________________________________________
TIVOLI ENTERPRISES, INC., ) Appeal from the Circuit Court
) of Du Page County.
Plaintiff-Appellant, )
) No. 96--MR--651
v. )
)
KENNETH ZEHNDER, as Director of )
Revenue, and JUDY BAAR-TOPINKA, )
as State Treasurer, ) Honorable
) Bonnie M. Wheaton,
Defendants-Appellees. ) Judge, Presiding.
_________________________________________________________________
JUSTICE DOYLE delivered the opinion of the court:
This appeal addresses the propriety of a use tax assessment
that the Illinois Department of Revenue (Department) issued against
plaintiff, Tivoli Enterprises, Inc. The central issue is whether
a Department regulation required plaintiff to pay a use tax on its
purchase of items (paper and plastic cups, lids, tubs, straws, and
napkins) that it used in conjunction with its sale of soft drinks
and popcorn at its concession counters in its movie houses.
The facts are not in dispute. Plaintiff operates 15 movie
houses in Illinois. Each of plaintiff's movie houses has a
darkened viewing area with seats where customers view movies.
Doors separate the viewing area from other areas of the movie
houses so that light will not disturb customers viewing movies.
Each of plaintiff's movie houses has a separate area, commonly
referred to as the lobby. In the lobby of each of the movie
houses, plaintiff operates a concession counter where plaintiff
sells soda pop, popcorn, and candy to customers. Plaintiff does
not provide tables or chairs in the concession counter areas for
customers to consume the items they have purchased. Customers
typically consume the items in the viewing area.
At its concession counters, plaintiff sells the soda pop in
disposable paper or plastic cups with disposable plastic lids.
Plaintiff sells the popcorn in disposable tubs. Plaintiff sells
the candy in wrappers provided by the candy manufacturer.
Plaintiff also provides paper napkins and straws to customers who
purchase items at the concession counters.
Plaintiff purchases the cups, lids, tubs, straws, and napkins
(disposable concession items) that it uses at its concession
counters from a supplier. During the period from January 1993
through December 1995, plaintiff did not pay a use tax to the
supplier when it purchased disposable concession items from the
supplier.
In 1996, following an audit, the Department assessed taxes and
interest against plaintiff in the amount of $47,891. Of that
amount, $29,061 was for plaintiff's nonpayment of use taxes to its
supplier when it purchased the disposable concession items.
On July 19, 1996, plaintiff paid the Department the full
assessment amount of $47,891. Of that amount, plaintiff paid
$29,061 under protest. This represented the part of the assessment
for the nonpayment of use taxes related to plaintiff s purchases of
the disposable concession items. Plaintiff made the payment under
protest pursuant to the State Officers and Employees Money
Disposition Act (30 ILCS 230/1 et seq. (West 1996)).
On August 9, 1996, plaintiff filed a verified complaint in the
circuit court. The complaint named the director of the Department
and the State treasurer as defendants. Count I of the complaint
sought declaratory and injunctive relief on the ground that the
Department misapplied its regulations when it imposed the use tax
on plaintiff's purchases of the disposable concession items.
Counts II and III sought declaratory judgment and injunctive relief
on the ground that the imposition of the tax violated plaintiff's
rights under the state and federal constitutions.
The parties filed cross-motions for summary judgment. On May
6, 1997, after extensive briefings and a hearing on the matter, the
trial court entered an order granting defendants' motion for
summary judgment and denying plaintiff's motion for summary
judgment. On May 23, 1997, the trial court issued an order
entering judgment against plaintiff in the amount of $29,061 as to
count I of plaintiff's complaint. The circuit court also entered
judgment in favor of defendants as to counts II and III of
plaintiff's complaint. Finally, the order dissolved a preliminary
injunction that had restrained the State from transferring the
funds that plaintiff had paid under protest into its general funds.
Plaintiff s timely appeal followed.
On appeal, plaintiff does not contest the judgment against
counts II and III of its complaint. Rather, plaintiff alleges
error only as to count I. Consequently, this appeal concerns only
count I of plaintiff's complaint. See Kincaid v. Ames Department
Stores, Inc., 283 Ill. App. 3d 555, 570 (1996) (issues not raised
or argued before appellate court are deemed waived).
At issue on appeal, as it was in the circuit court, is the
construction of the relevant parts of section 130.2070 of Title 86
of the Illinois Administrative Code (86 Ill. Adm. Code 130.2070
(1998)). The parties agree that section 130.2070 embodies the
Department's governing regulations regarding the taxation of
purchases such as those made by plaintiff when it purchased the
disposable concession items. However, the parties disagree as to
whether section 130.2070 requires the taxation of plaintiff's
purchases.
Section 130.2070 provides, in relevant part, as follows:
"130.2070 Sales of Containers, Wrapping and Packing Materials
and Related Products
a) Definition
When used in this Regulation, the term 'containers'
includes all containers, wrapping and packing materials,
bags, twines, container handles, wrapping papers, gummed
tapes, cellophane, boxes, bottles, drums, cartons, sacks
or other packing, packaging, containing and wrapping
materials in which tangible personal property may be
contained.
b) Sales for Resale
1) Sellers of containers to purchasers who sell
tangible personal property contained in such containers
to others are deemed to make sales of such containers to
purchasers for purposes of resale, the receipts from
which sales are not subject to the Retailers' Occupation
Tax, if the purchasers of such containers transfer the
ownership of the containers to their customers together
with the ownership of the tangible personal property
contained in such containers.
2) For example, a sale of fruit boxes to a packer
who fills the boxes with fruit and sells the fruit in
such boxes is a sale of the boxes to the packer for
resale by him. There is no difference between a
returnable container whose ownership is transferred with
a deposit being taken and a nonreturnable container.
Although sales of containers to purchasers who retransfer
such containers to others as an incident to engaging in
a service occupation are not subject to the Retailers'
Occupation Tax, such transactions are subject to the
Service Occupation Tax (see Subpart A of the Service
Occupation Tax Regulations).
c) Sales For Use or Consumption
* * *
4) Sales of paper napkins, drinking straws, paper
cups and paper plates to restaurants (including drive-in
restaurants) and other vendors of food or beverages for
use on the premises as serving equipment in lieu of more
durable kinds of serving equipment (such as linen
napkins, metal drinking straws, glass or porcelain cups
and plates) are taxable retail sales. Sales of paper
napkins, drinking straws, paper cups and paper plates to
food or beverage vendors are nontaxable sales for resale
if the items are resold for a direct and specific charge,
or if the items are employed as containers for food or
beverages contained therein and are transferred with the
food or beverages to the purchaser thereof either by
being delivered by the food or beverage vendor away from
his premises to his customers or by being delivered on
the premises of the food or beverage vendor to customers
who take the packaged food or beverages away from such
premises with them for consumption elsewhere (i.e., the
so-called 'carry-out trade'). In general, it may be
assumed that paper sacks, boxes, cartons and paper cups
with lids, when sold to a food or beverage vendor, are
for resale within the meaning of this paragraph. The
same is true of paper cups which are used in serving
beverages or other tangible personal property from a
vending machine." 86 Ill. Adm. Code 130.2070 (1998).
Plaintiff contends that subsections (a) and (b) of section
130.2070 set out a general rule regarding the taxation of the
purchase of containers and related products. In plaintiff's view,
the general rule regarding taxation of such items is that, when
such items are sold to a merchant who later uses the items as
containers and sells another product in the container, then the
sale of the item to the merchant is not taxable under either the
Retailers' Occupation Tax Act (35 ILCS 120/1 et seq. (West 1996))
or the Use Tax Act (35 ILCS 105/1 et seq. (West 1996)) because the
sale to the merchant is deemed a sale for resale. Plaintiff argues
that the disposable concession items it purchased were items
subject to the general rule and, therefore, the purchases were not
taxable.
Plaintiff acknowledges that, in certain circumstances, the
sale of containers is taxable under section 130.2070. More
specifically, plaintiff notes subsection (c)(4) of section
130.2070. Plaintiff reads subsection (c)(4) of section 130.2070 to
require the taxation of the purchase of containers in the following
circumstances: where the ownership of the containers will not be
transferred to another, e.g., the purchase of porcelain plates and
cups that are used to serve food and beverages to customers in a
restaurant; and where disposable containers are used in lieu of
more durable serving equipment, e.g., containers used by fast-food
restaurants that serve meals in paper containers and cups.
However, plaintiff asserts that subsection (c)(4) of section
130.2070 also creates an exception from taxation for the purchase
of containers used in situations such as delivery and carry-out
settings. Plaintiff argues that this exception applies to its
purchases of the disposable concession items because it uses the
items as containers for food and beverages that its customers carry
away from the concession counter premises. Plaintiff considers the
viewing area of its movie houses to be separate premises from the
concession counter area. Thus, plaintiff asserts that its sale of
soda pop and popcorn at its concession counters is essentially like
a carry-out operation.
Finally, plaintiff contends that subsection (c)(4) of section
130.2070 sets out a general assumption that containers sold to a
food vendor "are for resale" and therefore are not taxable.
Plaintiff argues that under this assumption the Department should
have assumed that plaintiff's purchases were nontaxable sales for
resale.
Defendants respond that the circuit court properly determined
that section 130.2070 required the taxation of plaintiff's
purchases of the disposable concession items. Defendants maintain
that the circuit court correctly found that the items were used on
the premises and in lieu of more durable food serving equipment
and therefore plaintiff s purchases of the items were taxable
events.
We first note our standard of review. A trial court may
render summary judgment if the record shows that there is no
genuine issue as to any material fact and that the moving party is
entitled to judgment as a matter of law. 735 ILCS 5/2--1005(c)
(West 1996). When the parties file cross-motions for summary
judgment, they agree that only a question of law is involved and
invite the court to decide the issues on the record. Western
States Insurance Co. v. Louis E. Olivero & Associates, 283 Ill.
App. 3d 307, 309-10 (1996). In an appeal from a grant of summary
judgment, a reviewing court conducts a de novo review. Milwaukee
Safeguard Insurance Co. v. Selcke, 179 Ill. 2d 94, 98 (1997).
In this case, we must decide whether a department regulation
requires plaintiff to pay a use tax. The Use Tax Act imposes a tax
on the privilege of using in this state tangible personal property
that is purchased at retail from a retailer. 35 ILCS 105/3 (West
1996). The act defines "use" as "the exercise by any person of any
right or power over tangible personal property incident to the
ownership of that property." 35 ILCS 105/2 (West 1996). "Purchase
at retail" is defined as "the acquisition of the ownership of or
title to tangible personal property through a sale at retail." 35
ILCS 105/2 (West 1996). A "sale at retail" is defined as follows:
"[A]ny transfer of the ownership of or title to tangible
personal property to a purchaser, for the purpose of use, and
not for the purpose of resale in any form as tangible personal
property to the extent not first subjected to a use for which
it was purchased, for a valuable consideration[] ***." 35
ILCS 105/2 (West 1996).
Here, the issue is whether plaintiff purchased the disposable
concession items for resale. The parties agree that if the
purchases were for resale then neither the Retailer's Occupation
Tax Act nor the Use Tax Act would impose a tax on the purchases.
In order to resolve this issue, we must construe section 130.2070,
the Department's governing regulation.
The Department's regulations have the force and effect of law
and are construed under the same standards governing the
construction of a statute. Union Electric Co. v. Department of
Revenue, 136 Ill. 2d 385, 391 (1990). A primary rule of statutory
construction is to ascertain and give effect to the legislative
intent through consideration of the language used in the statute.
Bridgestone/Firestone, Inc. v. Aldridge, 179 Ill. 2d 141, 149
(1997). We must give the language used in the statute its plain
and ordinary meaning, evaluating the statute as a whole, with each
provision construed in connection with every other section. Paris
v. Feder, 179 Ill. 2d 173, 177 (1997).
In this case, plaintiff first contends that subsections (a)
and (b) of section 130.2070 set out a general rule that applies to
its purchases of the disposable concession items. Plaintiff
asserts that under this general rule its purchases were sales for
resale and therefore were nontaxable.
Plaintiff's contention ignores subsection (c)(4) of section
130.2070, which applies the general rule specifically to
restaurants and "other vendors of food or beverages." 86 Ill. Adm.
Code 130.2070(c)(4) (1998). Plaintiff is clearly a vendor of food
and beverages when it operates its concession counters.
It is a fundamental rule of statutory construction that where
a general provision and a specific provision that both relate to
the same subject exist, either in the same or another statute, the
specific provision controls and should be applied. People v.
Villarreal, 152 Ill. 2d 368, 379 (1992). In this case, subsections
(a), (b), and (c)(4) of section 130.2070 relate to the same
subject, the taxation of the purchase of containers and related
products. Although all of these subsections could be construed to
apply to plaintiff's purchases, subsection (c)(4) is more specific
in that it specifically governs purchases by vendors of food and
beverages while subsections (a) and (b) govern purchases by anyone.
Consequently, subsection (c)(4) is controlling in this case, and
plaintiff's reliance on the general rule set out in subsections (a)
and (b) is misplaced.
Plaintiff next contends that even if subsection (c)(4) is
controlling it does not require the taxation of its purchases.
Plaintiff maintains that by its plain language subsection (c)(4)
requires taxation only if the items in question are used "on the
premises as serving equipment in lieu of more durable kinds of
serving equipment (such as linen napkins, metal drinking straws,
glass or porcelain cups, and plates)." 86 Ill. Adm. Code 130.2070
(c)(4) (1998). Plaintiff asserts that taxation of its purchases is
not required because the items in question were neither used on the
premises nor in lieu of more durable kinds of serving equipment.
Plaintiff also notes that subsection (c)(4) provides that
sales of items such as those in question here are nontaxable sales
for resale "if the items are employed as containers for food or
beverages contained therein and are transferred with the food or
beverages to the purchaser thereof *** by being delivered on the
premises of the food or beverage vendor to customers who take the
packaged food or beverages away from such premises with them for
consumption elsewhere (i.e., the so-called 'carry-out trade')." In
plaintiff's view, its customers do just that when they purchase
soda pop and popcorn contained in paper cups and tubs at its
concession counters and take these items into the viewing areas to
consume the soda pop and popcorn. Plaintiff argues that subsection
(c)(4) therefore does not require the taxation of plaintiff's
purchases of the disposable concession items.
Defendants respond that our supreme court's decision in Sta-Ru
Corp. v. Mahin, 64 Ill. 2d 330 (1976), is controlling and shows
that the taxation of plaintiff's purchases under subsection (c)(4)
was appropriate. The plaintiff in Stay-Ru operated six "Dairy
Queen-Brazier restaurants," which sold food and beverages in
nonreusable paper and plastic containers. The Dairy Queen
customers consumed these purchases either on or off the premises.
The plaintiff in Stay-Ru sought injunctive relief from the
Department's attempt to impose a tax on the plaintiff's purchases
of the containers under a Department rule that had identical
language to the relevant parts of subsection (c)(4) of section
130.2070 of the Department's regulations (86 Ill. Adm. Code
130.2070(c)(4) (1998)). Stay-Ru, 64 Ill. 2d at 332-33.
The plaintiff in Stay-Ru contended that its purchases of the
containers were not taxable because the purchases were for resale
and were therefore exempt from taxation. The plaintiff argued that
the passage of ownership of the containers to its customers when
they purchased food or beverages in the containers showed that its
purchases were for resale. Stay-Ru, 64 Ill. 2d at 334-35. The
plaintiff conceded that it did not separately charge its customers
for the containers. Stay-Ru, 64 Ill. 2d at 333.
Our supreme court focused on the fact that the plaintiff in
Stay-Ru did not separately charge its customers for the containers.
The court stated that the plaintiff provided the containers "as a
part of its standard method of doing business" and that "the cost
of the containers used to serve food on its premises is a cost of
doing business as would be the cost of permanent dinnerware." Sta-
Ru, 64 Ill. 2d at 337. The court concluded that the "containers
are consumed or used by Stay-ru in a business sense when it serves
the food or beverage." Stay-Ru, 64 Ill. 2d at 337. For these
reasons, the court determined that the plaintiff's purchase of the
containers was not for resale and was therefore taxable.
Here, defendants contend that this case is indistinguishable
from Stay-Ru. Defendants maintain that in both cases the
plaintiffs purchased disposable items for the purpose of serving
food and beverages to their customers and that in both cases the
plaintiffs did not separately charge their customers for the items.
Defendants argue that this is enough for a determination, relying
on Stay-Ru, that plaintiff's purchases in this case were taxable
under subsection (c)(4).
Plaintiff responds by arguing that Stay-Ru is distinguishable
from this case. Plaintiff contends that Stay-Ru addressed only the
taxability of the purchase of containers used to serve food and
beverages that were consumed on the vendor's premises. Plaintiff
asserts that Stay-Ru did not address the taxability of the purchase
of containers where the vendor's customers left the premises with
the food and beverages. In plaintiff's view Stay-Ru is not
controlling in this case because its customers leave the concession
counter premises with the food and beverages they purchase there.
We agree with plaintiff that Stay-Ru is not controlling in
this case if plaintiff's concession counter customers left the
premises with their purchases. Although some of the customers in
Stay-Ru did leave the Dairy Queen premises, we believe Stay-Ru
applies only to the customers who did not leave the premises. Our
understanding of Stay-Ru is buttressed by the words of subsection
(c)(4) and the identical regulation in Stay-Ru, which provide that
a vendor's purchase of items such as the disposable concession
items is not a taxable sale for resale "if the items are employed
as containers for food or beverages contained therein and are
transferred with the food or beverage to the purchaser thereof ***
by being delivered on the premises of the food or beverage vendor
to customers who take the packaged food or beverages away from such
premises with them for consumption elsewhere (i.e., the so-called
'carry-out trade')." 86 Ill. Adm. Code 130.2070(c)(4) (1998);
Sta-Ru, 64 Ill. 2d at 330. Thus, a critical issue in determining
whether plaintiff's purchases were taxable is, as plaintiff
contends, whether the items plaintiff purchased were employed as
containers for food and beverages that were taken off the premises.
On that issue, plaintiff relies on Canteen Corp. v. Department
of Revenue, 123 Ill. 2d 95 (1988). Plaintiff contends that, under
the definition of "premises" set out in Canteen, its customers took
the food and beverages that they purchased at its concession
counters away from the concession counter premises. Plaintiff
argues that this makes its purchases of the disposable concession
items nontaxable under subsection (c)(4) of section 130.2070.
In Canteen, our supreme court addressed the question of the
taxation of the sale of food and beverages from vending machines.
The Retailers' Occupation Tax Act governed the taxation of such
sales and provided that food not prepared for immediate consumption
and "consumed off the premises where it is sold" was subject to a
reduced tax rate. Canteen, 123 Ill. 2d at 98. In determining
whether food and beverages sold from the vending machines were
subject to the reduced tax rate the court defined "premises" as
follows:
" 'Premises' in the context of vending machines is the area
over which the vendor exercises control, whether by lease,
contract, license or otherwise, and, in addition, the area in
which facilities for eating are provided--that is, the area
designated for, or devoted to, use in conjunction with the
business engaged in by the vendor." Canteen, 123 Ill. 2d at
111.
Plaintiff asserts that we should use the same definition of
premises in this case. Plaintiff maintains that, under this
definition, when its customers take the food and beverages they
purchase at its concession counters into the viewing areas of its
movie houses, they take the food and beverages away from the
concession counter premises. Plaintiff argues that under
subsection (c)(4) this makes its purchase of the disposable
concession items not taxable.
We agree with plaintiff that the use of the Canteen definition
is appropriate in this case. We recognize that the definition was
formulated in the context of vending machine sales. However, the
applicability of the definition to the sale of food and beverages
at concession counters is reasonable.
Applying the Canteen definition to this case shows that
plaintiff's customers do not take their concession counter
purchases away from the premises when they take their purchases
into the viewing areas of the movie houses. The definition of
premises used in Canteen has two aspects. First, the Canteen court
stated that premises include "the area over which the vendor
exercises control." Canteen, 123 ll. 2d at 111. In this case, the
record shows that plaintiff controls both the lobby area, including
the concession counters, and the viewing areas in its movie houses.
Thus, under the control aspect of the Canteen definition of
premises, concession counter customers do not take their purchases
away from the concession counter premises.
The second aspect of the definition of premises used in
Canteen was "the area in which facilities for eating are provided--
that is, the area designated for, or devoted to, use in conjunction
with the business engaged in by the vendor." Canteen, 123 Ill. 2d
at 111. Plaintiff contends that it provides no such facilities.
We disagree. We believe that the viewing areas of plaintiff's
movie houses are such facilities. Even accepting plaintiff's
position that the primary purpose of the viewing areas in its movie
houses is for viewing movies and not for consuming food and
beverages, we think the viewing areas are also facilities for
consuming food and beverages sold by plaintiff at its concession
counters. Plaintiff virtually concedes that the facilities
required for consuming the food and beverages it sells at its
concession counters would essentially consist of a place to sit
down and consume the items (plaintiff consistently insists there
are no facilities to consume the food and beverages near its
concession counters because there are no chairs or benches there).
The viewing areas are filled with places to sit down and consume
the items purchased at the concession counters. Thus, plaintiff
can hardly contend in good faith that the viewing areas in its
movie houses are not designated for the consumption of the food and
beverages it sells at its concession counters. Plaintiff's
customers come to its movie houses to watch movies. This is done
in the viewing area of the movie houses. In conjunction with the
viewing of movies, plaintiff sells food and beverages to its
customers at its concession counters and allows and expects its
customers to consume these foods and beverages in the viewing
areas. Under the definition of premises used in Canteen, the
viewing areas of plaintiff's movie houses are therefore facilities
for use in conjunction with its concession counter business. Thus,
under the "facilities" aspect of the Canteen definition of
premises, consumption of the food and beverages plaintiff sells at
its concession counters occurs on the premises.
In sum, we conclude that the consumption of the food and
beverages that plaintiff sells at its concession counters occurs on
the premises. Accordingly, plaintiff s argument that its purchases
of the disposable concession items were not taxable because
customers consume the packaged food and beverages off the premises
fails.
Plaintiff's reliance on a decision of an appellate tax board
in Massachusetts (Hanover Mall Cinema, Inc. v. Commissioner of
Revenue, Mass. App. Tax Bd. Op. 1997--959 (October 17, 1997)) does
not change our conclusion. The administrative agency that rendered
the decision in that case construed a statute that was different
from the regulation at issue here. We are not persuaded that the
agency's analysis is applicable to this case.
Plaintiff next contends that its purchases of the disposable
concession items were not for use "in lieu of more durable kinds of
serving equipment" and therefore were not taxable under subsection
(c)(4). Plaintiff asserts that, in view of the nature of a movie
house concession counter, where the items purchased are carried
into the viewing area, it would be impractical and illogical for it
to use more durable serving equipment than the equipment it uses.
As all movie house operations are not identical, it is
conceivable that reasonable minds might differ over the
practicality of using more durable serving equipment in connection
with a particular serving operation. Plaintiff's opinion that
using more durable serving equipment at its concession counters
would be impractical or illogical does not bear upon the
determination that plaintiff has opted to use the disposable
concession items in lieu of more durable equipment. The regulation
requires no more than that. Consequently, we conclude that
plaintiff uses the disposable concession items "in lieu of more
durable kinds of serving equipment" as those terms are used in
subsection (c)(4) (86 Ill. Adm. Code 130.2070(c)(4) (1998)).
Accordingly, plaintiff s in-lieu-of argument fails.
Plaintiff next notes that subsection (c)(4) expresses an
assumption that the purchase of items such as the disposable
concession items is not taxable. Plaintiff argues that under this
assumption its purchase of the disposable concession items was not
taxable.
We disagree. Under the language of subsection (c)(4), the
purchase of containers and related items is plainly taxable when
the items are used by a vendor of food and beverages on its
premises in lieu of more durable kinds of serving equipment. We
have already established that plaintiff's purchases of the
disposable concession items were for the use of these items on its
premises and in lieu of more durable serving equipment. Thus, the
assumption set out in subsection (c)(4) has been overcome in this
case.
Finally, plaintiff contends that recent identical amendments
to the Retailers Occupation Tax Act and the Use Tax Act show that
the legislature never intended that a use tax should apply to its
purchases of the disposable concession items. The amendments that
plaintiff cites became effective August 1, 1997, and added the
following language to both the Retailers Occupation Tax Act and
the Use Tax Act:
"Nonreusable tangible personal property that is used by
persons engaged in the business of operating a restaurant,
cafeteria, or drive-in is a sale for resale when it is
transferred to customers in the ordinary course of business as
part of the sale of food or beverages and is used to deliver,
package, or consume food or beverages, regardless of where
consumption of the food or beverages occurs. Examples of
those items include, but are not limited to nonreusable, paper
and plastic cups, plates, baskets, boxes, sleeves, buckets or
other containers, utensils, straws, placemats, napkins, doggie
bags, and wrapping or packaging materials that are transferred
to customers as part of the sale of food or beverages in the
ordinary course of business." Pub. Act 90-289, eff. August 1,
1997 (amending 35 ILCS 105/2 and 35 ILCS 120/1 (West 1996)).
The parties agree that these amendments changed existing law
by making purchases of nonreusable tangible personal property such
as the cups, lids, tubs, straws, and napkins at issue in this case
nontaxable regardless of whether the consumption of the food and
beverages served in and with the items occurs on or off the
premises of a restaurant, cafeteria, or drive-in that purchases the
items. However, the parties disagree as to the effect of the
amendments, if any, on the taxation of plaintiff s purchases.
Plaintiff argues that the amendments show that the legislature
never intended that the purchase of items such as the disposable
concession items by a concession counter operator should be taxed.
Plaintiff maintains that this legislative intent is shown by the
fact that the amendments do not specifically refer to concession
counters. Plaintiff reasons that it was unnecessary for the
amendments to refer specifically to concession counters because
purchases by concession counters were not subject to taxation under
section 130.2070.
We agree with the parties that the amendments changed existing
law. There is a rebuttable presumption that the legislature
intends a change in the law when it amends a statute. Weast
Construction Co. v. Industrial Comm n, 102 Ill. 2d 337, 340 (1984).
Our examination of the record reveals nothing that rebuts that
presumption in this case.
However, we cannot agree with plaintiff that the change in the
law in question here shows that the legislature never intended that
plaintiff s purchases were subject to taxation. We find nothing in
the amendments that indicates that our construction of section
130.2070 of the Department s regulations, as applied to time
periods prior to the effective date of the amendments, should have
been different with respect to purchases such as plaintiff s.
Based on the foregoing, the judgment of the circuit court of
Du Page County is affirmed.
Affirmed.
COLWELL and THOMAS, JJ., concur.
_________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
_________________________________________________________________
TIVOLI ENTERPRISES, INC., ) Appeal from the Circuit Court
) of Du Page County.
Plaintiff-Appellant, )
) No. 96--MR--651
v. )
)
KENNETH ZEHNDER, as Director of )
Revenue, and JUDY BAAR-TOPINKA, )
as State Treasurer, ) Honorable
) Bonnie M. Wheaton,
Defendants-Appellees. ) Judge, Presiding.
_________________________________________________________________
JUSTICE DOYLE delivered the opinion of the court:
This appeal addresses the propriety of a use tax assessment
that the Illinois Department of Revenue (Department) issued against
plaintiff, Tivoli Enterprises, Inc. The central issue is whether
a Department regulation required plaintiff to pay a use tax on its
purchase of items (paper and plastic cups, lids, tubs, straws, and
napkins) that it used in conjunction with its sale of soft drinks
and popcorn at its concession counters in its movie houses.
The facts are not in dispute. Plaintiff operates 15 movie
houses in Illinois. Each of plaintiff's movie houses has a
darkened viewing area with seats where customers view movies.
Doors separate the viewing area from other areas of the movie
houses so that light will not disturb customers viewing movies.
Each of plaintiff's movie houses has a separate area, commonly
referred to as the lobby. In the lobby of each of the movie
houses, plaintiff operates a concession counter where plaintiff
sells soda pop, popcorn, and candy to customers. Plaintiff does
not provide tables or chairs in the concession counter areas for
customers to consume the items they have purchased. Customers
typically consume the items in the viewing area.
At its concession counters, plaintiff sells the soda pop in
disposable paper or plastic cups with disposable plastic lids.
Plaintiff sells the popcorn in disposable tubs. Plaintiff sells
the candy in wrappers provided by the candy manufacturer.
Plaintiff also provides paper napkins and straws to customers who
purchase items at the concession counters.
Plaintiff purchases the cups, lids, tubs, straws, and napkins
(disposable concession items) that it uses at its concession
counters from a supplier. During the period from January 1993
through December 1995, plaintiff did not pay a use tax to the
supplier when it purchased disposable concession items from the
supplier.
In 1996, following an audit, the Department assessed taxes and
interest against plaintiff in the amount of $47,891. Of that
amount, $29,061 was for plaintiff's nonpayment of use taxes to its
supplier when it purchased the disposable concession items.
On July 19, 1996, plaintiff paid the Department the full
assessment amount of $47,891. Of that amount, plaintiff paid
$29,061 under protest. This represented the part of the assessment
for the nonpayment of use taxes related to plaintiff s purchases of
the disposable concession items. Plaintiff made the payment under
protest pursuant to the State Officers and Employees Money
Disposition Act (30 ILCS 230/1 et seq. (West 1996)).
On August 9, 1996, plaintiff filed a verified complaint in the
circuit court. The complaint named the director of the Department
and the State treasurer as defendants. Count I of the complaint
sought declaratory and injunctive relief on the ground that the
Department misapplied its regulations when it imposed the use tax
on plaintiff's purchases of the disposable concession items.
Counts II and III sought declaratory judgment and injunctive relief
on the ground that the imposition of the tax violated plaintiff's
rights under the state and federal constitutions.
The parties filed cross-motions for summary judgment. On May
6, 1997, after extensive briefings and a hearing on the matter, the
trial court entered an order granting defendants' motion for
summary judgment and denying plaintiff's motion for summary
judgment. On May 23, 1997, the trial court issued an order
entering judgment against plaintiff in the amount of $29,061 as to
count I of plaintiff's complaint. The circuit court also entered
judgment in favor of defendants as to counts II and III of
plaintiff's complaint. Finally, the order dissolved a preliminary
injunction that had restrained the State from transferring the
funds that plaintiff had paid under protest into its general funds.
Plaintiff s timely appeal followed.
On appeal, plaintiff does not contest the judgment against
counts II and III of its complaint. Rather, plaintiff alleges
error only as to count I. Consequently, this appeal concerns only
count I of plaintiff's complaint. See Kincaid v. Ames Department
Stores, Inc., 283 Ill. App. 3d 555, 570 (1996) (issues not raised
or argued before appellate court are deemed waived).
At issue on appeal, as it was in the circuit court, is the
construction of the relevant parts of section 130.2070 of Title 86
of the Illinois Administrative Code (86 Ill. Adm. Code 130.2070
(1998)). The parties agree that section 130.2070 embodies the
Department's governing regulations regarding the taxation of
purchases such as those made by plaintiff when it purchased the
disposable concession items. However, the parties disagree as to
whether section 130.2070 requires the taxation of plaintiff's
purchases.
Section 130.2070 provides, in relevant part, as follows:
"130.2070 Sales of Containers, Wrapping and Packing Materials
and Related Products
a) Definition
When used in this Regulation, the term 'containers'
includes all containers, wrapping and packing materials,
bags, twines, container handles, wrapping papers, gummed
tapes, cellophane, boxes, bottles, drums, cartons, sacks
or other packing, packaging, containing and wrapping
materials in which tangible personal property may be
contained.
b) Sales for Resale
1) Sellers of containers to purchasers who sell
tangible personal property contained in such containers
to others are deemed to make sales of such containers to
purchasers for purposes of resale, the receipts from
which sales are not subject to the Retailers' Occupation
Tax, if the purchasers of such containers transfer the
ownership of the containers to their customers together
with the ownership of the tangible personal property
contained in such containers.
2) For example, a sale of fruit boxes to a packer
who fills the boxes with fruit and sells the fruit in
such boxes is a sale of the boxes to the packer for
resale by him. There is no difference between a
returnable container whose ownership is transferred with
a deposit being taken and a nonreturnable container.
Although sales of containers to purchasers who retransfer
such containers to others as an incident to engaging in
a service occupation are not subject to the Retailers'
Occupation Tax, such transactions are subject to the
Service Occupation Tax (see Subpart A of the Service
Occupation Tax Regulations).
c) Sales For Use or Consumption
* * *
4) Sales of paper napkins, drinking straws, paper
cups and paper plates to restaurants (including drive-in
restaurants) and other vendors of food or beverages for
use on the premises as serving equipment in lieu of more
durable kinds of serving equipment (such as linen
napkins, metal drinking straws, glass or porcelain cups
and plates) are taxable retail sales. Sales of paper
napkins, drinking straws, paper cups and paper plates to
food or beverage vendors are nontaxable sales for resale
if the items are resold for a direct and specific charge,
or if the items are employed as containers for food or
beverages contained therein and are transferred with the
food or beverages to the purchaser thereof either by
being delivered by the food or beverage vendor away from
his premises to his customers or by being delivered on
the premises of the food or beverage vendor to customers
who take the packaged food or beverages away from such
premises with them for consumption elsewhere (i.e., the
so-called 'carry-out trade'). In general, it may be
assumed that paper sacks, boxes, cartons and paper cups
with lids, when sold to a food or beverage vendor, are
for resale within the meaning of this paragraph. The
same is true of paper cups which are used in serving
beverages or other tangible personal property from a
vending machine." 86 Ill. Adm. Code 130.2070 (1998).
Plaintiff contends that subsections (a) and (b) of section
130.2070 set out a general rule regarding the taxation of the
purchase of containers and related products. In plaintiff's view,
the general rule regarding taxation of such items is that, when
such items are sold to a merchant who later uses the items as
containers and sells another product in the container, then the
sale of the item to the merchant is not taxable under either the
Retailers' Occupation Tax Act (35 ILCS 120/1 et seq. (West 1996))
or the Use Tax Act (35 ILCS 105/1 et seq. (West 1996)) because the
sale to the merchant is deemed a sale for resale. Plaintiff argues
that the disposable concession items it purchased were items
subject to the general rule and, therefore, the purchases were not
taxable.
Plaintiff acknowledges that, in certain circumstances, the
sale of containers is taxable under section 130.2070. More
specifically, plaintiff notes subsection (c)(4) of section
130.2070. Plaintiff reads subsection (c)(4) of section 130.2070 to
require the taxation of the purchase of containers in the following
circumstances: where the ownership of the containers will not be
transferred to another, e.g., the purchase of porcelain plates and
cups that are used to serve food and beverages to customers in a
restaurant; and where disposable containers are used in lieu of
more durable serving equipment, e.g., containers used by fast-food
restaurants that serve meals in paper containers and cups.
However, plaintiff asserts that subsection (c)(4) of section
130.2070 also creates an exception from taxation for the purchase
of containers used in situations such as delivery and carry-out
settings. Plaintiff argues that this exception applies to its
purchases of the disposable concession items because it uses the
items as containers for food and beverages that its customers carry
away from the concession counter premises. Plaintiff considers the
viewing area of its movie houses to be separate premises from the
concession counter area. Thus, plaintiff asserts that its sale of
soda pop and popcorn at its concession counters is essentially like
a carry-out operation.
Finally, plaintiff contends that subsection (c)(4) of section
130.2070 sets out a general assumption that containers sold to a
food vendor "are for resale" and therefore are not taxable.
Plaintiff argues that under this assumption the Department should
have assumed that plaintiff's purchases were nontaxable sales for
resale.
Defendants respond that the circuit court properly determined
that section 130.2070 required the taxation of plaintiff's
purchases of the disposable concession items. Defendants maintain
that the circuit court correctly found that the items were used on
the premises and in lieu of more durable food serving equipment
and therefore plaintiff s purchases of the items were taxable
events.
We first note our standard of review. A trial court may
render summary judgment if the record shows that there is no
genuine issue as to any material fact and that the moving party is
entitled to judgment as a matter of law. 735 ILCS 5/2--1005(c)
(West 1996). When the parties file cross-motions for summary
judgment, they agree that only a question of law is involved and
invite the court to decide the issues on the record. Western
States Insurance Co. v. Louis E. Olivero & Associates, 283 Ill.
App. 3d 307, 309-10 (1996). In an appeal from a grant of summary
judgment, a reviewing court conducts a de novo review. Milwaukee
Safeguard Insurance Co. v. Selcke, 179 Ill. 2d 94, 98 (1997).
In this case, we must decide whether a department regulation
requires plaintiff to pay a use tax. The Use Tax Act imposes a tax
on the privilege of using in this state tangible personal property
that is purchased at retail from a retailer. 35 ILCS 105/3 (West
1996). The act defines "use" as "the exercise by any person of any
right or power over tangible personal property incident to the
ownership of that property." 35 ILCS 105/2 (West 1996). "Purchase
at retail" is defined as "the acquisition of the ownership of or
title to tangible personal property through a sale at retail." 35
ILCS 105/2 (West 1996). A "sale at retail" is defined as follows:
"[A]ny transfer of the ownership of or title to tangible
personal property to a purchaser, for the purpose of use, and
not for the purpose of resale in any form as tangible personal
property to the extent not first subjected to a use for which
it was purchased, for a valuable consideration[] ***." 35
ILCS 105/2 (West 1996).
Here, the issue is whether plaintiff purchased the disposable
concession items for resale. The parties agree that if the
purchases were for resale then neither the Retailer's Occupation
Tax Act nor the Use Tax Act would impose a tax on the purchases.
In order to resolve this issue, we must construe section 130.2070,
the Department's governing regulation.
The Department's regulations have the force and effect of law
and are construed under the same standards governing the
construction of a statute. Union Electric Co. v. Department of
Revenue, 136 Ill. 2d 385, 391 (1990). A primary rule of statutory
construction is to ascertain and give effect to the legislative
intent through consideration of the language used in the statute.
Bridgestone/Firestone, Inc. v. Aldridge, 179 Ill. 2d 141, 149
(1997). We must give the language used in the statute its plain
and ordinary meaning, evaluating the statute as a whole, with each
provision construed in connection with every other section. Paris
v. Feder, 179 Ill. 2d 173, 177 (1997).
In this case, plaintiff first contends that subsections (a)
and (b) of section 130.2070 set out a general rule that applies to
its purchases of the disposable concession items. Plaintiff
asserts that under this general rule its purchases were sales for
resale and therefore were nontaxable.
Plaintiff's contention ignores subsection (c)(4) of section
130.2070, which applies the general rule specifically to
restaurants and "other vendors of food or beverages." 86 Ill. Adm.
Code 130.2070(c)(4) (1998). Plaintiff is clearly a vendor of food
and beverages when it operates its concession counters.
It is a fundamental rule of statutory construction that where
a general provision and a specific provision that both relate to
the same subject exist, either in the same or another statute, the
specific provision controls and should be applied. People v.
Villarreal, 152 Ill. 2d 368, 379 (1992). In this case, subsections
(a), (b), and (c)(4) of section 130.2070 relate to the same
subject, the taxation of the purchase of containers and related
products. Although all of these subsections could be construed to
apply to plaintiff's purchases, subsection (c)(4) is more specific
in that it specifically governs purchases by vendors of food and
beverages while subsections (a) and (b) govern purchases by anyone.
Consequently, subsection (c)(4) is controlling in this case, and
plaintiff's reliance on the general rule set out in subsections (a)
and (b) is misplaced.
Plaintiff next contends that even if subsection (c)(4) is
controlling it does not require the taxation of its purchases.
Plaintiff maintains that by its plain language subsection (c)(4)
requires taxation only if the items in question are used "on the
premises as serving equipment in lieu of more durable kinds of
serving equipment (such as linen napkins, metal drinking straws,
glass or porcelain cups, and plates)." 86 Ill. Adm. Code 130.2070
(c)(4) (1998). Plaintiff asserts that taxation of its purchases is
not required because the items in question were neither used on the
premises nor in lieu of more durable kinds of serving equipment.
Plaintiff also notes that subsection (c)(4) provides that
sales of items such as those in question here are nontaxable sales
for resale "if the items are employed as containers for food or
beverages contained therein and are transferred with the food or
beverages to the purchaser thereof *** by being delivered on the
premises of the food or beverage vendor to customers who take the
packaged food or beverages away from such premises with them for
consumption elsewhere (i.e., the so-called 'carry-out trade')." In
plaintiff's view, its customers do just that when they purchase
soda pop and popcorn contained in paper cups and tubs at its
concession counters and take these items into the viewing areas to
consume the soda pop and popcorn. Plaintiff argues that subsection
(c)(4) therefore does not require the taxation of plaintiff's
purchases of the disposable concession items.
Defendants respond that our supreme court's decision in Sta-Ru
Corp. v. Mahin, 64 Ill. 2d 330 (1976), is controlling and shows
that the taxation of plaintiff's purchases under subsection (c)(4)
was appropriate. The plaintiff in Stay-Ru operated six "Dairy
Queen-Brazier restaurants," which sold food and beverages in
nonreusable paper and plastic containers. The Dairy Queen
customers consumed these purchases either on or off the premises.
The plaintiff in Stay-Ru sought injunctive relief from the
Department's attempt to impose a tax on the plaintiff's purchases
of the containers under a Department rule that had identical
language to the relevant parts of subsection (c)(4) of section
130.2070 of the Department's regulations (86 Ill. Adm. Code
130.2070(c)(4) (1998)). Stay-Ru, 64 Ill. 2d at 332-33.
The plaintiff in Stay-Ru contended that its purchases of the
containers were not taxable because the purchases were for resale
and were therefore exempt from taxation. The plaintiff argued that
the passage of ownership of the containers to its customers when
they purchased food or beverages in the containers showed that its
purchases were for resale. Stay-Ru, 64 Ill. 2d at 334-35. The
plaintiff conceded that it did not separately charge its customers
for the containers. Stay-Ru, 64 Ill. 2d at 333.
Our supreme court focused on the fact that the plaintiff in
Stay-Ru did not separately charge its customers for the containers.
The court stated that the plaintiff provided the containers "as a
part of its standard method of doing business" and that "the cost
of the containers used to serve food on its premises is a cost of
doing business as would be the cost of permanent dinnerware." Sta-
Ru, 64 Ill. 2d at 337. The court concluded that the "containers
are consumed or used by Stay-ru in a business sense when it serves
the food or beverage." Stay-Ru, 64 Ill. 2d at 337. For these
reasons, the court determined that the plaintiff's purchase of the
containers was not for resale and was therefore taxable.
Here, defendants contend that this case is indistinguishable
from Stay-Ru. Defendants maintain that in both cases the
plaintiffs purchased disposable items for the purpose of serving
food and beverages to their customers and that in both cases the
plaintiffs did not separately charge their customers for the items.
Defendants argue that this is enough for a determination, relying
on Stay-Ru, that plaintiff's purchases in this case were taxable
under subsection (c)(4).
Plaintiff responds by arguing that Stay-Ru is distinguishable
from this case. Plaintiff contends that Stay-Ru addressed only the
taxability of the purchase of containers used to serve food and
beverages that were consumed on the vendor's premises. Plaintiff
asserts that Stay-Ru did not address the taxability of the purchase
of containers where the vendor's customers left the premises with
the food and beverages. In plaintiff's view Stay-Ru is not
controlling in this case because its customers leave the concession
counter premises with the food and beverages they purchase there.
We agree with plaintiff that Stay-Ru is not controlling in
this case if plaintiff's concession counter customers left the
premises with their purchases. Although some of the customers in
Stay-Ru did leave the Dairy Queen premises, we believe Stay-Ru
applies only to the customers who did not leave the premises. Our
understanding of Stay-Ru is buttressed by the words of subsection
(c)(4) and the identical regulation in Stay-Ru, which provide that
a vendor's purchase of items such as the disposable concession
items is not a taxable sale for resale "if the items are employed
as containers for food or beverages contained therein and are
transferred with the food or beverage to the purchaser thereof ***
by being delivered on the premises of the food or beverage vendor
to customers who take the packaged food or beverages away from such
premises with them for consumption elsewhere (i.e., the so-called
'carry-out trade')." 86 Ill. Adm. Code 130.2070(c)(4) (1998);
Sta-Ru, 64 Ill. 2d at 330. Thus, a critical issue in determining
whether plaintiff's purchases were taxable is, as plaintiff
contends, whether the items plaintiff purchased were employed as
containers for food and beverages that were taken off the premises.
On that issue, plaintiff relies on Canteen Corp. v. Department
of Revenue, 123 Ill. 2d 95 (1988). Plaintiff contends that, under
the definition of "premises" set out in Canteen, its customers took
the food and beverages that they purchased at its concession
counters away from the concession counter premises. Plaintiff
argues that this makes its purchases of the disposable concession
items nontaxable under subsection (c)(4) of section 130.2070.
In Canteen, our supreme court addressed the question of the
taxation of the sale of food and beverages from vending machines.
The Retailers' Occupation Tax Act governed the taxation of such
sales and provided that food not prepared for immediate consumption
and "consumed off the premises where it is sold" was subject to a
reduced tax rate. Canteen, 123 Ill. 2d at 98. In determining
whether food and beverages sold from the vending machines were
subject to the reduced tax rate the court defined "premises" as
follows:
" 'Premises' in the context of vending machines is the area
over which the vendor exercises control, whether by lease,
contract, license or otherwise, and, in addition, the area in
which facilities for eating are provided--that is, the area
designated for, or devoted to, use in conjunction with the
business engaged in by the vendor." Canteen, 123 Ill. 2d at
111.
Plaintiff asserts that we should use the same definition of
premises in this case. Plaintiff maintains that, under this
definition, when its customers take the food and beverages they
purchase at its concession counters into the viewing areas of its
movie houses, they take the food and beverages away from the
concession counter premises. Plaintiff argues that under
subsection (c)(4) this makes its purchase of the disposable
concession items not taxable.
We agree with plaintiff that the use of the Canteen definition
is appropriate in this case. We recognize that the definition was
formulated in the context of vending machine sales. However, the
applicability of the definition to the sale of food and beverages
at concession counters is reasonable.
Applying the Canteen definition to this case shows that
plaintiff's customers do not take their concession counter
purchases away from the premises when they take their purchases
into the viewing areas of the movie houses. The definition of
premises used in Canteen has two aspects. First, the Canteen court
stated that premises include "the area over which the vendor
exercises control." Canteen, 123 ll. 2d at 111. In this case, the
record shows that plaintiff controls both the lobby area, including
the concession counters, and the viewing areas in its movie houses.
Thus, under the control aspect of the Canteen definition of
premises, concession counter customers do not take their purchases
away from the concession counter premises.
The second aspect of the definition of premises used in
Canteen was "the area in which facilities for eating are provided--
that is, the area designated for, or devoted to, use in conjunction
with the business engaged in by the vendor." Canteen, 123 Ill. 2d
at 111. Plaintiff contends that it provides no such facilities.
We disagree. We believe that the viewing areas of plaintiff's
movie houses are such facilities. Even accepting plaintiff's
position that the primary purpose of the viewing areas in its movie
houses is for viewing movies and not for consuming food and
beverages, we think the viewing areas are also facilities for
consuming food and beverages sold by plaintiff at its concession
counters. Plaintiff virtually concedes that the facilities
required for consuming the food and beverages it sells at its
concession counters would essentially consist of a place to sit
down and consume the items (plaintiff consistently insists there
are no facilities to consume the food and beverages near its
concession counters because there are no chairs or benches there).
The viewing areas are filled with places to sit down and consume
the items purchased at the concession counters. Thus, plaintiff
can hardly contend in good faith that the viewing areas in its
movie houses are not designated for the consumption of the food and
beverages it sells at its concession counters. Plaintiff's
customers come to its movie houses to watch movies. This is done
in the viewing area of the movie houses. In conjunction with the
viewing of movies, plaintiff sells food and beverages to its
customers at its concession counters and allows and expects its
customers to consume these foods and beverages in the viewing
areas. Under the definition of premises used in Canteen, the
viewing areas of plaintiff's movie houses are therefore facilities
for use in conjunction with its concession counter business. Thus,
under the "facilities" aspect of the Canteen definition of
premises, consumption of the food and beverages plaintiff sells at
its concession counters occurs on the premises.
In sum, we conclude that the consumption of the food and
beverages that plaintiff sells at its concession counters occurs on
the premises. Accordingly, plaintiff s argument that its purchases
of the disposable concession items were not taxable because
customers consume the packaged food and beverages off the premises
fails.
Plaintiff's reliance on a decision of an appellate tax board
in Massachusetts (Hanover Mall Cinema, Inc. v. Commissioner of
Revenue, Mass. App. Tax Bd. Op. 1997--959 (October 17, 1997)) does
not change our conclusion. The administrative agency that rendered
the decision in that case construed a statute that was different
from the regulation at issue here. We are not persuaded that the
agency's analysis is applicable to this case.
Plaintiff next contends that its purchases of the disposable
concession items were not for use "in lieu of more durable kinds of
serving equipment" and therefore were not taxable under subsection
(c)(4). Plaintiff asserts that, in view of the nature of a movie
house concession counter, where the items purchased are carried
into the viewing area, it would be impractical and illogical for it
to use more durable serving equipment than the equipment it uses.
As all movie house operations are not identical, it is
conceivable that reasonable minds might differ over the
practicality of using more durable serving equipment in connection
with a particular serving operation. Plaintiff's opinion that
using more durable serving equipment at its concession counters
would be impractical or illogical does not bear upon the
determination that plaintiff has opted to use the disposable
concession items in lieu of more durable equipment. The regulation
requires no more than that. Consequently, we conclude that
plaintiff uses the disposable concession items "in lieu of more
durable kinds of serving equipment" as those terms are used in
subsection (c)(4) (86 Ill. Adm. Code 130.2070(c)(4) (1998)).
Accordingly, plaintiff s in-lieu-of argument fails.
Plaintiff next notes that subsection (c)(4) expresses an
assumption that the purchase of items such as the disposable
concession items is not taxable. Plaintiff argues that under this
assumption its purchase of the disposable concession items was not
taxable.
We disagree. Under the language of subsection (c)(4), the
purchase of containers and related items is plainly taxable when
the items are used by a vendor of food and beverages on its
premises in lieu of more durable kinds of serving equipment. We
have already established that plaintiff's purchases of the
disposable concession items were for the use of these items on its
premises and in lieu of more durable serving equipment. Thus, the
assumption set out in subsection (c)(4) has been overcome in this
case.
Finally, plaintiff contends that recent identical amendments
to the Retailers Occupation Tax Act and the Use Tax Act show that
the legislature never intended that a use tax should apply to its
purchases of the disposable concession items. The amendments that
plaintiff cites became effective August 1, 1997, and added the
following language to both the Retailers Occupation Tax Act and
the Use Tax Act:
"Nonreusable tangible personal property that is used by
persons engaged in the business of operating a restaurant,
cafeteria, or drive-in is a sale for resale when it is
transferred to customers in the ordinary course of business as
part of the sale of food or beverages and is used to deliver,
package, or consume food or beverages, regardless of where
consumption of the food or beverages occurs. Examples of
those items include, but are not limited to nonreusable, paper
and plastic cups, plates, baskets, boxes, sleeves, buckets or
other containers, utensils, straws, placemats, napkins, doggie
bags, and wrapping or packaging materials that are transferred
to customers as part of the sale of food or beverages in the
ordinary course of business." Pub. Act 90-289, eff. August 1,
1997 (amending 35 ILCS 105/2 and 35 ILCS 120/1 (West 1996)).
The parties agree that these amendments changed existing law
by making purchases of nonreusable tangible personal property such
as the cups, lids, tubs, straws, and napkins at issue in this case
nontaxable regardless of whether the consumption of the food and
beverages served in and with the items occurs on or off the
premises of a restaurant, cafeteria, or drive-in that purchases the
items. However, the parties disagree as to the effect of the
amendments, if any, on the taxation of plaintiff s purchases.
Plaintiff argues that the amendments show that the legislature
never intended that the purchase of items such as the disposable
concession items by a concession counter operator should be taxed.
Plaintiff maintains that this legislative intent is shown by the
fact that the amendments do not specifically refer to concession
counters. Plaintiff reasons that it was unnecessary for the
amendments to refer specifically to concession counters because
purchases by concession counters were not subject to taxation under
section 130.2070.
We agree with the parties that the amendments changed existing
law. There is a rebuttable presumption that the legislature
intends a change in the law when it amends a statute. Weast
Construction Co. v. Industrial Comm n, 102 Ill. 2d 337, 340 (1984).
Our examination of the record reveals nothing that rebuts that
presumption in this case.
However, we cannot agree with plaintiff that the change in the
law in question here shows that the legislature never intended that
plaintiff s purchases were subject to taxation. We find nothing in
the amendments that indicates that our construction of section
130.2070 of the Department s regulations, as applied to time
periods prior to the effective date of the amendments, should have
been different with respect to purchases such as plaintiff s.
Based on the foregoing, the judgment of the circuit court of
Du Page County is affirmed.
Affirmed.
COLWELL and THOMAS, JJ., concur.
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