Delta Air Lines, Inc. v. State Board of Equalization

On March 8, 1983, plaintiff Delta Air Lines, Inc. (hereinafter Delta) brought an action pursuant to Revenue and Taxation Code section 6933 to recover sales and use taxes and interest totalling $37,687.68, paid under protest to the State Board of Equalization of the State of California (hereinafter Board). Plaintiff also sought declaratory relief and the imposition of a constructive trust. Board was the named defendant.

Trial was by the court, sitting without a jury. The parties stipulated to certain facts, presented agreed-upon exhibits and deposition testimony, as well as the testimony of two witnesses. The trial court awarded judgment to plaintiff Delta. Defendant Board has filed a timely notice of appeal from the judgment. We reverse.

Factual Summary

This dispute arose as the result of an audit of plaintiff’s records by the Board from 1978 to 1980. (§§ 7053, 7054). The background of the dispute can be simply stated. Fuel purchased in California by common carriers, used by them while conducting the business of interstate transportation, is subject to a limited degree of taxation by the State of California. The fuel necessary to reach the common carrier’s first…