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Adamar of New Jersey v. Director

October 1, 1997

ADAMAR OF NEW JERSEY T/A TROPWORLD CASINO & ENTERTAINMENT RESORT, PLAINTIFF,
v.
DIRECTOR, DIVISION OF TAXATION, DEFENDANT.; BALLY'S PARK PLACE INC., PLAINTIFF, V. DIRECTOR, DIVISION OF TAXATION, DEFENDANT; COMFORT INN-WEST, PLAINTIFF, V. DIRECTOR, DIVISION OF TAXATION, DEFENDANT.; GREAT BAY HOTEL AND CASINO T/A SANDS HOTEL AND CASINO, PLAINTIFF, V. DIRECTOR, DIVISION OF TAXATION, DEFENDANT.; HARRAH'S ATLANTIC CITY, PLAINTIFF, V. DIRECTOR, DIVISION OF TAXATION, DEFENDANT.; HYATT CORPORATION T/A HYATT REGENCY PRINCETON, PLAINTIFF, V. DIRECTOR, DIVISION OF TAXATION, DEFENDANT.; RESORTS INTERNATIONAL HOTEL, INC., PLAINTIFF, V. DIRECTOR, DIVISION OF TAXATION, DEFENDANT.; TRUMP CASTLE HOTEL & CASINO, PLAINTIFF, V. DIRECTOR, DIVISION OF TAXATION, DEFENDANT.



The opinion of the court was delivered by: Kuskin

In these consolidated appeals, each of the plaintiffs seeks a refund of New Jersey sales and use taxes paid by it in connection with the purchase of "hotel amenities." The amenities include, without limitation: writing pads; stationery; postcards; pens; matches; sewing kits; shoeshine cloths or pads; and toiletries including soap, shampoo, conditioner, shower caps, lotion, shower gel and mouthwash.

The parties have filed cross-motions for summary judgment based on stipulated facts. These motions require interpretation of the following provisions of the New Jersey Sales and Use Tax Act, N.J.S.A. 54:32B-1 to -29:

(a) N.J.S.A. 54:32B-3(a) which imposes a sales tax of six percent on "the receipts from every retail sale of tangible personal property, except as otherwise provided in this act;"

(b) N.J.S.A. 54:32B-6(A) which imposes a compensating use tax, also of six percent, for the use in New Jersey "of any tangible personal property purchased at retail;"

(c) N.J.S.A. 54:32B-2(b) which defines "purchase at retail" as "[a] purchase by any person at a retail sale;" and

(d) N.J.S.A. 54:32B-2(e)(1) which, in relevant part, defines a "retail sale" as "[a] sale of tangible personal property to any person for any purpose, other than (A) for resale either as such or as converted into or as a component part of a product produced for sale by the purchaser ... ."

Plaintiffs acknowledge that the hotel amenities are tangible personal property but contend that their purchases were not "retail sales." Specifically, plaintiffs assert that they purchased hotel amenities for the purpose of resale either "as such" or as "a component part of a product [(hotel rooms)] produced for sale by [plaintiffs]."

For all tax periods in issue, each plaintiff operated a "hotel" as that term is defined in N.J.S.A. 54:32B-2(j) (that is, "[a] building ... which is regularly used and kept open as such for the lodging of guests"). Each plaintiff collected, and remitted to the Director, a sales tax of six percent on the rents charged for hotel room occupancy pursuant to N.J.S.A. 54:32B-3(d), which imposes such tax on "the rent for every occupancy of a room or rooms in a hotel in this State." The customary practice for hotels such as those operated by the plaintiffs is to provide hotel guests with at least some of the hotel amenities, and each plaintiff did so. The cost of the amenities provided by each plaintiff was low in relation to the room rent charged by each for a hotel room. The bills issued by each plaintiff to its guests did not include separate charges for the hotel amenities, but did contain separate charges for the sales tax of six percent imposed on room rents.

The plaintiffs paid the sales or use tax on their respective purchases of hotel amenities and filed claims for refunds as follows:

PLAINTIFF REFUND AMOUNT TIME PERIOD

Adamar of New Jersey $14,945.02 01/01/92 - 03/31/95

$5,166.72 03/01/92 - 07/31/96

Bally's Park Place $84,549.32 10/01/90 - 06/30/95

Comfort Inn-West $1,404.52 07/01/93 - 07/31/95

Great Bay Hotel & Casino $13,694.58 10/01/89 - 12/31/94

Harrah's Atlantic City $15,822.37 01/01/90 - 12/31/94

Hyatt Corporation $11,756.02 01/01/92 - 08/31/95

Resorts International Hotel, Inc. $38,211.09 ...


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