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system to chill the air in the storage rooms where Interstate’s customers keep their perishable food items.  When the temperature of the chilled refrigerant ammonia rises to 0°, it is returned through the same closed loop cooling distribution system to the compressors and condensers of the central refrigeration system.  Upon receiving the warmed ammonia, Interstate re-chills it and sends it back through the closed loop system to its customers’ storage areas.

Interstate charges its customers based on the temperature required to be maintained in the refrigerated storage area and the quantity of frozen food product delivered by the customer.  Interstate purchased electricity from Indianapolis Power and Light to use in its Indianapolis facility and purchased electricity from PSI Energy to use in its Lafayette facility.  The electricity consumed at the facilities was predominately used for the operation of closed loop refrigeration equipment that was used to chill the ammonia and produce the conditioned air.

From 1993 to 1996, Interstate paid $91,566.85 in sales and use taxes for electricity used in its Indianapolis and Lafayette facilities.  Interstate sought a refund of those taxes pursuant to Indiana Code § 6-2.5-5-5.1, the consumption exemption, and the Department denied Interstate’s refund claim.  

Interstate filed this original tax appeal on June 25, 1998.  Interstate then filed a motion for summary judgment.  The Department filed its response opposing the summary judgment motion and made a cross motion for summary judgment in its favor.  The Court heard oral arguments.  Additional facts will be supplied as needed.

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