A years-long legal dispute over franchise taxes on marine fuel sales in Texas has reached its conclusion, with the state’s highest court siding against a local bunker supplier. According to Ship & Bunker, the Supreme Court of Texas has rejected an appeal filed by NuStar Energy, which had sought a $2.4 million refund on franchise taxes tied to marine fuel sales at Texas ports.
Background: A Disputed Tax Position
Ship & Bunker reports that the refund claim covered tax years 2011 to 2013 and centered on NuStar’s sales of bunker fuel to nonresident purchasers at Texas ports. The company argued that these transactions — involving buyers who would consume the fuel outside the state — should not be classified as business conducted within Texas. When the original refund request was denied by authorities, NuStar escalated the matter through the courts in pursuit of its claim.
The Court’s Reasoning
After passing through multiple levels of the Texas judicial system over several years, the case was ultimately taken up by the state Supreme Court, which issued its ruling earlier this month. Justice John P. Devine, writing for the court, stated: “Goods are delivered in the statutory sense where the buyer receives them in the actual sense.”
The court found that NuStar had not met the legal threshold to successfully challenge the relevant administrative rules. Justice Devine added: “Because the challenged administrative rules are consistent with section 171.103(a)(1) as written, NuStar failed to overcome the presumption that the rules are valid. We therefore agree with the lower courts that those regulations withstand the taxpayer’s validity challenge.”
Ruling Upholds Lower Court Decisions
As reported by Ship & Bunker, the Supreme Court’s decision aligns with the findings of the lower courts and brings a definitive close to a case that had been working through the Texas legal system for a number of years.
Gulf Bunkering does not provide operational or security guidance. This article is for informational purposes only. Operators should consult flag state authorities, P&I clubs, and relevant advisories for decisions relating to transit planning.
Sources: Ship & Bunker
