South Carolina              
Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. Navin Patel for the partnership, d/b/a Goody's Restaurant

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Navin Patel for the partnership, d/b/a Goody's Restaurant
 
DOCKET NUMBER:
97-ALJ-17-0202-CC

APPEARANCES:
Nicholas P. Sipe, Esquire and Sean Bolchoz, Esquire for Petitioner

Randolph Hiller, Esquire for Respondent
 

ORDERS:

ORDER AND DECISION

STATEMENT OF THE CASE


This matter is before the Division pursuant to a citation issued by the Department of Revenue against Navin Patel for the partnership for failing to display penalty signs in violation of the provisions of S.C. Code Ann. § 12-21-2802 (Supp. 1996). After notice to the parties, a hearing was conducted on July 2, 1997. At the hearing, Respondent abandoned several defenses raised in the prehearing statements. The sole issue for determination is the appropriate penalty to be imposed.

Any issues raised in the proceedings or hearing of this matter not specifically addressed in this Order are deemed denied. ALJD Rule 29.

STIPULATED FACTS


At the hearing the parties stipulated to the following facts:

1. On October 8, 1996, a South Carolina State Law Enforcement Division (SLED) officer entered Goody's Restaurant located at 4609 White Horse Road in Greenville, South Carolina.

2. The location had five video machines with licenses affixed to them.

3. There were no signs attached to the machines or on the wall behind each machine stating penalties as required by S.C. Code Ann. § 12-21-2802 (Supp. 1996).

FINDINGS OF FACT


I make the following Findings of Fact, taking into consideration the burden on the parties to establish their respective cases by a preponderance of the evidence, and taking into account the credibility of the witnesses:

1. The five machines inspected by the SLED officer each had a Class III license and owner identification affixed to them.

2. The Class III licenses were licenses for video poker machines.

3. The officer and an employee, identified as the person in charge, searched the machines and on the wall behind the machines for a sign that states penalties as provided in S.C. Code Ann. §12-21-2802 (Supp. 1996). They were unable to locate any signs.

4. A preliminary findings report was issued by the officer and left with the person in charge of the location.

5. The name used on the preliminary findings report for the violation was obtained from the retail sales tax license at the location.

6. The business tax application for the location lists the names of the business owners as Navin Patel and Rajendra Bilgi, doing business as Goody's Restaurant. Additional information on the application indicates that the business is a partnership, each partner owning fifty percent.



CONCLUSIONS OF LAW

Based upon the Findings of Fact, I conclude, as a matter of law, the following:

1. The Administrative Law Judge Division is vested with jurisdiction pursuant to S.C. Code Ann. §12-4-30(D) (Supp. 1996) and S.C. Code Ann. § 1-23-320 (Supp. 1996).

2. S.C. Code Ann. § 12-21-2802 (Supp. 1996) states:

Each machine licensed under this article (Video Game Machines Act) or Article 19 must have a prominently displayed sign citing the penalties provided by Sections 12-21-2790, 12-21-2792, and 12-21-2794 on the wall above the machine or affixed prominently to the machine. The commission shall make these signs available free of charge.

3. The evidence is undisputed that the signs were not displayed on the wall above the machine or affixed prominently to the machine.

4. The statute does not specifically provide a penalty. The Department relies on S.C. Revenue Ruling #96-2 for assessment of a penalty under S.C. Code Ann. § 12-54-40(b)(3) (Supp. 1996). The revenue ruling is a statement of the Department's policy on penalty guidelines for violations of the Video Game Machines Act and the coin-operated devices laws.

5. Under the provisions of Revenue Ruling #96-2, the statutes providing penalties for violation of Section 12-21-2802 are Sections 12-54-40(b)(3) and 12-54-90.

6. S.C. Code Ann. §12-54-40(b)(3) (Supp. 1996) provides:

A person who is liable to obtain a license or purchase stamps for identification purposes, who fails to obtain or display the license properly, or who fails to affix the stamps properly, or fails to comply with statutory provisions, is subject to a penalty of not less than fifty dollars nor more than five hundred dollars for each failure. For failure to obtain or display a license as prescribed in Sections 12-21-2720 and 12-21-2730, the penalty is fifty dollars for each failure to comply.

7. S.C. Code Ann. § 12-54-90 (Supp. 1996) states in part:

(A) When a person fails, neglects, violates, or refuses to comply with a provision of law or regulation administered by the department, the department, in its discretion, may revoke one or more licenses held by the taxpayer within ten days of notification in writing of the taxpayer's failure to comply. The notification may be served by certified mail or personally.

8. Respondent argues that Section 12-54-40(b)(3) is inapplicable to the violation at issue and that Section 12-21-2802 does not contemplate a monetary penalty. The penalty provisions applicable to violations which do not contain a specific penalty are governed by other provisions of Title 12, Chapter 54 and include revocation of licenses.

9. Although other language in Section 12-54-40 refers to penalties imposed for specific conduct, there are a few subsections that are not related to the other provisions of the section. Section 12-54-40(b)(3) is one of those subsections. Even though this subsection is contained in a section dealing specifically with other unrelated penalty matters, it is a catchall provision and the language of Section 12-54-40(b)(3) is clear.

10. Section 12-54-40(b)(3) applies to a "person who is liable to obtain a license" and who "fails to comply with statutory provisions." Respondent is required to obtain a license under Title 12 and the partnership failed to comply with the statutory provisions of Section 12-21-2802. The penalty provision therefore applies.

11. The Department seeks to impose a fine in the amount of $300 for each of the five machines which failed to have the penalty sign posted for a total fine of $1,500. Under Section 12-54-40(b)(3), the penalty range is $50 to $500 for each failure.

12. As the finder of fact, it is the administrative law judge's prerogative "to impose an appropriate penalty based on the facts presented." Walker v. S.C. ABC Comm'n, 305 S.C. 209, 211, 407 S.E.2d 633, 634 (1991). In the present case, the administrative law judge has the authority to establish the monetary fine within the allowable range provided for by Section 12-54-40(b)(3). S.C. Code Ann. § 12-4-30(D) (Supp. 1996).

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby ORDERED, that Navin Patel and Rajendra Bilgi, partners doing business as Goody's Restaurant, violated the provisions of S.C. Code Ann. §12-21-2802 (Supp. 1996) by failing to have penalty signs displayed or attached to each of five Class III video machines. The appropriate penalty under the provisions of S.C. Code Ann. § 12-54-40(b)(3) (Supp. 1996) is $200 for each violation for a total of $1,000. The partners are ordered to pay the fine to the Department.

AND IT IS SO ORDERED.



ALISON RENEE LEE

Administrative Law Judge

July ___, 1997

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

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