CourtListener 10734302

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FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
10-NOV-2025
08:12 AM
Dkt. 128 OP

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

---o0o---

IN THE MATTER OF THE TAX APPEAL OF HAWAIIAN AIRLINES, INC.,
Appellant-Appellant/Cross-Appellee,
v.
DEPARTMENT OF TAXATION, STATE OF HAWAI#I,
Appellee-Appellee/Cross-Appellant

NO. CAAP-XX-XXXXXXX

APPEAL FROM THE TAX APPEAL COURT
(CASE NO. 1CTX-XX-XXXXXXX)

NOVEMBER 10, 2025

LEONARD, PRESIDING JUDGE, HIRAOKA AND WADSWORTH, JJ.

OPINION OF THE COURT BY HIRAOKA, J.

Hawaiian Airlines, Inc. flies jet aircraft manufactured

by Boeing. It services and maintains its Boeing aircraft with

parts it buys from Boeing under a Customer Services General Terms
Agreement Relating to Boeing Aircraft. Hawaiian agreed to "be
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

responsible for and pay all" general excise tax (GET) levied on

Boeing for aircraft parts sold to Hawaiian.

In 2021 the Hawai#i Department of Taxation notified

Boeing it owed additional GET on aircraft part sales to Hawaiian.

Hawaiian paid the GET for Boeing under protest. Hawaiian asked

the Department for a refund. It explained that "amounts received

by Boeing for sale of aircraft parts" are "maintenance costs"

exempt from GET under Hawaii Revised Statutes (HRS)

§ 237-24.9(a).1 The Department did not respond.

Hawaiian sued the Department for a refund in Tax Appeal

Court.2 The Department challenged jurisdiction. The court ruled

it had jurisdiction.3 Hawaiian and the Department filed cross-

motions for summary judgment. The court granted the Department's

motion, denied Hawaiian's motion, and entered a Final Judgment

for the Department against Hawaiian.4 Hawaiian appeals, and the

Department cross-appeals.5

We hold: (A) the Tax Appeal Court had jurisdiction

over Hawaiian's claim for a refund of GET it paid on Boeing's

1
The relevant text of the statute appears in section IV.C.1 below.
2
HRS § 232-1 (2017) gives a person contractually obligated to pay a
tax assessed against another the right of appeal "as if the tax were assessed
against the person."
3
The Honorable Gary W.B. Chang presided.
4
The Honorable Kevin T. Morikone presided.
5
Appeals from decisions of the Tax Appeal Court have statutory
priority. HRS § 232-19 (2017), amended by, 2025 Haw. Sess. Laws Act 10, § 2
at 14.

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behalf and the claim was not subject to abatement; (B) the claim

was timely; and (C) Boeing's "gross proceeds of sales" of

aircraft parts to Hawaiian, taxable under HRS § 237-13(2) (2001 &

Supp. 2013),6 are not "amounts received from the servicing and

maintenance of aircraft," otherwise taxable under HRS § 237-13(6)

but exempt under HRS § 237-24.9 (2001). We affirm the Final

Judgment.

I. BACKGROUND

This dispute arose from Boeing's Hawai#i GET returns

for tax years 2013-2018. Relevant to this appeal, the Hawai#i

General Excise Tax Law, HRS Chapter 237, provided:

There is hereby levied and shall be assessed and collected
annually privilege taxes against persons on account of their
business and other activities in the State measured by the
application of rates against values of products, gross
proceeds of sales, or gross income, whichever is specified,
as follows:

. . . .
(2) Tax on business of selling tangible personal
property; producing.
(A) Upon every person engaging or continuing
in the business of selling any tangible
personal property whatsoever . . . , there
is likewise hereby levied, and shall be
assessed and collected, a tax equivalent
to four per cent of the gross proceeds of
sales of the business . . . .

. . . .
(6) Tax on service business.
(A) Upon every person engaging or continuing
within the State in any service business
or calling including professional services
not otherwise specifically taxed under
this chapter, there is likewise hereby

6
The statute was amended in 2014, 2015, and 2018, but the relevant
language was not changed.

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levied and shall be assessed and collected
a tax equal to four per cent of the gross
income of the business[.]

HRS § 237-13.

Boeing claimed an exemption under HRS § 237-24.9 for

gross proceeds of its sale of aircraft parts to Hawaiian and

others. Hawaiian Airlines, Inc. v. Dep't of Tax'n, 155 Hawai#i

197, 201, 559 P.3d 283, 287 (2024) (HA I). The Department

disallowed the exemption. Boeing and Hawaiian challenged the

Department's position. The Department eventually issued a notice

of proposed assessment (NOPA) to Boeing. The NOPA told Boeing it

owed $1,965,290.57 in additional GET. HA I, 155 Hawai#i at 203,

559 P.3d at 289.7

Boeing informed Hawaiian that Hawaiian's share of the

GET under the Agreement was $1,624,482.75.8 Boeing asked

Hawaiian to pay that amount to Boeing under the Agreement or to

"the State of Hawaii directly on our behalf." Id. Hawaiian paid

the State for Boeing. Hawaiian informed the Department the GET

"is being paid UNDER PROTEST pursuant to HRS Sec. 40-35" because

Hawaiian's payments to Boeing for aircraft parts were exempt from

GET under HRS § 237-24.9. Id.

Hawaiian's payment was submitted online on June 9,

2021. Hawaiian sued the Department in Tax Appeal Court the next

7
Neither the NOPA nor the Department's Notice of Final Assessment
to Boeing are in the record of this appeal.
8
The remaining balance "represented GET taxes owed for Boeing's
sale of retail parts to other customers. Boeing's portion was not paid under
protest." HA I, 155 Hawai#i at 203, 559 P.3d at 289.

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day (the Payment-Under-Protest Action). The Department moved to

dismiss. The court granted the motion "on the basis of this

court lacking subject matter jurisdiction." HA I, 155 Hawai#i at

209, 559 P.3d at 295. Hawaiian appealed. We affirmed. Hawaiian

Airlines, Inc. v. Dep't of Tax'n, No. CAAP-XX-XXXXXXX, 2024 WL

1129759 (Haw. App. Mar. 15, 2024) (SDO), vacated, 155 Hawai#i

197, 559 P.3d 283 (2024).

On certiorari, the supreme court held the Tax Appeal

Court had jurisdiction over the Payment-Under-Protest Action

because "a NOPA qualifies as a 'formal administrative decision'

required . . . to invoke HRS § 40-35 jurisdiction." HA I, 155
Hawai#i at 213, 559 P.3d at 299. The supreme court remanded the

case "for further proceedings consistent with [its] opinion."

Id. at 215, 559 P.3d at 301. We take judicial notice9 that

nothing substantive has happened in the Tax Appeal Court since

the Payment-Under-Protest Action was remanded.10

Meanwhile, on December 8, 2022 (while Hawaiian's appeal

from the Payment-Under-Protest Action was pending), Hawaiian

filed the action below. Hawaiian sought "an order declaring the

payment of $1,624,482.75 . . . to be an unlawful government

realization and ordering a refund of the same, together with

statutory interest, to [Hawaiian.]" The Department's answer

9
See Rule 201, Hawaii Rules of Evidence, Chapter 626, Hawaii
Revised Statutes (2016).
10
The Tax Appeal Court held a status conference on March 17, 2025,
and set a further status conference for March 16, 2026. Judiciary Information
Management System case no. 1CTX-XX-XXXXXXX, dkt. 175. It appears the court
and the parties are awaiting our disposition of this appeal. Id.

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challenged subject matter jurisdiction and asserted the statute

of limitations as an affirmative defense.

Hawaiian moved for partial summary judgment on the Tax

Appeal Court's jurisdiction, and sought a ruling that the refund

claim was not time-barred. The court granted the motion,

concluding "it has subject matter jurisdiction over this

cause."11 The written order did not address the timeliness

issue, but the court stated during the hearing that Hawaiian's

"claim is timely filed."

Hawaiian and the Department then filed cross-motions

for summary judgment. The Tax Appeal Court granted the

Department's motion and denied Hawaiian's motion. A Final

Judgment for the Department against Hawaiian was entered on

July 15, 2024. Hawaiian appeals, and the Department cross-

appeals.

II. POINTS OF ERROR

Hawaiian contends Boeing was entitled to an exemption

from GET under HRS § 237-24.9, and the Tax Appeal Court erred by

denying Hawaiian's motion for summary judgment and granting the

Department's motion for summary judgment.

The Department contends (1) the Tax Appeal Court did

not have jurisdiction over Hawaiian's refund claim while the

Payment-Under-Protest Action was on appeal; and (2) the refund

claim was untimely.

11
The Honorable Gary W.B. Chang presided.

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III. STANDARDS OF REVIEW

A. Summary Judgment

We review the grant or denial of summary judgment de

novo. Tax Found. of Haw. v. State, 144 Hawai#i 175, 185, 439

P.3d 127, 137 (2019). Summary judgment is appropriate if the

record shows there is no genuine issue as to any material fact

and the moving party is entitled to judgment as a matter of law.

Id. at 186, 439 P.3d at 138.

B. Subject Matter Jurisdiction

The existence of subject matter jurisdiction is a

question of law reviewed de novo under the right/wrong standard.

Tax Found., 144 Hawai#i at 185, 439 P.3d at 137.

C. Statutory Interpretation

Interpretation of a statute is a question of law

reviewed de novo. Tax Found., 144 Hawai#i at 185, 439 P.3d at

137.
When construing a statute, our foremost obligation is to
ascertain and give effect to the intention of the
legislature, which is to be obtained primarily from the
language contained in the statute itself. And we must read
statutory language in the context of the entire statute and
construe it in a manner consistent with its purpose.

State v. Sing, 154 Hawai#i 377, 382, 550 P.3d 1235, 1240 (2024).

"Laws in pari materia, or upon the same subject matter,

shall be construed with reference to each other. What is clear

in one statute may be called upon in aid to explain what is

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doubtful in another." Sing, 154 Hawai#i at 382, 550 P.3d at 1240

(quoting HRS § 1-16 (1993)).

IV. DISCUSSION

We address the Department's cross-appeal first, because

the issues raised are potentially dispositive.

A. The Tax Appeal Court had jurisdiction over
the GET refund claim; abatement did not
apply.

The Department purported to challenge subject matter

jurisdiction. The Tax Appeal Court has jurisdiction over appeals

involving GET refunds. HRS § 232-14.5 (Supp. 2021). The

Department didn't use the term, but it actually argued this case

should have been abated in favor of the Payment-Under-Protest

Action.

Abatement is "the suspension or defeat of a pending

action for a reason unrelated to the merits of the claim[.]"

Cnty. of Haw. v. C&J Coupe Fam. Ltd. P'ship, 119 Hawai#i 352,
369, 198 P.3d 615, 632 (2008) (brackets omitted). Abatement is a
remedy; it does not implicate subject matter jurisdiction. Id.

"[W]here the party is the same in a pending suit, and

the cause is the same and the relief is the same, a good plea in

abatement lies." C&J Coupe, 119 Hawai#i at 371, 198 P.3d at 634.

This case involves the same parties and relief requested in the

Payment-Under-Protest Action. But the cause is different.

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The Payment-Under-Protest Action was filed under HRS

§ 40-35 "to recover moneys paid under protest." HA I, 155

Hawai#i at 199 & n.1, 559 P.3d at 285 & n.1. The money at issue

is being held in the litigated claims fund under HRS § 40-35(c)

(2009). Should Hawaiian ultimately prevail in the Payment-Under-

Protest Action, Hawaiian would be "paid the amount of the

judgment out of the litigated claims fund[.]" HRS § 40-35(c).

This action was filed under HRS § 232-14.5, after the

Department didn't respond to Hawaiian's claim for a refund. If

Hawaiian is entitled to a refund, it doesn't appear to matter

where the money would come from; the State would simply owe

Hawaiian the amount of the refund.

There is another reason abatement does not apply. The

reason to abate an action in favor of a prior pending action "is,

that the subsequent one is unnecessary and therefore oppressive

and vexatious." Oahu Lumber & Bldg. Co. v. Ah Yok, 11 Haw. 416,
418, 1898 WL 1553, at *2 (Haw. Rep. 1898). The Tax Appeal Court

dismissed the Payment-Under-Protest Action for lack of
jurisdiction. The supreme court vacated and remanded to the Tax

Appeal Court. The substantive issues in that case have not yet

been litigated. They have in this one. Thus, this action is

neither unnecessary nor vexatious, and is arguably the most

expedient way to resolve whether Boeing is entitled to the HRS

§ 237-24.9 exemption.

We hold the Tax Appeal Court had jurisdiction over

Hawaiian's claim for a refund of the GET it paid for Boeing, and

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this case is not subject to abatement in favor of the Payment-

Under-Protest Action.

B. The GET refund claim was timely.

HRS § 232-14.5 applies to "tax refund claims for all

taxes administered by the department of taxation." A written

notice of appeal to the Tax Appeal Court must be filed "within

thirty days after notice of the denial of the claim." HRS

§ 232-14.5(a). Hawaiian claimed a refund by letter dated May 19,

2022. HA I, 155 Hawai#i at 211 n.12, 559 P.3d at 297 n.12. The

Department conceded it "did not issue an official formal written

notice of denial" to Hawaiian. HRS § 232-14.5 imposes no

deadline to sue for a refund if the Department doesn't issue

notice that the refund is denied.12

If the Department does not issue notice of denial, a

refund appeal may be filed with the Tax Appeal Court "at any time

after one hundred eighty days from the date that the claim was

filed[.]" HRS § 232-14.5(b). Thus, the earliest Hawaiian could

have filed its refund claim was November 15, 2022. This case was
filed on December 8, 2022, in compliance with HRS § 232-14.5(b).

The Department relies on HRS § 232-14.5(c) (Supp.

2021), which states: "Any claimed tax refund or credit appealed

pursuant to this section shall be awarded only if the claim

12
The Department incorrectly argues that the Tax Appeal Court
required the Department to provide notice of a denial of a refund claim. It
did not; the court just recognized that no deadline is triggered if the
Department doesn't notify the taxpayer their refund claim is denied.

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therefor was filed within the applicable statutory period of

limitation." The Department contends the applicable period is

set by HRS § 237-40(d)(1) (2017), which provides:

If an annual return is timely filed, or is filed within
three years after the date prescribed for filing the annual
return, then the credit or refund shall be claimed within
three years after the date the annual return was filed or
the date prescribed for filing the annual return, whichever
is later.

Boeing timely filed its GET returns for tax years 2013-

2018. The returns did not report liability for, and Boeing did

not pay, the amounts disputed in this case. Hawaiian's payment

for Boeing was based on the NOPA for additional GET. Boeing — or

Hawaiian on Boeing's behalf — couldn't claim a refund for amounts

Boeing never paid. HRS § 237-40(d)(1) does not apply under the

circumstances of this case.

We hold that Hawaiian's claim for a refund of GET it

paid on Boeing's behalf was timely filed under HRS § 232-14.5(b).

We now address Hawaiian's appeal.

C. The gross proceeds of Boeing's aircraft part
sales to Hawaiian are not "amounts received
from the servicing and maintenance of
aircraft . . . ."

Before determining what is excluded from GET, we

examine what is included. HRS § 237-13 levies GET on "persons on

account of their business and other activities in the State

measured by the application of rates against values of products,

gross proceeds of sales, or gross income, whichever is

specified[.]"

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The nine subsections of HRS § 237-13 specify rates

against values for (1) manufacturing; (2) selling tangible

personal property; (3) contracting; (4) operating theaters and

similar venues; (5) sales representatives and purchasing agents;

(6) service businesses; (7) insurance producers; (8) sugar

benefit payments; and (9) "any business, trade, activity,

occupation, or calling not included in the preceding paragraphs

or any other provisions of" HRS Chapter 237.

At issue in this case is the levy on Boeing of "four

per cent of the gross proceeds of sales[13]" of tangible personal
property under HRS § 237-13(2). Hawaiian contends that Boeing's

gross proceeds of sales of aircraft parts are exempt from GET by

HRS § 237-24.9.

1. The plain language of HRS § 237-24.9 does not
apply to Boeing's aircraft part sales.

HRS § 237-24.9 (2001) provides, in relevant part:

(a) This [GET] chapter shall not apply to amounts received
from the servicing and maintenance of aircraft . . . .

(b) As used in this section:

"Aircraft" means any craft . . . engaged in . . .
scheduled commercial use . . . that operates with two or
more jet engines.

"Aircraft service and maintenance" means all scheduled
and unscheduled tasks performed within an aircraft service
and maintenance facility . . . .

"Aircraft service and maintenance facility" means a
facility for aircraft service and maintenance that is not
less than thirty thousand square feet in area . . . .

13
"Gross proceeds of sale" means "the value actually proceeding from
the sale of tangible personal property without any deduction on account of the
cost of property sold or expenses of any kind." HRS § 237-3(a) (2017).

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. . . .
"Maintenance" means the upkeep of aircraft engines,
hydraulic and electrical systems, and all other components
which are an integral part of an aircraft . . . .

(Emphasis added.)

Boeing sells aircraft parts to Hawaiian; it doesn't

service or maintain Hawaiian's aircraft. Hawaiian argues that

HRS § 237-24.9 "uses the passive voice – without reference to any

specific actor – and thus allows for someone not mentioned [that

is, Hawaiian,] to have performed the maintenance activity."

Hawaiian's argument ignores the structure of HRS § 237-13 and the

definitions in HRS § 237-7, which we read in pari materia with

HRS § 237-24.9.

A taxpayer who receives amounts from the servicing and

maintenance of aircraft is liable to pay GET based on "four per

cent of the gross income of the business" under the HRS

§ 237-13(6) tax on "service business or calling" — except to the

extent the taxpayer qualifies for the HRS § 237-24.9 exemption.

"Service business or calling" includes all activities
engaged in for other persons for a consideration which
involve the rendering of a service, including professional
and transportation services, as distinguished from the sale
of tangible property or the production and sale of tangible
property.

HRS § 237-7 (2017) (emphasis added). Read together with these

other sections of the GET Law, HRS § 237-24.9 applies only to

taxpayers who service and maintain multi-engine jet aircraft for

others (within a thirty-thousand-square-foot-or-more facility),

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"as distinguished from the sale of tangible property or the

production and sale of tangible property."

Hawaiian nevertheless argues that a "better reading of

the statute is that HRS [§] 237-24.9 exempts from GET the

purchase of aircraft parts as a necessary and included component

of 'the servicing and maintenance of aircraft'" because "Hawaiian

and Boeing together engage in 'the servicing and maintenance of

aircraft' within the meaning of Haw. Rev. Stat. § 237-24.9."

(Emphasis added.)

Hawaiian conflates Boeing's production and sale of

aircraft parts with Hawaiian's purchase of those parts. GET is

levied on sellers of tangible personal property under HRS

§ 237-13(2) ("Tax on business of selling tangible personal

property"). Not buyers. Even if the seller passes its GET

expense on to a buyer as part of the sales price — or, as in this

case, by contract — the tax remains assessed on, and collected

from, the seller.

Boeing sells aircraft parts; it must pay "four per cent

of the gross proceeds of sales" as GET under HRS § 237-13(2).

Hawaiian buys Boeing parts; HRS § 237-24.9 does not apply to

Hawaiian because Hawaiian has no HRS § 237-13(2) GET liability on

aircraft part purchases from which to be exempt. Hawaiian's

obligation to indemnify Boeing for Boeing's GET liability is a

function of the Agreement, not HRS § 237-13(2).

We hold that Boeing's "gross proceeds of sales" of

aircraft parts, taxable under HRS § 237-13(2), are not "amounts

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received from the servicing and maintenance of aircraft,"

otherwise taxable under HRS § 237-13(6) but exempt under HRS

§ 237-24.9. Accordingly, Hawaiian is not entitled to a refund of

the GET it paid for Boeing on Boeing's aircraft parts sales to

Hawaiian.

2. The Use Tax exemption for using imported
material, parts, or tools for aircraft
service and maintenance does not require a
parallel GET exemption.

Hawaiian argues: the GET Law and the Use Tax Law (HRS

Chapter 238) impose "complementary taxes"; the law creating HRS

§ 237-24.9 created a parallel exemption under the Use Tax Law; so

"[i]f the sale of a product is exempt from GET, its import must

also be exempt from the Use Tax to avoid discrimination against

interstate commerce that is forbidden by the Commerce Clause of

the U.S. Constitution." See U.S. Const. art. I, § 8, cl. 3. But

the converse is not true. When use of an imported item is exempt

from Use Tax, a sale of the same item need not also be exempt

from GET because the Use Tax exemption does not burden interstate
commerce.

The Commerce Clause "generally prohibits states from

levying taxes that . . . discriminate against[] interstate

commerce." CompUSA Stores, L.P. v. Dep't of Tax'n, 142 Hawai#i

304, 311, 418 P.3d 645, 652 (2018).

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As relevant here, HRS § 238-2 (2017) provides:

There is hereby levied an excise tax on the use in this
State of tangible personal property which is imported by a
taxpayer in this State . . . .

HRS § 238-2 discriminates against interstate commerce

because it taxes the use of property imported into Hawai#i, but

doesn't tax the use of property purchased in Hawai#i. CompUSA

Stores, 142 Hawai#i at 312, 418 P.3d at 653. To avoid violating

the Commerce Clause, a use tax must be "the rough equivalent of

an identifiable and 'substantially similar' tax on intrastate

commerce[.]" Id. (quoting Or. Waste Sys., Inc. v. Dep't of Env't

Quality, 511 U.S. 93, 102-03, 114 S. Ct. 1345, 128 L. Ed.2d 13

(1994)).

Here, the substantially similar tax on intrastate

commerce is the GET. See CompUSA Stores, 142 Hawai#i at 313, 418

P.3d at 654 ("The interstate use tax in Hawai#i is designed to

complement the intrastate GET."). To survive constitutional

scrutiny a tax on interstate commerce must "roughly approximate[]

the amount taxed on intrastate commerce without exceeding it."

Id. at 314, 418 P.3d at 655 (emphasis added) (citing Or. Waste,

511 U.S. at 102-03, 114 S. Ct. 1345).

The law that enacted HRS § 237-24.9 also amended the

Use Tax Law's definition of "use." See 1997 Haw. Sess. Laws

Act 107, § 4 at 205-06. After the law was enacted, HRS § 238-1

(Supp. 1998) provided:
[T]he term "use" shall not include:
. . . .

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(8) The use of material, parts, or tools imported or
purchased by a person licensed under chapter 237
[(the GET Law)] which are used for aircraft
service and maintenance, or the construction of
an aircraft service and maintenance facility as
those terms are defined in section 237–24.9.

Thus, if Hawaiian purchased material, parts, or tools

in another state, shipped them to Hawai#i, and used them for

aircraft service and maintenance, it would not have to pay Use

Tax. If Hawaiian purchased the same material, parts, or tools

locally, it would ordinarily pay the seller's GET as part of the

sales price. The interstate Use Tax would not exceed the

parallel intrastate GET. There would be no discriminatory burden

on interstate commerce, and no Commerce Clause violation.

CompUSA Stores, 142 Hawai#i at 314, 418 P.3d at 655. The Use Tax

exemption for using imported material, parts, or tools to service

and maintain aircraft does not discriminate against interstate

commerce, and thus does not require a parallel GET exemption.

3. Courts cannot construe a statute to achieve a
public policy goal not authorized by the
statute's language.

Hawaiian argues that not adopting its "better reading"
of HRS § 237-24.9, given the Use Tax exemption for imported

material, parts, or tools used to service and maintain aircraft,

"penalizes local sellers and encourages airlines to obtain their

parts from out of state." It cites statutes from sixteen states

that "explicitly exempt aircraft parts from their sales tax if

sold to a federally licensed air carrier." It claims there would

be "a perverse incentive for airlines flying to Hawaii to locate

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and staff maintenance facilities outside of Hawaii and in a state

with a favorable sales tax exemption." Those are matters for

consideration by the legislature. See Haw. Insurers Council v.

Lingle, 120 Hawai#i 51, 69-70, 201 P.3d 564, 582-83 (2008) ("The

power of taxation is essentially a legislative power."). The

courts' role is to ascertain and give effect to the legislature's

intention, which we obtain from the language of the statute.

Sing, 154 Hawai#i at 382, 550 P.3d at 1240.

V. CONCLUSION

Boeing's aircraft part sales to Hawaiian do not qualify

for the HRS § 237-24.9 exemption because Boeing's "gross proceeds

of sales" were not "received from the servicing and maintenance

of aircraft." Hawaiian is not entitled to a refund of the GET it

paid for Boeing. The July 15, 2024 Final Judgment for the

Department against Hawaiian is affirmed.

On the briefs:
/s/ Katherine G. Leonard
Thomas Yamachika, Presiding Judge
for Appellant-Appellant/
Cross-Appellee Hawaiian /s/ Keith K. Hiraoka
Airlines, Inc. Associate Judge

Nathan S.C. Chee, /s/ Clyde J. Wadsworth
Janine R. Udui, Associate Judge
Deputy Attorneys General,
State of Hawai#i,
for Appellee-Appellee/
Cross-Appellant
Department of Taxation,
State of Hawai#i.

FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
10-NOV-2025
08:12 AM
Dkt. 128 OP

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

---o0o---

IN THE MATTER OF THE TAX APPEAL OF HAWAIIAN AIRLINES, INC.,
Appellant-Appellant/Cross-Appellee,
v.
DEPARTMENT OF TAXATION, STATE OF HAWAI#I,
Appellee-Appellee/Cross-Appellant

NO. CAAP-XX-XXXXXXX

APPEAL FROM THE TAX APPEAL COURT
(CASE NO. 1CTX-XX-XXXXXXX)

NOVEMBER 10, 2025

LEONARD, PRESIDING JUDGE, HIRAOKA AND WADSWORTH, JJ.

OPINION OF THE COURT BY HIRAOKA, J.

Hawaiian Airlines, Inc. flies jet aircraft manufactured

by Boeing. It services and maintains its Boeing aircraft with

parts it buys from Boeing under a Customer Services General Terms

Agreement Relating to Boeing Aircraft. Hawaiian agreed to "be
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

responsible for and pay all" general excise tax (GET) levied on

Boeing for aircraft parts sold to Hawaiian.

In 2021 the Hawai#i Department of Taxation notified

Boeing it owed additional GET on aircraft part sales to Hawaiian.

Hawaiian paid the GET for Boeing under protest. Hawaiian asked

the Department for a refund. It explained that "amounts received

by Boeing for sale of aircraft parts" are "maintenance costs"

exempt from GET under Hawaii Revised Statutes (HRS)

§ 237-24.9(a).1 The Department did not respond.

Hawaiian sued the Department for a refund in Tax Appeal

Court.2 The Department challenged jurisdiction. The court ruled

it had jurisdiction.3 Hawaiian and the Department filed cross-

motions for summary judgment. The court granted the Department's

motion, denied Hawaiian's motion, and entered a Final Judgment

for the Department against Hawaiian.4 Hawaiian appeals, and the

Department cross-appeals.5

We hold: (A) the Tax Appeal Court had jurisdiction

over Hawaiian's claim for a refund of GET it paid on Boeing's

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behalf and the claim was not subject to abatement; (B) the claim

was timely; and (C) Boeing's "gross proceeds of sales" of

aircraft parts to Hawaiian, taxable under HRS § 237-13(2) (2001 &

Supp. 2013),6 are not "amounts received from the servicing and

maintenance of aircraft," otherwise taxable under HRS § 237-13(6)

but exempt under HRS § 237-24.9 (2001). We affirm the Final

Judgment.

I. BACKGROUND

This dispute arose from Boeing's Hawai#i GET returns

for tax years 2013-2018. Relevant to this appeal, the Hawai#i

General Excise Tax Law, HRS Chapter 237, provided:

. . . .
(2) Tax on business of selling tangible personal
property; producing.

(A) Upon every person engaging or continuing
in the business of selling any tangible
personal property whatsoever . . . , there
is likewise hereby levied, and shall be
assessed and collected, a tax equivalent
to four per cent of the gross proceeds of
sales of the business . . . .

. . . .
(6) Tax on service business.

(A) Upon every person engaging or continuing
within the State in any service business
or calling including professional services
not otherwise specifically taxed under
this chapter, there is likewise hereby

6
The statute was amended in 2014, 2015, and 2018, but the relevant
language was not changed.

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levied and shall be assessed and collected
a tax equal to four per cent of the gross
income of the business[.]

HRS § 237-13.

Boeing claimed an exemption under HRS § 237-24.9 for

gross proceeds of its sale of aircraft parts to Hawaiian and

others. Hawaiian Airlines, Inc. v. Dep't of Tax'n, 155 Hawai#i

197, 201, 559 P.3d 283, 287 (2024) (HA I). The Department

disallowed the exemption. Boeing and Hawaiian challenged the

Department's position. The Department eventually issued a notice

of proposed assessment (NOPA) to Boeing. The NOPA told Boeing it

owed $1,965,290.57 in additional GET. HA I, 155 Hawai#i at 203,

559 P.3d at 289.7

Boeing informed Hawaiian that Hawaiian's share of the

GET under the Agreement was $1,624,482.75.8 Boeing asked

Hawaiian to pay that amount to Boeing under the Agreement or to

"the State of Hawaii directly on our behalf." Id. Hawaiian paid

the State for Boeing. Hawaiian informed the Department the GET

"is being paid UNDER PROTEST pursuant to HRS Sec. 40-35" because

Hawaiian's payments to Boeing for aircraft parts were exempt from

GET under HRS § 237-24.9. Id.

Hawaiian's payment was submitted online on June 9,

2021. Hawaiian sued the Department in Tax Appeal Court the next

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day (the Payment-Under-Protest Action). The Department moved to

dismiss. The court granted the motion "on the basis of this

court lacking subject matter jurisdiction." HA I, 155 Hawai#i at

209, 559 P.3d at 295. Hawaiian appealed. We affirmed. Hawaiian

Airlines, Inc. v. Dep't of Tax'n, No. CAAP-XX-XXXXXXX, 2024 WL

1129759 (Haw. App. Mar. 15, 2024) (SDO), vacated, 155 Hawai#i

197, 559 P.3d 283 (2024).

On certiorari, the supreme court held the Tax Appeal

Court had jurisdiction over the Payment-Under-Protest Action

because "a NOPA qualifies as a 'formal administrative decision'

required . . . to invoke HRS § 40-35 jurisdiction." HA I, 155

Hawai#i at 213, 559 P.3d at 299. The supreme court remanded the

case "for further proceedings consistent with [its] opinion."

Id. at 215, 559 P.3d at 301. We take judicial notice9 that

nothing substantive has happened in the Tax Appeal Court since

the Payment-Under-Protest Action was remanded.10

Meanwhile, on December 8, 2022 (while Hawaiian's appeal

from the Payment-Under-Protest Action was pending), Hawaiian

filed the action below. Hawaiian sought "an order declaring the

payment of $1,624,482.75 . . . to be an unlawful government

realization and ordering a refund of the same, together with

statutory interest, to [Hawaiian.]" The Department's answer

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challenged subject matter jurisdiction and asserted the statute

of limitations as an affirmative defense.

Hawaiian moved for partial summary judgment on the Tax

Appeal Court's jurisdiction, and sought a ruling that the refund

claim was not time-barred. The court granted the motion,

concluding "it has subject matter jurisdiction over this

cause."11 The written order did not address the timeliness

issue, but the court stated during the hearing that Hawaiian's

"claim is timely filed."
Hawaiian and the Department then filed cross-motions

for summary judgment. The Tax Appeal Court granted the

Department's motion and denied Hawaiian's motion. A Final

Judgment for the Department against Hawaiian was entered on

July 15, 2024. Hawaiian appeals, and the Department cross-

appeals.

II. POINTS OF ERROR

Hawaiian contends Boeing was entitled to an exemption

from GET under HRS § 237-24.9, and the Tax Appeal Court erred by

denying Hawaiian's motion for summary judgment and granting the

Department's motion for summary judgment.

The Department contends (1) the Tax Appeal Court did

not have jurisdiction over Hawaiian's refund claim while the

Payment-Under-Protest Action was on appeal; and (2) the refund

claim was untimely.

11
The Honorable Gary W.B. Chang presided.

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III. STANDARDS OF REVIEW

A. Summary Judgment

We review the grant or denial of summary judgment de

novo. Tax Found. of Haw. v. State, 144 Hawai#i 175, 185, 439

P.3d 127, 137 (2019). Summary judgment is appropriate if the

record shows there is no genuine issue as to any material fact

and the moving party is entitled to judgment as a matter of law.

Id. at 186, 439 P.3d at 138.

B. Subject Matter Jurisdiction

The existence of subject matter jurisdiction is a

question of law reviewed de novo under the right/wrong standard.

Tax Found., 144 Hawai#i at 185, 439 P.3d at 137.

C. Statutory Interpretation

Interpretation of a statute is a question of law

reviewed de novo. Tax Found., 144 Hawai#i at 185, 439 P.3d at

State v. Sing, 154 Hawai#i 377, 382, 550 P.3d 1235, 1240 (2024).

"Laws in pari materia, or upon the same subject matter,

shall be construed with reference to each other. What is clear

in one statute may be called upon in aid to explain what is

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doubtful in another." Sing, 154 Hawai#i at 382, 550 P.3d at 1240

(quoting HRS § 1-16 (1993)).

IV. DISCUSSION

We address the Department's cross-appeal first, because

the issues raised are potentially dispositive.

A. The Tax Appeal Court had jurisdiction over
the GET refund claim; abatement did not
apply.

The Department purported to challenge subject matter

jurisdiction. The Tax Appeal Court has jurisdiction over appeals

involving GET refunds. HRS § 232-14.5 (Supp. 2021). The

Department didn't use the term, but it actually argued this case

should have been abated in favor of the Payment-Under-Protest

Action.

Abatement is "the suspension or defeat of a pending

action for a reason unrelated to the merits of the claim[.]"

Cnty. of Haw. v. C&J Coupe Fam. Ltd. P'ship, 119 Hawai#i 352,

369, 198 P.3d 615, 632 (2008) (brackets omitted). Abatement is a
remedy; it does not implicate subject matter jurisdiction. Id.

"[W]here the party is the same in a pending suit, and

the cause is the same and the relief is the same, a good plea in

abatement lies." C&J Coupe, 119 Hawai#i at 371, 198 P.3d at 634.

This case involves the same parties and relief requested in the

Payment-Under-Protest Action. But the cause is different.

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The Payment-Under-Protest Action was filed under HRS

§ 40-35 "to recover moneys paid under protest." HA I, 155

Hawai#i at 199 & n.1, 559 P.3d at 285 & n.1. The money at issue

is being held in the litigated claims fund under HRS § 40-35(c)

(2009). Should Hawaiian ultimately prevail in the Payment-Under-

Protest Action, Hawaiian would be "paid the amount of the

judgment out of the litigated claims fund[.]" HRS § 40-35(c).

This action was filed under HRS § 232-14.5, after the

Department didn't respond to Hawaiian's claim for a refund. If

Hawaiian is entitled to a refund, it doesn't appear to matter

where the money would come from; the State would simply owe

Hawaiian the amount of the refund.

There is another reason abatement does not apply. The

reason to abate an action in favor of a prior pending action "is,

that the subsequent one is unnecessary and therefore oppressive

and vexatious." Oahu Lumber & Bldg. Co. v. Ah Yok, 11 Haw. 416,

418, 1898 WL 1553, at *2 (Haw. Rep. 1898). The Tax Appeal Court

dismissed the Payment-Under-Protest Action for lack of

jurisdiction. The supreme court vacated and remanded to the Tax

Appeal Court. The substantive issues in that case have not yet

been litigated. They have in this one. Thus, this action is

neither unnecessary nor vexatious, and is arguably the most

expedient way to resolve whether Boeing is entitled to the HRS

§ 237-24.9 exemption.

We hold the Tax Appeal Court had jurisdiction over

Hawaiian's claim for a refund of the GET it paid for Boeing, and

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this case is not subject to abatement in favor of the Payment-

Under-Protest Action.

B. The GET refund claim was timely.

HRS § 232-14.5 applies to "tax refund claims for all

taxes administered by the department of taxation." A written

notice of appeal to the Tax Appeal Court must be filed "within

thirty days after notice of the denial of the claim." HRS

§ 232-14.5(a). Hawaiian claimed a refund by letter dated May 19,

2022. HA I, 155 Hawai#i at 211 n.12, 559 P.3d at 297 n.12. The

Department conceded it "did not issue an official formal written

notice of denial" to Hawaiian. HRS § 232-14.5 imposes no

deadline to sue for a refund if the Department doesn't issue

notice that the refund is denied.12

If the Department does not issue notice of denial, a

refund appeal may be filed with the Tax Appeal Court "at any time

after one hundred eighty days from the date that the claim was

filed[.]" HRS § 232-14.5(b). Thus, the earliest Hawaiian could

have filed its refund claim was November 15, 2022. This case was
filed on December 8, 2022, in compliance with HRS § 232-14.5(b).

The Department relies on HRS § 232-14.5(c) (Supp.

2021), which states: "Any claimed tax refund or credit appealed

pursuant to this section shall be awarded only if the claim

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therefor was filed within the applicable statutory period of

limitation." The Department contends the applicable period is

set by HRS § 237-40(d)(1) (2017), which provides:

Boeing timely filed its GET returns for tax years 2013-

2018. The returns did not report liability for, and Boeing did

not pay, the amounts disputed in this case. Hawaiian's payment

for Boeing was based on the NOPA for additional GET. Boeing — or

Hawaiian on Boeing's behalf — couldn't claim a refund for amounts

Boeing never paid. HRS § 237-40(d)(1) does not apply under the

circumstances of this case.

We hold that Hawaiian's claim for a refund of GET it

paid on Boeing's behalf was timely filed under HRS § 232-14.5(b).

We now address Hawaiian's appeal.

C. The gross proceeds of Boeing's aircraft part
sales to Hawaiian are not "amounts received
from the servicing and maintenance of
aircraft . . . ."

Before determining what is excluded from GET, we

examine what is included. HRS § 237-13 levies GET on "persons on

account of their business and other activities in the State

measured by the application of rates against values of products,

gross proceeds of sales, or gross income, whichever is

specified[.]"

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The nine subsections of HRS § 237-13 specify rates

against values for (1) manufacturing; (2) selling tangible

personal property; (3) contracting; (4) operating theaters and

similar venues; (5) sales representatives and purchasing agents;

(6) service businesses; (7) insurance producers; (8) sugar

benefit payments; and (9) "any business, trade, activity,

occupation, or calling not included in the preceding paragraphs

or any other provisions of" HRS Chapter 237.

At issue in this case is the levy on Boeing of "four

per cent of the gross proceeds of sales[13]" of tangible personal
property under HRS § 237-13(2). Hawaiian contends that Boeing's

gross proceeds of sales of aircraft parts are exempt from GET by

HRS § 237-24.9.

1. The plain language of HRS § 237-24.9 does not
apply to Boeing's aircraft part sales.

HRS § 237-24.9 (2001) provides, in relevant part:

(a) This [GET] chapter shall not apply to amounts received
from the servicing and maintenance of aircraft . . . .

(b) As used in this section:

"Aircraft" means any craft . . . engaged in . . .
scheduled commercial use . . . that operates with two or
more jet engines.

"Aircraft service and maintenance" means all scheduled
and unscheduled tasks performed within an aircraft service
and maintenance facility . . . .

"Aircraft service and maintenance facility" means a
facility for aircraft service and maintenance that is not
less than thirty thousand square feet in area . . . .

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. . . .
"Maintenance" means the upkeep of aircraft engines,
hydraulic and electrical systems, and all other components
which are an integral part of an aircraft . . . .

(Emphasis added.)

Boeing sells aircraft parts to Hawaiian; it doesn't

service or maintain Hawaiian's aircraft. Hawaiian argues that

HRS § 237-24.9 "uses the passive voice – without reference to any

specific actor – and thus allows for someone not mentioned [that

is, Hawaiian,] to have performed the maintenance activity."

Hawaiian's argument ignores the structure of HRS § 237-13 and the

definitions in HRS § 237-7, which we read in pari materia with

HRS § 237-24.9.

A taxpayer who receives amounts from the servicing and

maintenance of aircraft is liable to pay GET based on "four per

cent of the gross income of the business" under the HRS

§ 237-13(6) tax on "service business or calling" — except to the

extent the taxpayer qualifies for the HRS § 237-24.9 exemption.

HRS § 237-7 (2017) (emphasis added). Read together with these

other sections of the GET Law, HRS § 237-24.9 applies only to

taxpayers who service and maintain multi-engine jet aircraft for

others (within a thirty-thousand-square-foot-or-more facility),

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"as distinguished from the sale of tangible property or the

production and sale of tangible property."

Hawaiian nevertheless argues that a "better reading of

the statute is that HRS [§] 237-24.9 exempts from GET the

purchase of aircraft parts as a necessary and included component

of 'the servicing and maintenance of aircraft'" because "Hawaiian

and Boeing together engage in 'the servicing and maintenance of

aircraft' within the meaning of Haw. Rev. Stat. § 237-24.9."

(Emphasis added.)

Hawaiian conflates Boeing's production and sale of

aircraft parts with Hawaiian's purchase of those parts. GET is

levied on sellers of tangible personal property under HRS

§ 237-13(2) ("Tax on business of selling tangible personal

property"). Not buyers. Even if the seller passes its GET

expense on to a buyer as part of the sales price — or, as in this

case, by contract — the tax remains assessed on, and collected

from, the seller.

Boeing sells aircraft parts; it must pay "four per cent

of the gross proceeds of sales" as GET under HRS § 237-13(2).

Hawaiian buys Boeing parts; HRS § 237-24.9 does not apply to

Hawaiian because Hawaiian has no HRS § 237-13(2) GET liability on

aircraft part purchases from which to be exempt. Hawaiian's

obligation to indemnify Boeing for Boeing's GET liability is a

function of the Agreement, not HRS § 237-13(2).

We hold that Boeing's "gross proceeds of sales" of

aircraft parts, taxable under HRS § 237-13(2), are not "amounts

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received from the servicing and maintenance of aircraft,"

otherwise taxable under HRS § 237-13(6) but exempt under HRS

§ 237-24.9. Accordingly, Hawaiian is not entitled to a refund of

the GET it paid for Boeing on Boeing's aircraft parts sales to

Hawaiian.

2. The Use Tax exemption for using imported
material, parts, or tools for aircraft
service and maintenance does not require a
parallel GET exemption.

Hawaiian argues: the GET Law and the Use Tax Law (HRS

Chapter 238) impose "complementary taxes"; the law creating HRS

§ 237-24.9 created a parallel exemption under the Use Tax Law; so

"[i]f the sale of a product is exempt from GET, its import must

also be exempt from the Use Tax to avoid discrimination against

interstate commerce that is forbidden by the Commerce Clause of

the U.S. Constitution." See U.S. Const. art. I, § 8, cl. 3. But
the converse is not true. When use of an imported item is exempt

from Use Tax, a sale of the same item need not also be exempt

from GET because the Use Tax exemption does not burden interstate

commerce.