Tax Type
Retail Sales and Use Tax
Description
Fuel and Supplies;Shipbuilding and Repair Materials
Topic
Taxability of Persons and Transactions
Date Issued
03-14-1985
March 14, 1985
Dear*****
This will reply to your letter of February 4, 1985 requesting a ruling on the application of the sales and use tax to the purchase of parts and materials used in the maintenance and repair of containers and chassis.
FACTS
* * * (Taxpayer) is an international shipping company which operates ocean going vessels to transport freight between the United States and Europe. In connection with such international shipping Taxpayer owns containers and chassis to facilitate the movement of the products being shipped to and from its vessels. The company is seeking an exemption from the sales tax on its purchase of parts and materials for use in the maintenance and repair of such containers and chassis.
DETERMINATION
Secs. 58.1-603 and 58.1-602(19), of the Virginia Code, set forth the general rule that all sales of tangible personal property are subject to the sales tax. Furthermore, Sec. 630-10-35.2 of the Virginia Sales and Use Tax Regulations states in pertinent part, that ``taxation is the rule and exemption the exception. Therefore, exemptions from the sales and use tax are strictly construed.'
Sec. 58.1-608(11) of the Virginia Code, exempts from the sales and use tax, ``Ships or vessels used or to be used exclusively or principally in interstate or foreign commerce, or [to] repairs and alterations thereof; or [to] fuel and supplies for use or consumption aboard ships or vessels plying the high seas, either in intercoastal trade between ports in the Commonwealth and ports in other states of the United States or its territories or possessions, or in foreign countries, when delivered directly to such ships or vessels; or [to] tangible personal property used directly in the building, conversion or repair of the ships or vessels covered by this subsection.' (Emphasis added.)
Inasmuch as Taxpayer's containers and chassis are items of tangible personal property separate and distinct from its vessels and ships, they do not qualify for the exemption stated above. Furthermore, unless the repair parts or materials being purchased by taxpayers were purchased under a certificate of exemption (i.e. for resale), there would be no basis for an exemption from the tax. Based on the facts presented, there is nothing to indicate that Taxpayer is purchasing such repair parts or materials for resale. Rather, such materials are being used to maintain and repair Taxpayer's own containers and chassis.
Therefore, under present law, no exemption exists for the purchase of parts and materials used in the maintenance and repair of such containers and chassis.
However, Sec. 58.1-608(2) exempts from the sale and use tax ``Professional, insurance, or personal service transactions which involve sales as inconsequential elements for which no separate charges are made, nor services rendered by repairmen for which a separate charge is made.' (Emphasis added.) Therefore, to the extent suchcharges are separately stated, the labor or services required in repairing such containers and chassis, would be exempt from the sales and use tax.
I hope this has answered all of your questions, but please let me know if I can be of further assistant.
Dear*****
This will reply to your letter of February 4, 1985 requesting a ruling on the application of the sales and use tax to the purchase of parts and materials used in the maintenance and repair of containers and chassis.
FACTS
* * * (Taxpayer) is an international shipping company which operates ocean going vessels to transport freight between the United States and Europe. In connection with such international shipping Taxpayer owns containers and chassis to facilitate the movement of the products being shipped to and from its vessels. The company is seeking an exemption from the sales tax on its purchase of parts and materials for use in the maintenance and repair of such containers and chassis.
DETERMINATION
Secs. 58.1-603 and 58.1-602(19), of the Virginia Code, set forth the general rule that all sales of tangible personal property are subject to the sales tax. Furthermore, Sec. 630-10-35.2 of the Virginia Sales and Use Tax Regulations states in pertinent part, that ``taxation is the rule and exemption the exception. Therefore, exemptions from the sales and use tax are strictly construed.'
Sec. 58.1-608(11) of the Virginia Code, exempts from the sales and use tax, ``Ships or vessels used or to be used exclusively or principally in interstate or foreign commerce, or [to] repairs and alterations thereof; or [to] fuel and supplies for use or consumption aboard ships or vessels plying the high seas, either in intercoastal trade between ports in the Commonwealth and ports in other states of the United States or its territories or possessions, or in foreign countries, when delivered directly to such ships or vessels; or [to] tangible personal property used directly in the building, conversion or repair of the ships or vessels covered by this subsection.' (Emphasis added.)
Inasmuch as Taxpayer's containers and chassis are items of tangible personal property separate and distinct from its vessels and ships, they do not qualify for the exemption stated above. Furthermore, unless the repair parts or materials being purchased by taxpayers were purchased under a certificate of exemption (i.e. for resale), there would be no basis for an exemption from the tax. Based on the facts presented, there is nothing to indicate that Taxpayer is purchasing such repair parts or materials for resale. Rather, such materials are being used to maintain and repair Taxpayer's own containers and chassis.
Therefore, under present law, no exemption exists for the purchase of parts and materials used in the maintenance and repair of such containers and chassis.
However, Sec. 58.1-608(2) exempts from the sale and use tax ``Professional, insurance, or personal service transactions which involve sales as inconsequential elements for which no separate charges are made, nor services rendered by repairmen for which a separate charge is made.' (Emphasis added.) Therefore, to the extent suchcharges are separately stated, the labor or services required in repairing such containers and chassis, would be exempt from the sales and use tax.
I hope this has answered all of your questions, but please let me know if I can be of further assistant.
Rulings of the Tax Commissioner