Tax Type
Retail Sales and Use Tax
Description
Fabrication; Mobile Lumber Sawing Service
Topic
Taxability of Persons and Transactions
Date Issued
06-04-1991
June 4, 1991
Re: Ruling Request: Retail Sales and Use Tax
Dear****************
This will reply to your letter of December 7, 1989 seeking a ruling on the application of the sales and use tax to ***********************(the "Taxpayer").
FACTS
The Taxpayer operates a mobile lumber sawing service, which through the use of a portable band saw, saws wood on its customers' premises. The Taxpayer charges its customers a fee for sawing the wood into planking, beams, etc. You ask whether the entire charge for this mobile lumber sawing service would be exempt from the sales and use tax.
The Taxpayer plans to expand its business and obtain its own raw wood and convert it into usable lumber for sale to customers. You ask whether tangible personal property purchased and consumed in such an operation would qualify for the manufacturing exemption.
RULING
As indicated in the enclosed determination of the department (P.D. 86-242, 11/28/86) involving a similar business, the mobile lumber sawing service which the Taxpayer provides to customers in this case represents "fabrication." Under Virginia Regulation (VR) 630-10-37 (copy enclosed) the total charge for such fabrication is taxable.
Furthermore, fabricating businesses such as the Taxpayer qualify for the manufacturing exemption in VR 630-10-63, provided they fabricate raw wood into lumber for sale to customers, and not principally or primarily for their own use or consumption.
The manufacturing exemption is limited to those activities conducted at a single plant site for use directly in manufacturing. Therefore, it would not apply to machinery the Taxpayer purchases for use with its mobile unit since the use of a portable band saw on various customers' premises would not constitute a single plant site.
However, the exemption would apply to the Taxpayer once it establishes a definite site. I have enclosed a copy of VR 630-10-63 for your review. Please note that this exemption only applies to items that are used directly in the manufacturing or production activity.
I hope that the foregoing and the enclosed information have responded to your questions, but let the department know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner