371 Mass. 254 | Mass. | 1976
Two taxpayers seek abatements of sales and use taxes, claiming exemptions under G. L. c. 64H, § 6 (r) and (s), originally enacted temporarily by St. 1966, c. 14, § 1, continued by St. 1967, c. 757, § 1, and subsequently amended by St. 1971, c. 555, § 45. The taxpayers are heating contractors; in the performance of lump-sum contracts they sell, install and service hot water and steam generating boilers and related equipment, materials and supplies. The State Tax Commission (commission) and the Appellate Tax Board (board) denied the abatements sought, applying the commission’s Emergency Reg. No. 12, published July 7, 1966. We affirm.
It is common ground that the taxpayers, in the performance of lump-sum contracts, purchased machinery, ma
Under § 6 (r) sales of “materials, tools and fuel” are exempt if they “become an ingredient or component part of tangible personal property to be sold” or if they are “consumed and used directly and exclusively ... in an industrial plant in the [process of the] actual manufacture of tangible personal property to be soldin the furnishing of power to an industrial manufacturing plant; or in the furnishing of gas, water, steam or electricity when delivered to consumers through mains, lines or pipes.” Under § 6 (s) sales of “machinery, or replacement parts thereof,” are exempt if the property is “used directly and exclusively... in an industrial plant in the actual manufacture, conversion or processing of tangible personal property to be sold...; in the furnishing of power to an industrial manufacturing plant; or in the furnishing of gas, water, steam or electricity when delivered to consumers through mains, lines or pipes.” Language in brackets was deleted by St. 1971, c. 555, § 45; language in italics was inserted by the same statute. We have treated “manufacture” in § 6 (r) as equivalent to “manufacture, conversion or processing” in § 6 (s). Rowe Contracting Co. v. State Tax Comm’n, 361 Mass. 158, 162 (1972).
We have recognized that the scope of these exemptions is somewhat uncertain. Wakefield Ready-Mixed Concrete Co. v. State Tax Comm’n, 356 Mass. 8, 10 (1969). There is no requirement that this type of exemption be interpreted narrowly. Id. at 12. Courier Citizen Co. v. Commissioner
Contrary to the taxpayers’ contention, we do not think the property in question constitutes materials, tools or fuel, or substitutes therefor, subject to § 6 (r). The boilers and related materials are “machinery” within § 6 (s), but they are not used “directly” in the actual manufacture of tangible personal property to be sold. The taxpayers sell, install and service boilers, they do not sell hot water or steam or goods manufactured through the use of hot water or steam. Nor do they “directly” furnish power to manufacturers or hot water or steam to either manufacturers or consumers.
To the extent that there is ambiguity in the word “directly,” it is resolved by Emergency Reg. No. 12, published shortly after the sales tax took effect. See R. Barrett & A. Bailey, Taxation, app. 527-529 (2d ed. 1970). The term “contractor” is defined to include “heating” contractors. “A contractor shall pay the sales or use tax as a consumer upon the purchase of all materials or supplies used by him in fulfilling a lump-sum contract,” with exceptions not applicable here. “Contractors are the consumers of... machinery... which they use in their business. The sale or rental of such property to contractors is subject to the sales or use tax.”
We need not now decide whether the boilers in question would be sufficiently part of an integrated production process to come within the principle of Courier Citizen Co. v. Commissioner of Corps. & Taxation, 358 Mass. 563, 571-573 (1971), and Niagara Mohawk Power Corp. v.
The decisions of the Appellate Tax Board are affirmed.
So ordered.
See, e.g., Fusco-Amatruda Co. v. Tax Comm’r, 168 Conn. 597, 599-600 (1975), and cases cited (construction contracts); Opinion of Counsel, Dep’t of Taxation & Fin., May 26, 1969, 2 CCH State Tax Rep., N.Y. par. 60-280 (1976); Reg. “C,” CCH State Tax Rep., R.I. pars. 63-820, 63-821 (1969).