We affirm the decision of the Appellate Tax Board that a contractor is liable for sales and use taxes on materials purсhased and used in the construction of a turnkey project for a local housing authority.
Beginning in 1971, Northgate Construction Company, Inc. (Northgаte), participated in the construction of two low income housing projects for the elderly in Malden. These projects, built for thе Malden Housing Authority (MHA), were approved by the United States Department of Housing and Urban Development (HUD) and financed pursuant to the Unitеd States Housing Act of 1937. See current version at 42 U.S.C. § 1437 et seq. (1976). Each project was undertaken pursuant to a plan of develop
Northgate argues that it was exempt from sаles and use taxes assessed for materials purchased by it in its own name and used in the turnkey construction of low income housing projeсts because the imposition of such taxes would interfere with the Federal policy of providing low cost housing. Northgate argues, alternatively, that the sales of building materials and supplies were exempt from sales and use taxes under G. L. c. 64H, § 6(f), inserted by St. 1967, c. 757, § 1, because the structures were "owned by or held in trust for the benefit of’ a governmental agency. See, as to use taxes, G. L. c. 641, § 7(b), which generally incorporаtes by reference the sales tax exemptions.
1. The imposition of sales and use taxes on materials used in the construction of а turnkey project financed by HUD does not run contrary to any Federal policy. North-gate does not rely on any Federal statutory оr regulatory exemption. It contends that the imposition of sales and use taxes will increase the cost of turnkey projects, that undеr conventional construction of a building for a governmental agency the materials purchased by the contractor are еxempt from sales and use taxes, and that turnkey construction is used for reasons of economy where it is less costly than conventional construction procedures. Northgate’s argument may have force if
We have had occasion to recognize restrictions on State legislation in the face of clear contrary Federal policy in the field of public housing. In Commissioner of Labor & Indus. v. Boston Hous. Auth.,
The case before us presents no similar conflict of Federal policy with State legislation. Not only is there no Federal statute or regulation barring the imposition of salеs and use taxes, but also there is no contractual arrangement between HUD and the local housing authority which undertakes to regulatе the subject. Indeed, the Low-Rent Public Housing Turnkey Handbook, issued by HUD in 1973, acknowledges that the developer’s "total turnkey price” may include sаles taxes on construction and equipment.
Section 6(f) of G. L. c. 64H exempts from the sales tax "[sjales of building materials and supplies to be used in the construction ... of (1) any building ... owned by or held in trust for the benefit of any governmental body or agency mentioned in paragraph (d).” Paragraph (d) refers to "the United States, the commonwealth or any political subdivision thereof, or their respective agencies.”
The MHA did not have legal title to the buildings when they were being constructed by Northgate. The word "owner” has a "flexible meaning depending upon the other language of the particular statute in which it is employed and the purpose and aim of the statute.” Animal Rescue League of Boston v. Assessors,
The developer did not hold the project premises in trust for the benefit of the MHA. A person under obligation to construct a project and then to convey the property to another is not a trustee of that property for the benefit of the prospective purchaser. See Laurin v. DeCarolis Constr. Co.,
Decision of the Appellate Tax Board affirmed.
Notes
The details of the turnkey method of project construction are described in Commissioner of Labor & Indus. v. Lawrence Hous. Auth.,