Tax Type
Retail Sales and Use Tax
Description
Vessels, Interstate Commerce; Barge Used as Floating Dock
Topic
Taxability of Persons and Transactions
Date Issued
10-08-1991
October 8, 1991
Re: §58.1-1821 Application: Retail Sales and Use Tax
Dear *********************
This will reply to your letter of April 22, 1991 on behalf of******** (the "Taxpayer") seeking correction of a retail sales and use tax assessment for the period November 11, 1986 through March 31, 1990.
FACTS
The Taxpayer is engaged in loading and unloading bulk cargo from ships. It is contesting the inclusion in the assessment of a barge upon which it has installed a crane. The barge is used as a floating dock against which bulk cargo ships berth. You maintain that the barge qualifies for exemption from the tax under Va. Code §58.1-608(A)(3)(d) as a "vessel(s) used or to be used exclusively or principally in interstate or foreign commerce...."
You point out that the power to regulate commerce with foreign nations and among the states is given to Congress by the United States Constitution and that since the Interstate Commerce Act sets forth certain definitions dealing with interstate commerce, the department should take cognizance of such with respect to the above cited Code section.
DETERMINATION
The key issue in this case is whether the barge is a vessel within the meaning of the Va. Code §58.1-608(A)(3)(d). While the Taxpayer relies on the expansive definitions used in the federal Interstate Commerce Act to support its position that the barge is exempt under the above Code section, the purpose of the Act is to regulate interstate commerce and congressional regulatory power tends to be broadly construed. Virginia courts, on the other hand, have determined that statutes granting tax exemptions must be strictly construed with all reasonable doubts resolved against the exemption. (See, e.g., Commonwealth v. Community Motor Bus Co., 214 Va. 155, 157, 198 S.E.2d 619, 620 (1973)). Thus, the purpose of Va. Code §58.1-608(A)(3)(d) is to describe an exemption from the tax that must be strictly construed.
In addition, it is well settled that words used in statutes are given their plain and ordinary meaning unless the General Assembly manifests some different intent. Thus, in determining whether the barge is a vessel within the meaning of the above Code section, we must look to the ordinary dictionary definition of the term.
The Taxpayer concedes that the barge is essentially stationary and "serves the same role as the fixed dock on the other side" of its facilities. However, the ordinary dictionary definition of the term "vessel" does not include a stationary barge that serves as a dock for unloading cargo and suggests that a vessel must be used for traveling on water, as opposed to merely serving as an unloading dock. (See, e.g., The Webster Encyclopedic Dictionary of the English Language, 934 (1967), American Heritage Dictionary 1345 (2d College Ed. 1976))
Accordingly, the Taxpayer's admitted actions in using the barge as a floating dock and improving it with cranes can be cited as negating an intent to use the barge as a ship or vessel for traveling as contemplated by Va. Code §58.1-608(A)(3)(d). Since the barge the Taxpayer uses as a dock is neither a ship nor a vessel, the exemption is inapplicable regardless of whether the activities performed at the dock constitute "interstate commerce.
Furthermore, since the U.S. Supreme Court's decision in Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977), it has been settled that interstate commerce enjoys no federal constitution immunity from state taxation. Thus, the Taxpayer's reliance upon the interstate commerce and supremacy clauses and old case law is misplaced.
Accordingly, the assessment is correct and is now due and payable. The Taxpayer will shortly receive a bill with interest accrued to date which should be paid within 30 days to avoid the accrual of additional interest.
Sincerely,
W. H. Forst
Tax Commissioner
TPD/5167H
Rulings of the Tax Commissioner