August 31, 1979

You have requested a ruling on whether rentals of reusable industrial gas cylinders by your welding supply company, ********** are subject to the Massachusetts sales tax.

Your company is in the business of supplying industrial gases. When a customer orders gas, you send the gas in cylinders which you own. You then charge the customer for the gas purchased and for cylinders in his possession at the end of the month.

Massachusetts General Laws Chapter 64H, Section 6(q)(3) exempts from the sales tax, "returnable containers when sold with the contents." "Returnable containers" are containers of a kind customarily returned by the buyer of the contents for reuse. "Sale" is defined in Chapter 64H, Section 1(12) to include lease or rental of such tangible personal property.

Since cylinder rental is billed separately and since the rental charge is based on the number of cylinders on hand at the end of the month, the containers are not "sold with the contents" within the meaning of Chapter 64H, Section 6(q)(3). In this case the containers are subject to tax like any other rental of tangible personal property.

Based on the foregoing, it is ruled that rentals of returnable gas cylinders, where the rental fee is based on the number of cylinders in the possession of customers at the end of each month, are not exempt from the Massachusetts sales tax under General Laws Chapter 64H, Section 6(q)(3).

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

LJH/PAG/jmp

LR 79-30