June 8, 1983

You inquire whether the beverage container refund value that must be deposited under General Laws Chapter 94, Sections 321-327 is part of the sales price of beverages on which the sales tax is based.

Consumers of beverages must pay dealers a refundable charge of at least five cents per container for containers having a capacity of less than 32 ounces, and at least 10 cents per container for containers with a capacity of 32 ounces or more. Dealers are not required to separately state the refundable charge.

General Laws Chapter 64H, Section 1(14) defines "sales price" as the total amount charged by a vendor to a purchaser as consideration for a retail sale. In determining the sales price, no deduction may be taken on account of "the cost of materials used, labor or service cost, interest charges, losses or other expenses" (emphasis supplied). G.L. c. 64H, s. 1(14)(a)(ii).

General Laws Chapter 64H, Section 6(q) provides that the following are exempt from the sales tax:

"(1) Sales of both returnable and nonreturnable containers when sold without the contents together with the container; (2) containers when sold with the contents if the sale price of the contents is not required to be included in the measure of the taxes imposed by this chapter; (3) returnable containers when sold with the contents or resold for refilling. As used in this paragraph the term 'returnable containers' means containers of a kind customarily returned by the buyer of the contents for reuse. All other containers are 'nonreturnable' containers."

Sales of beverages are exempt from the sales tax (G.L. c. 64H, s. 6(h)). This exemption generally does not apply to beverages sold by a restaurant.

Based on the foregoing, it is ruled that the refundable charge for beverage containers is not taxable. However, the entire price charged for a "meal" is subject to the sales tax, even if the "meal" includes or consists entirely of a beverage in a returnable bottle.

Very truly yours,

/s/Ira A. Jackson

Ira A. Jackson

Commissioner of Revenue

IAJ:JXD:mf

LR 83-51