June 26, 1984
__________ ("Manufacturer") is a registered Massachusetts vendor that manufactures equipment used in food preparation. __________ ("Distributor") purchased from the Manufacturer a refrigerator, a freezer, and a dishwashing machine, and sold them in turn to __________ ("Purchaser"), a maker of jellies and other prepared foods. The Manufacturer shipped the equipment directly from Ohio to the Purchaser in Massachusetts. You inquire whether, in these circumstances, the Distributor or the Purchaser is required to present exempt use certificates in connection with these sales.
It is assumed on the basis of your statement of facts that the Distributor is not engaged in business in Massachusetts within the meaning of General Laws Chapter 64H, Section 1(5).
General Laws Chapter 64H, Section 2 imposes an excise on a vendor's gross receipts from sales at retail of tangible personal property in Massachusetts; "sale at retail" does not include sales for resale in the regular course of business (G.L. c. 64H, § 1(13)).
Chapter 64I, Section 2 imposes an excise on the storage, use or other consumption in Massachusetts of tangible personal property purchased from any vendor for storage, use or other consumption in Massachusetts; "storage, use or other consumption" does not include the sale of tangible personal property in the regular course of business or the retention of tangible personal property for sale in the regular course of business (G.L. c. 64I, § 1(4), (5)).
Section 1(13) of Chapter 64H provides:
The delivery in the commonwealth of tangible personal property by an owner or former owner thereof, or by a factor, or agent of such owner, former owner or factor, if the delivery is to a consumer or to a person for redelivery to a consumer, pursuant to a retail sale made by a retailer not engaged in business in the commonwealth, is a retail sale in the commonwealth by the person making the delivery. He shall include the retail selling price of the property in his gross receipts.
Section 6(s) of Chapter 64H sets forth a limited exemption for sales of machinery used directly and exclusively in an industrial plant in the actual manufacture, conversion or processing of tangible personal property to be sold. The facts you state do not establish that the sales about which you inquire are exempt under Section 6(s). In any of the following circumstances, for example, the exemption would not apply: (1) if the equipment is not used in an "industrial plant;" (2) if the refrigerator and freezer are used to store food prior to the Purchaser's first processing operation, or after its last processing operation; or (3) if the dishwashing machine is used partly or exclusively to wash utensils used in food processing.
It is the responsibility of the Purchaser to present an exempt use certificate, if appropriate, upon the sales. However, the sales to the Purchaser will be presumed to be subject to tax if the Purchaser does not present an exempt use certificate (G.L. c. 64H, § 8; G.L. c. 64I, § 8), and the tax, if it applies, will be a debt from the Distributor to the Manufacturer, recoverable in the same manner as other debts (G.L. c. 64H, § 3; G.L. c. 64I, § 4).
Very truly yours,
/s/Ira A. Jackson
Commissioner of Revenue
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