Was a California automobile sale exempt when the dealer delivered it to a steamship for shipment as the Manila buyer's baggage?

Plain-English summary

An unidentified adviser described a Chevrolet dealer that sold a new automobile to a Manila resident visiting San Francisco. The sales agreement required dealer delivery to American President Lines' SS President Wilson. A steamship receipt was stamped “Auto Baggage,” and the automobile shipped as the purchaser's baggage.

The PDF does not reproduce the agreement, receipt or shipping report. Its sentence introducing that report is malformed and cannot support any detail beyond the readable statements surrounding it.

Assistant counsel first rejected exemption under Ruling 55 A-1-(c) and the Commerce Clause because the purchaser apparently arranged the shipment, making the steamship company the purchaser's agent. The letter nevertheless treated the sale as exempt under Ruling 55 A-1-(e), the Export Clause, and Richfield Oil Corp. v. State Board of Equalization.

The letter explained that the Export Clause provided a “slightly broader” exemption in this setting and regarded the sale as exempt once the vehicle had started the exportation process.

No bill of lading, loading record, voyage, Manila delivery, vehicle use, tax amount or later proceeding is supplied. The live annotation publishes only the seller-delivery and exempt-export result.

Common questions

Why did the Commerce Clause route fail?

Counsel said the purchaser apparently made all shipping arrangements, so delivery to the steamship company was treated as delivery to the purchaser's agent. That did not meet Ruling 55 A-1-(c) as described.

Why did the Export Clause route succeed?

Counsel treated Ruling 55 A-1-(e), the Export Clause and Richfield Oil as broader in this setting and concluded the goods had started the exportation process.

What shipment evidence did the letter identify?

It identifies a written steamship report and a receipt stamped “Auto Baggage,” and says the automobile shipped as purchaser baggage. Neither record is reproduced.

Does the opinion establish delivery in Manila?

No. It states the purchaser resided in Manila and analyzes exportation, but supplies no foreign-arrival or use record.

Is the historical constitutional analysis necessarily current?

The source does not answer that. It supplies only this 1954 advisory view and an absent copy of then-applicable Ruling 55.

Citations and references

• Ruling 55 A-1-(c) and the Commerce Clause — purchaser-agent route rejected
• Ruling 55 A-1-(e) and the Export Clause — export-process route accepted
• Richfield Oil Corporation v. State Board of Equalization, 329 U.S. 69 — cited Export Clause authority
• Steamship report and Auto Baggage receipt — described but not reproduced
• Official Annotation 325.1200 — publishes the exempt-export result

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 325.1200
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/325-1200.pdf

Original ruling text

325.1200

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

April 19, 1954

Your client is a Chevrolet dealer and recently sold a new automobile to a purchaser who resides in Manila. The purchaser was visiting in San Francisco at the time and the sales agreement required your client deliver the vehicle to the American President Lines SS “President Wilson”. This is and he received the written report from the steamship company. The receipt is stamped “Auto Baggage” and the automobile was shipped as baggage of the purchaser. The application of sales tax to sales in interstate and foreign commerce is governed by Ruling 55 (copy enclosed). The exemption set forth in A-1- (c) of that ruling is based on the Commerce Clause of the Federal Constitution. It is our opinion that that exemption does not apply to this transaction due to the fact that the purchaser apparently made all arrangements for shipment and we would regard delivery to the steamship company as delivery to the purchaser’s agent. However, we would regard the transaction exempt under A-1-(e) which paragraph is based on the Export Clause of the Federal Constitution and the case of Richfield Oil Corporation v. State Board of Equalization, 329 U.S. 69. The Export Clause creates a slightly broader exemption than the Commerce Clause. Apparently under the Export Clause the sale is exempt if the goods are started on the process of exportation.

Yours very truly,

Bill Holden
Assistant Counsel

BH:ja
Cc: San Francisco - Auditing