Ezel / Tax Rulings / TX
TX 8801L0867A08 Sales and/or Use Tax (State,Local,MTA) 1988-01-04

Were natural gas and electricity used to prepare refrigerated or frozen catered food exempt from Texas sales tax?

Short answer: No. Because the same entity prepared and sold the food through its restaurant or catering business, the natural gas and electricity did not qualify for exemption as of October 1, 1987.

Apply this to your situation

This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1988
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is a taxpayer-specific January 1988 Texas Comptroller letter applying an exemption change effective October 1, 1987. It says the opinion may change if the facts differ and cites no statute or rule. The result rests on the same entity preparing food and selling it through its restaurant or catering operation, after refrigeration or freezing and shipment for later service. Utility, manufacturing or processing, restaurant, catering, food-preparation, and exemption rules may have changed; verify current law. STAR documents may no longer represent current policy even when not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The company prepared food, refrigerated or froze it, and shipped it elsewhere to be served later. The same entity sold the food through its restaurant or catering business.

The Comptroller said the natural gas and electricity used in that operation did not qualify for exemption as of October 1, 1987.

What this means for you

The historical result followed the integrated preparation-and-sale operation of the restaurant or caterer.

Common questions

Was the caterer's natural gas exempt? No.

Was its electricity exempt? No.

Citations and references

The letter cites no numbered statute or rule.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

January 4, 1988

Dear *****:

On behalf of Mr. Bullock, I hope you'll accept my apology for the delay
in
answering your question involving changes in the sales tax law. This
isn't
the way we normally do business.

Our people were, and still are, swamped by a deluge of inquiries as they
attempted to interpret provisions of the new law and draft rules which
would
not adversely impact businesses. In many instances, an answer to a
question
just wasn't available when the question arrived.

You asked about sales tax exemption on natural gas and electricity used
in a
catering operation. The company prepares food which is either
refrigerated
or frozen and shipped to another location to be served at a future time.

It appears the food will be sold by the same entity, either in its
restaurant or catering business. The natural gas and electricity would
not
qualify for exemption as of October 1, 1987.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call our
toll-free
number 1-800-531-5441. The regular number is 512/463-4600. You may
write me
at the Tax Policy Division.

Sincerely,
(Mrs.) Jo Ann Dieck
Tax Policy Division

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