On appeal from the Division of Tax Appeals.
Allcorn, Pressler and Furman. The opinion of the court was delivered by Furman, J.s.c. (temporarily assigned). Allcorn, P.J.A.D. (dissenting).
The issue on consolidated appeals before us is whether the labor component of charges for repair of public transport buses is exempt from taxation under the Sales and Use Tax Act, N.J.S.A. 54:32B-1 et seq. In accordance with a uniform administrative interpretation since 1967 and an Attorney General's memorandum opinion of 1975, the Director of the Division of Taxation denied the exemption. The Division of Tax Appeals affirmed the Director. Appeals are brought by two business entities engaged in bus repairs.
Sales of services, including repair work on motor vehicles, are subject to the sales tax under N.J.S.A. 54:32B-3(b)(2). N.J.S.A. 54:32B-8 sets forth 34 categories of exemptions from the sales tax.*fn1 N.J.S.A. 54:32B-8(cc) is pertinent on the issue before us, providing for exemption from the sales tax of
Sales of buses for public passenger transportation, including repair and replacement parts therefor, to bus companies whose rates are regulated by the Interstate Commerce Commission or the Board of Public Utilities or to an
affiliate of said bus companies or to common or contract carriers for their use in the transportation of children to and from school.
Appellants assert their entitlement to an exemption under a construction of the above language that "repair" stands alone as a noun and is not an adjective or noun adjunct modifying "parts." Respondent urges the contrary construction, that "repair" as well as "replacement" modifies "parts" and that the exemption extends to repair parts but not to repair services or work.
In statutory construction the guideposts are legislative intent and the rational and generally accepted meaning of language. State v. Brown , 22 N.J. 405, 415 (1956); N.J. Ins. Underwriting Ass'n v. Clifford , 112 N.J. Super. 195, 200 (App.Div.1970). In the ascertainment of legislative intent, statutes upon cognate subjects may be considered. As stated in State v. Brown , (22 N.J. at 415): "This principle is essential to give unity to the laws and to connect them in a symmetrical system."
The legislative intent of N.J.S.A. 54:32B-8 and of cognate enactments is clear, that is, to subsidize public transportation and, specifically, to relieve it of the burden of the sales tax. With particular reference to public transport buses, sales of buses and of replacement parts indisputably are exempt, as well as bus fares (N.J.S.A. 54:32B-8(k)) and sales of motor fuels to buses (N.J.S.A. 54:32B-8(h), 54:39-66(1)(b)). Public transport buses operating within this State are exempt from the Motor Fuels Use Tax Act of 1963 (N.J.S.A. 54:39A-2(a)). In addition, the New Jersey Public Transportation Act of 1979, N.J.S.A. 27:25-1 et seq. , and the predecessor Transportation Act of 1966, N.J.S.A. 27:1A-1 et seq. , provide broadly for financial subsidies by the New Jersey Transit Corporation to motorbus carriers.*fn2
In harmony with the manifest legislative intent to subsidize public transportation, the meaning of the statutory exemption of sales of "repair and replacement parts" for public transport buses must be arrived at. The record below includes unrebutted testimony by an expert in bus repair and maintenance, and by one in English usage, both on behalf of the bus repair companies.
The expert testimony is compelling that there is no such term in usage and no such technical concept as "repair parts" of buses. During repair work no part is ever installed that is in addition to parts previously on the bus. Any part installed replaces a worn, defective or otherwise nonfunctioning part. If a part is repaired, the charge is for repair work. If to ...