On appeal from the Tax Court of New Jersey, the opinion of which is reported at 6 N.J. Tax 513 (1984).
Plaintiff Zim-American Israeli Shipping Co., Inc. (Zim) is an international shipper. Plaintiff Maher Terminals, Inc. (Maher) operates a marine terminal at which plaintiff Zim docks container ships and from which plaintiff Zim's cargo containers are dispatched to their ultimate commercial destinations.
The Director of the Division of Taxation assessed a sales tax for Maher's charge for the repair and maintenance (R & M) and parts provided to Zim's containers and chassis (the mobile unit under the containers). Plaintiff Maher was also assessed sales tax on the charges for its rental of cranes from Sea-Land Service, Inc. (Sea-Land) (not a party to this suit).*fn1
Plaintiff Zim paid part of the tax and sought a refund which the Tax Court granted, except for the tax on the sale of parts
for Zim's chassis.*fn2 Maher's application for abatement of the tax on the crane rentals was denied by the Tax Court. Zim sought and was denied interest on its refund.
With the one exception, all parties appealed and cross-appealed the adverse portions of the Tax Court decision which is reported at 6 N.J. Tax. 513 (Tax Ct.1984). Since the facts and legal issues are fully set forth in the Tax Court opinion there is no need for extensive repetition.
While appeal in this matter was pending, the case of Hapag-Lloyd A.G. v. Director, Div. of Tax. was decided by Judge Lasser, P.J.T.C. and published at 7 N.J. Tax. 108 (Tax Ct.1984). That decision was in direct conflict with that of Judge Crabtree concerning the issue of the taxability of R & M of "containers" carried on "container ships". On March 20, 1986, we affirmed Judge Lasser and overruled Judge Crabtree's determination which favored the taxpayer on that issue. Hapag-Lloyd A.G. v. Director, Div. of Tax., 8 N.J. Tax. 323 (App.Div.1986). Therefore, we will not address that issue anew, namely that charges for container R & M and the sale of parts to fix containers are not exempt from the Sales and Use Tax pursuant to the applicable pre-1980 statute, N.J.S.A. 54:32B-8.12, which exempted from tax "repairs . . . of . . . commercial ships . . . primarily engaged in interstate or foreign commerce, and . . . property used by or purchased for the use of such vessels for . . . maintenance and repairs. . . ."*fn3
The interpretation question under N.J.S.A. 54:32B-8.12 revolved around whether the container represented such an integral part of a container ship that R & M to containers was R & M to the ship itself. We have held containers were separate units. This ruling, however, does not dispose of the issue of the taxability of the container R & M charges in the case at bar. Plaintiffs Zim and Maher contend that if the fee for R & M to the containers is not exempt from tax because the container is not part of the ship, then it is exempt under N.J.S.A. 54:32B-8.11*fn4 as a "charge for the transportation of . . . property."
A review of the history provides little insight into the legislative intent behind the passage of N.J.S.A. 54:32B-1 et seq. or any of its exemptions. The Sales and Use Tax Act (L.1966, c. 30) was introduced as an alternative tax following legislative defeat of a State income tax. No public hearings were held and no statements accompanied the sales tax bill. The Report of the New Jersey Tax Policy Committee, Part V at 72 (1972) in its review of Sales and Use Tax Act exemptions recommended maintaining the transportation exemption section because of "(1) the virtually insurmountable administrative problems of imposing such a tax and (2) the fact that such transportation is conducted on an interstate, as well as ...