Opinion ID: 1213419
Heading Depth: 1
Heading Rank: 4

Heading: Passenger and Baggage Service Equipment

Text: This category includes equipment necessary to the loading, unloading and handling of passenger baggage, supplying the packing boxes for freignt, an intercom system, attendant stands at passenger gates, baggage and ticket computer components, flight information boards, and parking wands. Although a disposal unit and an eating utensil packing machine used at United's flight kitchen in Washington National Airport are included under the above category, we will deal with them under the Washington National Airport jurisdictional issue. Transporting and handling passenger baggage is an integral part of an airline's common carrier service. The equipment necessary for loading or unloading and the handling of baggage is used directly by United in the rendition of its common carrier service. Packing materials and gate assemblies are indispensable in the safeloading of aircraft and transportation of baggage and freight. Ticket and baggage counter comonents, the intercom system, flight inforation boards and attendant stands at passenger gates are used to process the passengers and send them on their flight. [3] Headrest covers are used to provide sanitary protection for passenger seats on the aircraft. Parking wands are used to accomplish the safe movement of aircraft while on the ground. All of these items are used directly in the rendition of common carrier service and are thus exempt from taxation under Code | 58-441.6(u). Washington National Airport Jurisdictional Issue By a State-Federal Compact entered into in 1946, Virginia ceded to the United States exclusive jurisdiction over the territory embraced within the Washington National Airport, reserving only the specific tax powers relating to the sale of oil, gasoline, and all other motoer fuels and lubricants sold at the airport for use in over-the-road vehicles. Hence, Virginia and Arlington County were precluded by this compact from asserting any other tax powers at Washington National Airport. See Floyd Fischer, 199 Va. 363, 99 S.E.2d 612 (1957). Prior to the date of the State-Federal compact, Congress, in 1940, had enacted the Buck Act (4 U.S.C., || 105-10), which provided, in effect, that the states and their political subdivisions might impose income, sales and use taxes within federal enclaves situated in the several states. But, because of the State-Federal compact, Washington National Airport was the only civil airport in the United States where businesses were immune from state and local taxation. In 1968, the General Assembly of Virginia adopted legislation to amend the compact by extending its jurisdiction to levy taxes under the provisions of the Buck Act and to revoke the section of the compact ceding its taxing powers at Washington National. The legislation also sought the right to impose and collect enplaning service fees as provided in Chapter 7, Title 5.1 of the Code of Virginia of 1950, amended, (Repl. Vol. 1978). However, it was provided that the legislation would not become effective unless and until the rights were ratified and accepted by the Congress of the United States. Acts 1968 at 1369, 1371-72. As a result of Virginia's 1968 Act, legislation was immediately proposed in Congress to grant the Commonwealth the right to impose and levy taxes on activities at the National Airport as provided under the Buck Act, but this legisation failed passage. Later, when the Airport and Airways Development Act (AADA) was under consideration in Congress, Representative Joel T. Broyhill of Virginia proposed an amendment to the AADA which was enacted as | 210 of the act, effective July 1, 1970. Section 210 provides, in pertinent part, as follows: (a) Nothing in this title or in any other law of the United States shall prevent the applicationof... [the Buck Act] to civil airports owned by the United States. (b) Subsection (a) shall not apply to -- (1) sales or use taxes in respect of fuels for aircraft or in respect of other servicing of aircraft, or (2) taxes, fees, head charges, or other charges in respect of the landing or taking off of aircraft or aircraft passengers or freight. It is obvious that the language of | 210(a) embraced the act by which Congress entered into the State-Federal compact of 1946 (Act of October 31, 1945, Public Law 208, Statutes at Large). The only limitations on the scope of subsection (a) were that sales and use taxes could not be imposed in respect of fuels for aircraft or in respect of other servicing of aircraft, and that taxes, fees or other charges could not be imposed on the landing or taking off of aircraft or aircraft passengers or freight. The Commonwealth contends that because the meaning of the phrase other servicing of aircraft is to be interpreted to mean items similar to fuels for aircraft, those items assessed and taxes levied on United's personal property at Washington National Airport after July 1, 1970, do not fall within the exemption category, and that | 210 of the AADA allows the Commonwealth to exercise its taxing authority under the Buck Act to the fullest, except as otherwise provided. On the other hand, United contends that its personal property at Washington National Airport fell within the category of other servicing of aircraft and is not limited to items similar to fuel; that while the phrase in respect of other servicing of aircraft is not clear, it shows a congressional purpose to continue in effect the tax-free status of the airline industry at Washington National Airport; and that the legislative history of the AADA suports this contention. Federal statutes allowing exemptions from taxation, like state exemption statutes, are to be narrowly construed. Bingler Johnson, 394 U.S. 741, 751-52 (1969). The meaning of doubtful words in a statute may be determined by reference to their association with related words and phrases. Thus, when general words and specific words are grouped together, the general words are limited and qualified by the specific words and will be construed to embrace only objects similar in nature to those objects identified by the specific words. Prog. Com. Club, supra, 215 Va. at 737-38, 213 S.E.2d at 762-63 (1975); Kohlberg Va. Real Estate Comm., 212 Va. 237, 183 S.E.2d 170 (1971); Sellers Bles, 198 Va. 49, 92 S.E.2d 486 (1956); Sands, 2A Sutherland Statutory Construction (4th ed. 1973), | 47.17. The words used in section 210(b)(1) are fuels for aircraft or other servicing of aircraft. Both phrases refer to aircraft. Thus, the first limitation imposed on the exemption by the words used is that the exempt items must be used in other servicing of aircraft. It is clear that the word fuels denotes one specific type of servicing of an aircraft but not the only type. Hence, the construction of the phrase other servicing of aircraft results in a limitation of the exemption to items similar to fuels that sevice the aircraft itself, such as lubricants, etc. The exception relates to servicing or aircraft, not servicing passengers or freight. Section 210(b)(2) was a rejection of one of Virginia's requests made in its 1968 Act that it be specifically permitted to impose an enplaning fee on passengers deploying from Washington National. Even so, the sales and use taxes imposed upon United in this case do not constitute the type of head and other charges contemplated by | 210(b)(2). United relies on excerpts from the legislative history of the AADA in support of its contention that all its personal property at National is exempt as servicing of aircraft passengers and freight. The language used in the report of the congressional committee is as follows: It appears inconsistent to continue complete exemption from State sales and income tax jurisdiction when other competitive businesses located in the vicinity are subject to these State taxes. It was concluded that the general rules as to tax jurisdiction on Federal reservations are also to apply, with certain exceptions, to Washington National Airport. Exceptions are provided with respect to taxes on aviation fuels, servicing of aircraft, landing or takeoff fees, and other charges dealing with aircraft, passengers, and freight. Facilities which serve persons not as passengers, however, are subject to the general State tax jurisdiction. . . . Accordingly, this title provides that with certain exceptions, the general rules as to taxes on Federal reservations are to apply in the cae of Washington National Airport. Exceptions are provided with regard to fuels and servicing of aircraft and landing and takeoff charges. However, facilities at the airport that do not deal directly with the pasengers or with the aircraft would come under the general provisions of law. So, for example, facilities for the preparation of food to be served when the aircraft is airborne will be exempt, while restaurant and cafeteria facilities for the general public, employees, and others on the ground will be subject to the provisions of general law. H. Rep. 91-601 at 51, 91st Cong. 2d Sess. reprinted in (1970) U.S. Code Cong. & Ad. News 3047 at 3086, 3096. The report of the congressional committee does not classify food and related items as other servicing of aircraft, nor does it mention that food and related items served when the aircraft is airborne will be exempt from sales taxes. The report does state, however, that facilities for the preparation of food to be served when the aircraft is airborne will be exempt. We note that the legislative history of a statute is an appropriate source to consult for the purpose of ascertaining the intent of Congress. But in the construction of a statute, courts are not required to follow committee reports which import a broader meaning than the statutory language. Railroad Com. Chicago, B. & Q.R. Co., 257 U.S. 563, 588-89 (1921). While the congressional committee's report stated that the facilities at Washington Airport used in the preparation of food served to passengers when the aircraft is airborne will be exempt, this statement is broader than the language of the provisions of | 210 of the AADA and we are not required to give it effect. We hold that such facilities are not exempt under the language of | 210 of the AADA and are not used directly by United in the rendition of its common carrier service under the provisions of Code | 58-441.6(u). Hence, the assessments on the facilities used for the preparation of food were not erroneous. Additionally, when the language of | 210 of the AADA is considered as a whole, it is clear to us that Congress granted Virginia all the Buck Act powers to assess and levy sales and use taxes on the personal property of United and other airlines operating out of Washington National Airport, except as to fuels, lubricants, and analogous items used in servicing the aircraft itself. If this were not its intent, Congress could have very easily provided that | 210 of the AADA was not to apply to any aspect of the airline industry operating out of the airport. We hold that the Virginia Department of Taxation had jurisdiction under the provisions of | 210 of the AADA to assess sales and use taxes on food and related items boarded on United's aircraft at Washington National and served to its passengers when the aircraft was airborne, and that United is not exempt from sales and use taxes because food and related items are not used directly by United in the rendition of its common carrier service (Code | 58-441.6(u)). The anti-hijacking equipment, reservation and ticketing equipment, and passenger and baggage service equipment used at Washington National Airport are exempt from sales and use taxes under the provisions of Code | 58-441.6(u). We agree with the trial court that on erroneous assessments made before July 1, 1973, interest shall be paid at the rate of 8% per annum on the amounts paid by United from the date of the final judgment until refunded (Code | 8.01-382); and that on the erroneous assessments made on and after July 1, 1973, interest shall be paid on the amounts paid by United as provided by Code | 58-1140.1 For the reasons stated, the case is remanded for further proceedings not inconsistent with this opinion. Affirmed in part, Reversed in part and remanded. COCHRAN (in part) COCHARAN, J., concurring in part, dissenting in part. I agree with the majority that United is not entitled to exemption from payment of sales and use taxes for food and related items served to passengers. The exemption provided by Code | 58-441.6(u) for tangible personal property sold or leased to an airline for use or consumption by such airline directly in the rendition of its common carrier service is not applicable. Food and related items are not used directly in the rendition of United's common carrier service. Nor is the purchase of such items by United for service to its passengers a sale at retail for resale that would be exempt under the provisions of Code | 58-441.2(c). And I find no merit in United's contention that the tax would impose a direct burden upon interstate commerce. Therefore, I concur with the majority in holding that the trial court erred in ruling that food and related items were entitled to exemption. I cannot agree with the majority that all the other tangible personal property in controversy is exempt because it is used directly in the rendition of United's common carrier service. Such a holding cannot, in my view, be reconciled with the principles recently approved by us in Commonwealth Community Motor Bus, 214 Va. 155, 198 S.E.2d 619 (1973), and reaffirmed in Webster Department of Taxation, 219 Va. 81, 245 S.E.2d 252 (1978). The majority opinion correctly points out that the language of the exemption provided in Code | 58-441.6(u) for airlines parallels the language of Code | 58-441.6(u) which sets forth the exemption of tangible personal property sold or leased to a motor vehicle common carrier for use or consumption directly in the rendition of its public service. We narrowly construed the word directly in the exemption provision of Code | 58-441.6(h) in Community Motor Bus to include only such essential tangible personal property used immediately and principally by a common carrier to keep its motor vehicles on the road in performance of its public service. Id. at 159, 198 S.E.2d at 622. We also held that items which are esential to operation of a business but are not an immediate part of public-utility service are not exempt and that exemption is not provided merely because the taxpayer is required by law to comply with certain conditions. In Webster Brick, we noted that since adoption of the 1971 Constitution we have applied the mandate of strict construction against taxpayers in all cases where exemptions were sought under Code | 58-441.6; we resolve any doubt against one claiming the exemption; and we accord great weight to the construction placed upon the statute by a state official charged with its administration. While the majority opinion does not disavow these guidelines and, indeed, restates them with approval, its effect is to establish a new and broader definition of direct use applicable only to common carriers by air. For example, in approving the exemption of anti-hijacking surveillance equipment, the majority recognizes that this equipment is not per se exempt merely because it is required by federal law. However, the majority goes on to hold that the direct use exemption applies to this equipment because of the potential culpability of an air carrier for failure to provide adequate protection against air Piracy. This would seem to extend the definition of direct use far beyond that contemplated by Community Bus. The exemption of the highly sophisticated electronic computer system known as Apollo was also based upon its direct use in the furnishing of air carrier service. That some of the data furnished by the Apollo system, such as weather information, flight plans, fuel limitations, cruising altitudes, and weight limits, are used directly in providing common carrier service is not denied by the Department of Taxation. But, insofar as the Apollo system comprises reservation and ticketing equipment, the Department contends, and I agree, that the exemption should not apply. As to this category I would remand the case for a determination of the property not entitled to exemption. By the same reasoning I cannot agree that aircraft passenger and baggage servicing equipment, while useful and even essential in maintaining an airline's competitive marketing position, is used directly in the rendering of common carrier service by air under the guidelines heretofore approved by us. Although it is a very close question, I concur in the majority view that under | 210 of the Airport and Airways Development Act, effective July 1, 1970, the Department of Taxation has jurisdiction to impose sales and use taxes on United's tangible personal property at Washington National Airport, except for fuels for aircraft and items similar to fuels used in servicing aircraft.