Com. v. Research Analysis Corp.
| Citation | 198 S.E.2d 622,214 Va. 161 |
| Parties | COMMONWEALTH of Virginia v. RESEARCH ANALYSIS CORPORATION. |
| Decision Date | 30 August 1973 |
| Court | Virginia Supreme Court |
Sally T. Warthen, Asst. Atty. Gen. (Andrew P. Miller, Atty. Gen., on brief), for plaintiff in error.
Carrington Williams, Fairfax (Boothe, Prichard & Dudley, Fairfax, on brief), for defendant in error.
Before SNEAD, C.J., and I'ANSON, CARRICO, HARRISON, COCHRAN, HARMAN and POFF, JJ.
I'ANSON, Justice.
Research Analysis Corporation (RAC) filed in the court below two petitions for correction of allegedly erroneous sales and use tax assessments made by the Department of Taxation against RAC's leased 1 computer for the years 1966 through 1970. The cases were consolidated for trial and the trial court, sitting without a jury, held that under the provisions of Code § 58--441.6(q) the computer was exempt from the tax and the assessments were erroneous. We granted the Commonwealth a writ of error to the judgment.
Code § 58--441.6(q) exempts the following from sales and use taxation:
'Tangible personal property purchased for use or consumption Directly and exclusively in research and development in the experimental or laboratory sense.' (Italics supplied.)
Pursuant to Code § 58--441.41 the State Tax Commissioner in 1969 promulgated § 1--92 of the Sales and Use Tax Rules and Regulations, which in pertinent part provides:
'Types of projects which qualify as research and development include: (a) research and development of new products; (b) research and development of new uses for existing products; (c) research and development for improving existing products; (d) research and development in advance technology; (e) basic research.'
The Commonwealth contends that the exemption granted by the statute does not, by its terms or its intended meaning, exempt property used in the type of activities in which RAC is engaged.
The pertinent evidence shows that RAC, a corporation organized under the laws of the District of Columbia and doing business in Virginia, leased a computer for use in its work as a consultant under its contracts with the United States Army. RAC's work consisted primarily of analysis of simulated battlefield situations for the Army. The computer was used to devise a methodology or formula to aid the Army in future decision-making situations, such as a formula devised for the Army's use if it were confronted with an 'outbreak of a large-scale conflict, simultaneously, in several parts of the world.'
RAC also performed work in the field of commercial aviation. It consisted of a study of the financial and practical feasibility for operating a supersonic airplane (SST), including the facilities needed and the management of personnel.
An engineering professor testified that he observed on one afternoon RAC's operations and believed them to be research and development in the experimental or laboratory sense. He characterized RAC's work as 'operations research,' which in his view as an engineer was a valid enterprise in the research and development field, but he did not claim to be an expert in 'operations research.' He said that 'in the trade' research and development has become one word, but there are distinctive differences between the two fields. Research and development was defined as a search for truth with subsequent application of the knowledge obtained through research to finding solutions to problems and to developing the solutions. He stressed that his expertise dealt with finding solutions to problems, while scientists deal with product development or the improvement of existing tangible products.
In determining whether the computer used by RAC in conducting its activities is exempt from the payment of the tax assessments under the provisions of the statute, we must keep in mind that taxation is the rule and not the exception; and that statutory tax exemptions are strictly construed against the taxpayer, with doubts resolved against the exemptions. Commonwealth v. Manzer, 207 Va. 996, 1000, 154 S.E.2d 185, 189 (1967); Commonwealth v. Community Motor Bus Co., 214 Va. ---, 198 S.E.2d 619 (1973), this day decided.
The construction of a statute by a State official charged with its administration is entitled to great weight. Miller v....
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...of Taxation v. Progressive Community Club, Inc. , 215 Va. 732, 739, 213 S.E.2d 759, 763 (1975) (citing Commonwealth v. Research Analysis , 214 Va. 161, 198 S.E.2d 622 (1973) ); Anglin v. Joyner , 181 Va. 660, 667, 26 S.E.2d 58, 60 (1943) ( "[I]n construing a statute of doubtful import the c......
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... ... Commonwealth v. Radiator Corp., 202 Va. 13, 18, 116 S.E.2d 44, 47 (1960). Exemptions granted under the sales and use tax ... ...
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United States v. Com. of Va., Civ. A. No. 79-1003-R.
...its prior view that exemption should be leniently viewed. It then pointed to its post-1971 decision in Commonwealth v. Research Analysis, 214 Va. 161, 163, 198 S.E.2d 622, 624 (1973) and Golden Skillet Corp. v. Commonwealth, 214 Va. 276, 278, 199 S.E.2d 511, 513 (1973). Both, construing exe......
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Reynolds v. Com., Record No. 1921-98-3.
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