Georgia Supreme Court Reverses Replacement and Repair Parts Ruling

The Supreme Court of Georgia reversed a 2007 Georgia Court of Appeals ruling that the 1997 version of an exemption statute created an exemption for manufacturing machinery replacement and repair parts. Although the added phrase “including components thereof” created ambiguity as to the inclusion of repair and replacement parts, the court held that it did not create a clear and unambiguous exemption. Further, the court asserted that in the case of ambiguity, the statute must be interpreted in favor of the tax, not the exemption. The court also noted that historically, the Legislature has explicitly declared repair parts subject to tax, and that the express legislative intent to phase in an exemption with the 2000 amendment of the statute further clarifies that no intended exemption for replacement and repair parts existed under the 1997 version of the statute. (Georgia Department of Revenue v. Owens Corning, Supreme Court of Georgia, No. S07G1297, 2008 Ga. LEXIS 356, April 21, 2008)

Posted on August 7, 2008