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Satco, Inc. v. State Board of Equalization … (1983)

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Sales of Goods to Common Carrier Not Exempt Unless a Proper Bill of Lading Is Issued

Taxpayer sold goods to an airline common carrier under bills of lading which listed the carrier, not the taxpayer, as the shipper. The goods were delivered to and inspected by the carrier in California, but were for use out of state.

The Board denied an exemption under Revenue and Taxation Code Section 6385 because the bill of lading did not show taxpayer as the shipper as required in Regulation 1621. The taxpayer filed an action for refund, and the trial court entered judgment for the taxpayer.

The court of appeal reversed and held in favor of the Board. The court held that the place of delivery determines whether sales to common carriers are exempt under Section 6385. Taxpayer's sales were not exempt because the bills of lading did not show taxpayer as the consignor, the contract documents indicated delivery occurred in California, and the carrier's inspection of the goods at the place of delivery was the kind of inspection performed by a purchaser, not a common carrier. Satco, Inc. v. State Board of Equalization (1983) 144 Cal.App.3d 12.