Laws, Regulations and Annotations


Business Taxes Law Guide—Revision 2024

Sales and Use Tax Annotations

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325.0000 Interstate and Foreign Commerce—Regulation 1620

Annotation 325.1260

(c) Shipments from California to Points Outside State

(5) Exports

325.1260 Foreign Naval Vessel. A foreign government purchased an anchor chain from the California retailer for use as part of the running gear of a vessel of its navy. The chain was delivered to the vessel at a California port. It was contended that since the vessel flies the Chilean flag, delivery to the vessel constituted delivery to foreign territory, and for this reason the sale was exempt from sales tax as a sale in foreign commerce. The California Supreme Court, however, in Shell Oil Co. v. State Board of Equalization, 64. A.C. 773, has stated that "An article delivered to a vessel which flies a foreign flag cannot, for that reason alone, be deemed to have been received at a foreign country or destination and thus to have become an ‘export,' ". The sale of the anchor chain, delivered to the ship in this state, was a taxable retail sale. 8/23/66.