S.C. Code Regs. 117-321.1 — Sales of Fuel, Lubricants and Mechanical Supplies

Code Section 12-36-2120 exempts from payment of sales or use taxes the sale or use of fuels,
lubricants and supplies for use or consumption aboard ships in intercoastal trade between ports of the
state of South Carolina and ports in other states of the United States or its possessions, or in foreign
commerce between ports in the state of South Carolina, and ports in foreign countries; provided,
however, that nothing herein shall be construed to exempt or exclude from the tax herein levied, that
gross proceeds of the sale or sales of materials and supplies to any person for use in fulfilling a contract
for the painting, repair or reconditioning of vessels, barges, ships and other watercraft.
It will be noted that the exemption does not apply to sales to fishing craft, tugs, vessels, or other
watercraft not used in trade or commerce between South Carolina ports and ports of other states or
foreign countries.
This exemption has been held to include any waters on the seacoast which are without the
boundaries of the low water mark and would include waters of sea in small harbors and roadstands
enclosed by narrow headlands and promontories. This ruling has been interpreted not to include the
inland waterway.
You will note that the proviso contained in the section outlined above renders subject to the tax the
sale or use of materials and supplies to any person for use in fulfilling a contract for the painting,
repairing, or reconditioning of vessels, etc. Any person under contract for the purposes as outlined
above must pay to his supplier sales or use tax, whichever is applicable, on the purchases of tangible
personal property for use in fulfilling such a contract unless such person is engaged in a dual type
business in which case the tax applies on the withdrawal for use.