§237-25  Exemptions of sales and grossproceeds of sales to federal government, and credit unions.  (a)  Anyprovision of law to the contrary notwithstanding, there shall be exempted from,and excluded from the measures of, the tax imposed by chapter 237 all sales,and the gross proceeds of all sales, of:

(1)  Intoxicating liquor, as defined in chapter 281,hereafter sold by any person licensed under chapter 281 to the United States(including any agency or instrumentality of the United States that is whollyowned or otherwise so constituted as to be immune from the levy of a tax underchapter 238 or 244D but not including national banks), or to any organizationto which that sale is permitted by the proviso of "Class 3" ofsection 281-31, located on any Army, Navy, or Air Force reservation, but theperson making the sale shall nevertheless, within the meaning of chapters 237,244D, and 281 be deemed to be a licensed seller;

(2)  Tobacco products and cigarettes, as defined inchapter 245, sold by any person licensed under the chapter to the United States(including any agency or instrumentality thereof that is wholly owned orotherwise so constituted as to be immune from the levy of a tax under chapter238 or 245 but not including national banks), but the person making the saleshall nevertheless, within the meaning of chapters 237 and 245, be deemed to bea licensed seller;

(3)  Other tangible personal property sold by anyperson licensed under this chapter to the United States  (including any agency,instrumentality, or federal credit union thereof but not including nationalbanks), and to any state-chartered credit union, but the person making suchsale shall nevertheless, within the meaning of this chapter, be deemed alicensed seller; and

(4)  When the amount of property sold by a licenseeturns upon the amount of the property sold through a vending machine or similardevice to the customer using the device, there shall not be deemed to haveoccurred any sale covered by an exemption under paragraph (1), (2), or (3).

(b)  Nothing in this section shall be deemed toexempt any sales to or by a federal cost-plus contractor, as defined in chapter237, or the gross proceeds thereof; with respect to all such activities andtransactions, taxes shall be levied, returned, computed, and assessed the sameas if this section had not been enacted, and in the case of an election madeunder sections 237-13(2)(F) and 237-13(3)(C)(ii), the tax shall be computed thesame as upon a sale to the state government.

(c)  Nothing in this section shall be deemed toexempt any person engaging or continuing in a service business or calling fromany part of the tax imposed upon the person for such activity, and the personshall not be entitled to deduct any amount for tangible personal propertyfurnished in conjunction therewith even though the person separately bills orotherwise shows the amount of the gross income of the business derived from thefurnishing of the property.

(d)  The exemption granted by this sectionshall apply to the seller of products sold in the State as provided insubsection (a) in respect of the privilege of manufacturing or producing, aswell as the privilege of selling, and the value or gross proceeds of sales ofthe products so sold shall be excluded from the measure of the tax imposed bychapter 237 upon the seller as a manufacturer or producer. [L 1951, c 284, §§1,2; am L 1953, c 183, §§1, 2; am L 1955, c 214, §1; RL 1955, §117-21.5; am L1957, c 34, §7; am L Sp 1959 2d, c 1, §16; HRS §237-25; am L 1968, c 7, §2; amL 1971, c 4, §4; am L 1985, c 16, §8; gen ch 1985; am L 1986, c 344, §11; am L1987, c 239, §6; am L 1989, c 8, §2 and c 149, §1; am L 1993, c 220, §3; am L1994, c 141, §3 and c 274, §1]

 

Attorney General Opinions

 

  Sales of tangible personal property made to Federal CreditUnions are exempt from the state general excise tax.  Att. Gen. Op. 65-29.

  The Hawaii general excise tax cannot be imposed upon sellerswho sell tangible personal property to National Banks.  Att. Gen. Op. 66-16.