ADMINISTRATIVE NOTICE 90-8


	SUBJECT:	Artificially Carbonated Water is Subject to West Virginia's
			Soft Drink Tax


	According to the West Virginia Legislative Regulations for the Soft Drink Tax, 110 C.S.R. 19, §
3.3.4, bottled water which is naturally carbonated is exempt from the soft drinks tax.  Bottled water which is not exempt is taxed as a bottled soft drink.  As indicated in 110 C.S.R. 19, §
2.1.1 the term "bottled soft drinks" does not include plain water that is not carbonated artificially, but which is naturally carbonated before it is removed from the ground. 

	On October 18, 1979, the State Tax Department concluded that unflavored Perrier brand bottled water was exempt from the Soft Drinks Tax because "It contains no additives.  It is merely bottled and sold."  Consequently, since that time unflavored bottled Perrier water has been considered to be exempt from the soft drinks tax.  

	However, on March
14, 1990, the U.S. Food and Drug Administration (FDA) notified Perrier of its determination that Perrier "Natural Sparkling Mineral Water" was misbranded under sections 403(a)(1) and 403(i)(2) of the Federal Food, Drug and Cosmetic Act because "in fact, most if not all carbonation is added" and the water is "fabricated from two or more ingredients, namely water, carbon dioxide, and in some instances flavor...."  In response, Perrier agreed to change its labels no later than July
30, 1990.  The pertinent changes agreed to are that the principle display panel will read "Natural Mineral Water" and an ingredients statement will be added which will read "carbonated mineral water."  In a letter commenting on these changes, the FDA made the following statement:

You should understand that FDA takes exception to the use of the term "natural" in the identity statement because the term "natural" has no defined meaning in this context.  Indeed, Perrier mineral water is fabricated from the mixing of filtered carbon dioxide gas with mineral water.

	The FDA's conclusions were based on an on-site inspection of the Perrier bottling facilities in France.  According to the FDA's inspection report, the carbon dioxide which was added to the water was naturally occurring in the same ground as the water, and was even present to some extent in the water before additional amounts were added to the water to reach the desired level of carbonation.  But because some amount of carbonation is added to the water,the water cannot be considered to be naturally carbonated.  The fact that the carbon dioxide itself could be considered "natural" because it was removed from the same ground as the water does not mean the water is naturally carbonated.  Not only must the carbon dioxide itself be naturally occurring for the water to be considered naturally carbonated,  all of the carbon dioxide in the bottled water must have been present in the water before the water was removed from the ground.  

	In short, the facts as determined by the federal government clearly establish that Perrier's bottled "Naturally Sparkling Mineral Water," however ultimately designated or labeled, is carbonated artificially after it is removed from the ground.  As such, the water is within the definition of "bottled soft drinks" which are subject to the Soft Drinks Tax.

	Although the soft drinks tax regulations became effective on April
2, 1990, the change in taxability announced by this notice is not based upon policy changes in the regulations, but upon changes in the facts available to this Department.  Accordingly, this notice will not be effective retroactively to the effective date of the regulations; instead, it will become effective on the date this notice is issued.

	The applicability of this notice is not limited to Perrier brand bottled water.  Taxpayers should immediately take steps to determine whether other brands of bottled water hitherto exempt as "naturally carbonated"  remain exempt in light of the guidelines discussed in this notice and the Soft Drinks Tax regulations.

							    	FOR ASSISTANCE CALL: (304) 348-3333 OR 
							    	TOLL FREE WITHIN W. VA. 1-800-642-9016



______________________________			
	Charles O. Lorensen					Date:  July 13, 1990
    State Tax Commissioner