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Keywords

statutetax law
statutetestimonyrespondent

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West Lake Quarry & Material Co. v. Schaffner, 451 S.W.2d 140

Facts

West Lake Quarry & Material Co., Inc. contested a sales tax of $36,040.96 collected by the State Director of Revenue, arguing that their operations of removing and processing rock qualified for a tax exemption under the sales tax law. The company engaged in blasting rock, removing it from the quarry, crushing, and sizing it for sale. The Director contended that these activities did not constitute mining or manufacturing, leading to the legal dispute.

The Director contends that this operation is neither mining nor manufacturing. West Lake's operation is described in an agreed statement of facts and testimony of its president in part as follows: ‘The quarrying operation involves the removal of overburden (dirt and in some cases sand) to expose the rock, the removal of the rock from the ground by means of blasting by use of explosives, the removal of the rock so blasted from the quarry pit, crushing and sizing and selling such rock.'

Issue

Whether the machinery and equipment used by West Lake Quarry & Material Co., Inc. are exempt from sales tax under the statute that provides exemptions for machinery used in manufacturing or mining products intended for final use or consumption.

The issue involved is whether certain machinery and equipment of West Lake Quarry & Material Co., Inc. comes within the exemption provided by s 144.030, subd. 3(4) as follows: ‘(4) Machinery and equipment purchased and used to establish new or to expand existing manufacturing, mining or fabricating plants in the state if such machinery is used directly in manufacturing, mining or fabricating a product which is intended to be sold ultimately for final use or consumption; * * *.’

Rule

The relevant statute exempts machinery and equipment used to establish or expand manufacturing, mining, or fabricating plants if such machinery is used directly in the production of a product intended for final use or consumption.

The relevant statute exempts machinery and equipment used to establish or expand manufacturing, mining, or fabricating plants if such machinery is used directly in the production of a product intended for final use or consumption.

Analysis

The court analyzed the operations of West Lake Quarry, determining that the removal of rock from the ground and its subsequent processing fell within the definition of mining as used in the statute. The court noted that even if part of the operation was classified as manufacturing, the machinery used for both mining and manufacturing was exempt under the statute. The court referenced similar cases to support its conclusion that the processing of rock into various sizes constituted manufacturing.

Therefore, we hold that respondent's operations in removing rock from the ground are within the term ‘mining’ as used in s 144.030, subd. 3(4). Obviously, the purpose of exempting machinery and equipment used in manufacturing or mining products to be sold for final use or consumption is to encourage the development of such enterprises to produce products in this state which are subject to sales tax when sold and thus build up the economy of this state.

Conclusion

The court affirmed the judgment in favor of West Lake Quarry, holding that their operations qualified for the sales tax exemption. However, it modified the judgment to deduct the sales tax paid on a specific wheel loader not used directly in mining or manufacturing.

The judgment as modified is affirmed.

Who won?

West Lake Quarry & Material Co., Inc. prevailed because the court found that their operations qualified as mining under the statute, thus entitling them to a sales tax exemption.

West Lake Quarry & Material Co., Inc. prevailed because the court found that their operations qualified as mining under the statute, thus entitling them to a sales tax exemption.

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