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Wilson & Co., Inc. v. Department of Revenue, 531 S.W.2d 752

Facts

In late 1973, Wilson & Co. constructed a hog slaughtering and packing plant in Marshall, Missouri, installing machinery valued at over $3 million. After paying sales/use tax on a portion of the machinery, the Department of Revenue assessed an additional tax on machinery valued at approximately $2.5 million. Wilson contested this assessment, leading to a legal dispute over whether the machinery was exempt from sales/use tax under the state's manufacturing exemption.

Issue

The main legal issue is whether the conversion of live hogs into marketable portions of fresh meat and other products qualifies as 'manufacturing' under the sales and use tax exemption statute.

The question presented in this case is whether the conversion of live hogs into marketable portions of fresh meat and other products is ‘manufacturing’ within the meaning of s 144.030, subsection 3(4) , 1 providing for exemption from the sales and use tax of certain machinery and equipment purchased and used to establish new or expand existing manufacturing plants in this state. We hold that it is manufacturing.

Rule

The relevant statute, s 144.030, subsection 3(4), exempts machinery and equipment purchased and used to establish or expand manufacturing plants if such machinery is used directly in manufacturing a product intended for final use or consumption.

Subsection 3(4) of s 144.030 provides that the following machinery and equipment shall be exempt from the sales/use tax: ‘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.’

Analysis

The court analyzed the process by which live hogs are transformed into marketable food products, determining that this process meets the definition of manufacturing. The court referenced previous cases that established a broad interpretation of manufacturing, concluding that the machinery used in the slaughtering and packing process was integral to producing new and different salable articles.

The West Lake and Heidelberg cases are controlling. The conversion of a live hog into marketable portions of food suitable for human consumption and into other marketable products is manufacturing within the meaning of s 144.030 , subd. 3(4). It is: a ‘process which took something practically unsuitable for any common use and changed it so as to adapt it to * * * common uses'; ‘the production from raw material of new and different salable articles for new and different uses.’ The machinery and equipment used in this process, described in the parties' stipulation as being that about which there remained a dispute between them, is exempt from a sales/use tax thereon.

Conclusion

The court affirmed the lower court's judgment, ruling that the machinery and equipment used in the hog slaughtering and packing process were exempt from the sales-use tax as they were used in manufacturing.

The judgment is affirmed.

Who won?

Wilson & Co. prevailed in the case because the court found that the conversion of live hogs into marketable food constituted manufacturing, thus qualifying for the tax exemption.

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