BASF Corp. v. Director of Revenue
2012 Mo. LEXIS 284
| Mo. | 2012Background
- BASF's Hannibal, Missouri plant manufactures finished molecules for herbicides/pesticides; processes involve four lines producing products from reagents.
- Recovered materials are generated during processing and include internally recovered and third-party materials, comprising about 42% by weight of inputs.
- Statutes 144.030.2(4) and 144.030.2(12) provide sales/use tax exemptions for material recovery plants and related electricity use under specified conditions.
- The director audited BASF for use tax on chemicals, natural gas, coal, and electricity; BASF sought exemptions and refunds.
- The Missouri Administrative Hearing Commission rejected BASF’s exemptions, concluding the plant did not meet the definition of a material recovery processing plant; BASF appealed.
- BASF contends the plant qualifies as a material recovery processing plant and seeks the exemptions; the director opposes this interpretation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hannibal qualifies as a material recovery processing plant under 144.030.2(4). | BASF argues materials recovered and used solely for operation meet the definition. | Director contends BASF's processes do not yield 'recovered materials' as defined. | Not a material recovery processing plant; exemptions denied. |
| Whether recovered materials must be solid waste under the statute. | BASF asserts liquids/gases can be recovered materials. | Director relies on solid waste definition to limit recovered materials. | Recovered materials must meet solid waste-diversion standard; BASF fails. |
| Whether electricity exemptions apply if plant qualifies. | BASF says plant's processes meet criteria for recovered materials with electricity. | Director argues criteria not satisfied. | Electricity exemptions not shown under 144.030.2(12). |
| Whether coal and natural gas exemptions require sole operation of exempt machinery. | Stipulation shows purchases were for operation of exempt equipment. | Cannot prove purchases were solely for exempt machinery; not shown. | No exemptions for coal/natural gas. |
| Whether the decision should be applied prospectively only. | BASF seeks prospective-only application due to lack of predictability. | Decision not unexpected; prospective-only not warranted. | Prospective-only application not warranted. |
Key Cases Cited
- Aquila Foreign Qualifications Corp. v. Dir. of Revenue, 362 S.W.3d 1 (Mo. banc 2012) (statutory construction and pari materia principles apply to revenue laws)
- Brinker Mo., Inc. v. Dir. of Revenue, 319 S.W.3d 433 (Mo. banc 2010) (strict construction of tax exemptions; de novo review of agency interpretations)
- Derousse v. State Farm Mut. Auto. Ins. Co., 298 S.W.3d 891 (Mo. banc 2009) (ambiguity resolution and legislative intent)
- Six Flags Theme Parks, Inc. v. Dir. of Revenue, 102 S.W.3d 526 (Mo. banc 2003) (standard of review for agency factual determinations)
- Sneary v. Dir. of Revenue, 865 S.W.2d 342 (Mo. banc 1993) (prospective application of unexpected decisions)
- State ex rel. Rothermich v. Gallagher, 816 S.W.2d 194 (Mo. banc 1991) (in pari materia and harmonization of statutes)
- Am. Eagle Waste Indus., LLC v. St. Louis County, 379 S.W.3d 813 (Mo. banc 2012) (affirming agency result even if reasoning differs; substantial evidence standard)