Fenix Construction Company of St. Louis and Five Star Ready-Mix Concrete Company and Horstmeyer Enterprises, Inc. v. Director of Revenue
449 S.W.3d 778
Mo.2014Background
- Taxpayers sought refunds of sales and use taxes on materials used to construct tilt-up concrete walls under §144.054.2, which exempts materials used in manufacturing of any product.
- Director denied refunds; Administrative Hearing Commission (AHC) denied as tilt-up walls not a “product.”
- This Court reviews AHC de novo on statutory interpretation; tax exemptions are strictly construed against taxpayers.
- Tilt-up walls are cast on site, built for specific buildings, and are not marketable as standalone products.
- Taxpayers must prove a market exists for the tilt-up walls to qualify under the exemption; no market was shown.
- Court affirms AHC’s decision that tilt-up walls are not “products” under §144.054.2.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether tilt-up walls are a “product” under §144.054.2. | Taxpayers argue tilt-up walls have market value. | Director contends walls lack marketability and thus are not products. | No; tilt-up walls are not products under the exemption. |
| Whether there was a proven market for tilt-up walls. | There is a market for the walls as outputs with value. | No market evidence; panels are site-specific and not sold separately. | No market established; exemption not available. |
| What is the proper interpretation of “product” in §144.054.2. | Product means output with market value. | Strict interpretation requires marketability, which is lacking. | Product requires a market; tilt-up walls fail this standard. |
| Is the AHC’s application of the statute supported by governing standards of review. | Ties to statutory interpretation in taxpayers’ favor. | Court should defer to AHC if supported by evidence. | AHC decision affirmed; interpretation consistent with the record. |
Key Cases Cited
- Mid-America Dairymen, Inc. v. Dir. of Revenue, 924 S.W.2d 280 (Mo. banc 1996) (defines product as an output with a market value)
- Int'l Bus. Machines Corp. v. Dir. of Revenue, 958 S.W.2d 554 (Mo. banc 1997) (product concept in Missouri tax exemptions)
- E & B Granite, Inc. v. Dir. of Revenue, 331 S.W.3d 314 (Mo. banc 2011) (granite countertops as outputs with market value; contrasts on tangible property issue)
- Brinker Missouri, Inc. v. Dir. of Revenue, 319 S.W.3d 433 (Mo. banc 2010) (strict construction of tax exemptions; legislative intent)
- Balloons Over the Rainbow, Inc. v. Dir. of Revenue, 427 S.W.3d 815 (Mo. banc 2014) (strict construction; interpret exemption language)