Fred Weber, Inc. v. Director of Revenue
2015 Mo. LEXIS 4
| Mo. | 2015Background
- Fred Weber, Inc. (Weber) sold rock base and hot asphalt (~300°F) to private paving contractors for road and parking-lot construction and resurfacing; paving contractors placed and compacted the asphalt on site.
- From Oct. 2008–Sep. 2009 Weber sold about $2.6 million in these materials and sought a sales-tax refund of $139,654.62 under Mo. Rev. Stat. § 144.054.2 (materials used or consumed in manufacturing/processing/etc.).
- The Director of Revenue denied the refund; Weber appealed to the Administrative Hearing Commission (AHC), which reversed and found the paving activity qualified as "manufacturing/processing/compounding/producing."
- The Director sought review in the Missouri Supreme Court, which reviews statutory interpretation de novo and requires taxpayers to prove exemptions by clear and unequivocal proof.
- The Supreme Court held the AHC misapplied § 144.054.2: road/parking-lot construction/resurfacing is construction, not the large-scale industrial activities contemplated by the statute, so the exemption did not apply.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether sales of rock base and asphalt to paving contractors are exempt as materials "used or consumed in manufacturing, processing, compounding, or producing" a product under § 144.054.2 | Weber: Paving contractors "processed/produced" roads and parking lots by combining materials and altering them in a way that created new products, so sales are tax-exempt | Director: Paving contractors performed construction, not industrial processing/manufacturing; § 144.054.2 targets large-scale industrial activities and does not include construction/resurfacing | Held for Director: construction/resurfacing is not within the industrial terms of § 144.054.2; AHC erred in extending the exemption to these activities |
Key Cases Cited
- Branson Props. USA, L.P. v. Dir. of Revenue, 110 S.W.3d 824 (Mo. banc 2003) (definition of "manufacturing" as physical alteration creating a new article)
- Aquila Foreign Qualifications Corp. v. Dir. of Revenue, 362 S.W.3d 1 (Mo. banc 2012) (statutory "processing" ambiguous; use noscitur a sociis to limit to industrial context)
- Union Elec. Co. v. Dir. of Revenue, 425 S.W.3d 118 (Mo. banc 2014) (terms in § 144.054.2 describe large-scale industrial activities)
- AAA Laundry & Linen Supply Co. v. Dir. of Revenue, 425 S.W.3d 126 (Mo. banc 2014) (standard for reviewing AHC interpretation of revenue statutes)
- Parktown Imports, Inc. v. Audi of Am., Inc., 278 S.W.3d 670 (Mo. banc 2009) (primary rule: interpret statute to give effect to General Assembly's intent and plain language)