Gate Gourmet, Inc. v. Director of Revenue
2016 Mo. LEXIS 326
| Mo. | 2016Background
- Gate Gourmet prepared, flash-froze, and sold bulk meals under catering contracts to commercial airlines at Lambert-St. Louis Airport; meals were ordered hours before flights, delivered on carts, reheated onboard, and intended for consumption on aircraft.
- Gate Gourmet reported those sales at Missouri’s reduced 1% food sales-tax rate (§144.014) for 2008–2010; Missouri Dept. of Revenue audited and assessed tax at the general 4% rate (§144.020), totaling approximately $296k, which Gate Gourmet paid under protest.
- The Director denied Gate Gourmet’s protest; Gate Gourmet appealed to the Administrative Hearing Commission, which denied the refund, finding the meals were not sold “for home consumption.”
- Gate Gourmet petitioned the Missouri Supreme Court for review; the court reviews statutory construction de novo but defers to Commission fact findings supported by substantial evidence.
- Central statutory issue: whether the meals fit the §144.014 definition of “food” (which incorporates 7 U.S.C. §2012(k)) — i.e., food for which food stamps may be redeemed, excluding hot foods ‘‘ready for immediate consumption,’’ and limited by whether items are sold "for home consumption."
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether frozen airline meals qualify as “food” sold “for home consumption” under §144.014 (to get 1% rate) | Gate Gourmet: meals are frozen (not hot) and thus fall within the federal definition of food for which food stamps may be redeemed, so 1% rate applies | Director: context matters; meals were sold and intended for consumption on aircraft (not for home consumption), so 1% exception does not apply | Held: Meals were intended for in-flight consumption, not for home consumption; 4% rate applies |
| Whether statutory definition requires looking to context of sale or only the food’s abstract characteristics | Gate Gourmet: only the food’s type matters (frozen v. hot); abstract capability to be eaten at home is dispositive | Director: the statute (and Wehrenberg) requires assessing whether items are intended for home consumption in context | Held: Context (intended use/where consumed) is controlling; Wehrenberg controls |
| Whether application violates Missouri constitutional uniformity clause | Gate Gourmet: disparate treatment (e.g., grocery TV dinners taxed differently) violates uniformity | Director: distinction between items sold for home consumption and those not is reasonable and treats similarly situated taxpayers alike | Held: No uniformity violation; statutory distinction is reasonable |
| Whether decision should be applied retroactively or is “unexpected” under §143.903.2 | Gate Gourmet: adverse construction is unexpected and should be prospective only | Director: decision aligns with statute and precedent; not unexpected | Held: Not unexpected; retrospective application proper |
Key Cases Cited
- Wehrenberg, Inc. v. Dir. of Revenue, 352 S.W.3d 366 (Mo. 2011) (context of sale controls whether item is “for home consumption” for reduced food-tax rate)
- Krispy Kreme Doughnut Corp. v. Dir. of Revenue, 488 S.W.3d 62 (Mo. 2016) (focus on how food is generally consumed, not merely capability of immediate consumption)
- Eilian v. Dir. of Revenue, 402 S.W.3d 566 (Mo. 2013) (taxpayer bears burden to prove entitlement to refund before the Commission)
- Fred Weber, Inc. v. Dir. of Revenue, 452 S.W.3d 628 (Mo. 2015) (statutory construction reviewed de novo; Commission fact findings binding if supported)
- Union Elec. Co. v. Dir. of Revenue, 425 S.W.3d 118 (Mo. 2014) (standards for judicial review of Commission decisions)
- McKinley Iron, Inc. v. Dir. of Revenue, 888 S.W.2d 705 (Mo. 1994) (uniformity clause allows reasonable classifications among taxpayers)
- Sneary v. Dir. of Revenue, 865 S.W.2d 342 (Mo. 1993) (statutory constructions applying retrospectively are permissible absent an unexpected ruling)