Background

• Pace applied for the freeport exemption for 2006 inventory; the Board denied it, then the Board of Equalization affirmed, and Pace sued for summary judgment.
• Pace stores grill-body inventory in a Georgia Columbus warehouse; the bodies are die-cast aluminum and destined for Char-Broil; Pace ships them to Char-Broil’s Columbus plant.
• Char-Broil incorporates the grill bodies into finished grills, which Char-Broil ships out of state to customers, mostly outside Georgia.
• The issue is whether the Category 3 freeport exemption applies to inventory (finished goods) destined for shipment to a final destination outside Georgia.
• The trial court granted Pace summary judgment, holding the category 3 exemption applied; the Court of Appeals reversed, holding no exemption applies because the final destination is Char-Broil’s Columbus plant, not outside Georgia.
• Georgia law requires strict construction of exemptions, but a plain reading of the statute assigns the final destination to the seller’s conduct and boundaries.

Issues

Key Cases Cited

• Delta Air Lines v. Clayton County Bd. of Tax Assessors, 246 Ga.App. 225, 539 S.E.2d 905 (2000) (freeport analysis framework; strict construction favored for exemptions)
• Aircraft Spruce & etc., Co. v. Fayette County Bd. of Tax Assessors, 294 Ga.App. 241, 669 S.E.2d 417 (2008) (retailer inventory and where sales occur; exemption limits based on seller's conduct)
• City of Atlanta v. Clayton County Bd. of Tax Assessors, 286 Ga.App. 193, 648 S.E.2d 701 (2007) (summary judgment standards and de novo review on tax exemptions)
• Fulton County Tax Commr. v. Gen. Motors Corp., 234 Ga.App. 459, 507 S.E.2d 772 (1998) (statutory construction principles for exemptions)