1. (a) The service of initial installation, alteration, addition, or replacement of machinery and equipment that qualifies for the exemption from the gross receipts or compensating use tax provided by Arkansas Code §§ 26-52-402 and 26-53-114 (machinery and equipment used directly in manufacturing) is not subject to gross receipts or use tax.
2. (b) Labor services that are exempt from tax as provided in this section are exempt without regard to who performs and bills for the labor services.
3. (c) Labor performed in connection with the replacement of exempt manufacturing machinery is exempt from tax only if the machinery being replaced meets all of the requirements for exemption required by Arkansas Code §§ 26-52-402 and 26-53-114, including the requirement that substantially all of the machinery required to perform an essential function is replaced.
4. (d) The service of repair of exempt machinery is taxable.

Codification Notes: This section as promulgated prior to codification into the Code of Arkansas Rules contained a footnote as follows: "Source: Ark. Code Ann. § 26-52-402"