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Fenix Construction Co. of St. Louis v. Director of Revenue

Supreme Court of Missouri, En Banc

November 25, 2014

FENIX CONSTRUCTION COMPANY of ST. LOUIS and FIVE STAR READY-MIX CONCRETE COMPANY and HORSTMEYER ENTERPRISES, INC., Appellants,
v.
DIRECTOR of REVENUE, Respondent

PETITION FOR REVIEW OF A DECISION OF THE ADMINISTRATIVE HEARING COMMISSION. The Honorable Sreenivasa Rao Dandamudi, Commissioner.

OPINION

Page 779

RICHARD B. TEITELMAN, Judge

Fenix Construction Company of St. Louis, Five Star Ready-Mix Concrete Company and Horstmeyer Enterprises, Inc., (collectively, Taxpayers) sought refunds for sales and use taxes paid on materials used to construct tilt-up concrete walls. Taxpayers asserted that the materials fell within the section 144.054.2[1] tax exemption for materials used in " manufacturing...any product." The director denied the refund claims. The Administrative Hearing Commission (AHC) determined that the tax exemption was inapplicable because the tilt-up concrete walls were not a " product" as that term is used in section 144.054.2.[2] The AHC's decision is affirmed.

I. Facts

Fenix is a construction contractor that performs concrete construction services, including the construction of " tilt-up" concrete wall panels. Tilt-up work involves casting concrete and reinforced steel wall panels on the ground and then tilting the wall panels into position as walls of the building. Tilt-up wall panels are made at the construction site because it is cost-prohibitive to construct them off-site and transport them to the construction site. According to Fenix, each panel is custom made for the specific job in accordance with the detailed specifications of the customer.

In 2011 and 2012, Taxpayers filed sales tax refund claims for their purchases of materials used in the tilt-up process. The director of revenue denied those claims. The AHC also denied the refund claims. Taxpayers filed a petition for review.

II. Standard of Review

The AHC's decision will be affirmed if: (1) it is authorized by law; (2) it is supported by competent and substantial evidence based on the whole record; (3) mandatory procedural safeguards are not violated; and (4) it is not clearly contrary to the reasonable expectations of the legislature. Section 621.193. This Court reviews

Page 780

the AHC's interpretation of section 144.054.2 de novo. Aquila Foreign Qualifications Corp. v. Dir. of Revenue, 362 S.W.3d 1, 3 (Mo. banc 2012). Tax exemptions are strictly construed against the taxpayer. Id. The taxpayer bears the burden of proving clearly and unequivocally that the exemption applies. Id. Any doubt regarding the applicability of an exemption is resolved in favor of taxation. Id.

III. Analysis

Section 144.054.2 provides sales and use tax exemptions for " materials used or consumed in the manufacturing, processing, compounding, mining, or producing of any product ...." Thus, Taxpayers must demonstrate, clearly and unequivocally, that the tilt-up concrete wall panels are a manufactured product.

The legislature has not defined the word " product" as it is used in chapter 144.[3] " Absent a statutory definition, the primary rule of statutory interpretation is to give effect to legislative intent as reflected in the plain language of the statute." Brinker Missouri, Inc. v. Dir. of Revenue, 319 S.W.3d 433, 437-38 (Mo. banc 2010). When interpreting a statutory tax exemption, the interpretation must adhere to the requirement of strict ...


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