Wilson & Co., Inc. v. Department of Revenue
| Decision Date | 12 January 1976 |
| Docket Number | No. 58940,No. 2,58940,2 |
| Citation | 531 S.W.2d 752 |
| Parties | WILSON & CO., INC., Plaintiff-Respondent, v. DEPARTMENT OF REVENUE, Defendant-Appellant |
| Court | Missouri Supreme Court |
Robert H. House, Asst. Atty. Gen., Jefferson City, for defendant-appellant.
George S. Huff, Huff & Huff, Marshall, for plaintiff-respondent.
The question presented in this case is whether the conversion of live hogs into marketable portions of fresh meat and other products is 'manufacturing' within the meaning of § 144.030, subsection 3(4), 1 providing for exemption from the sales and use tax of certain machinery and equipment purchased and used to establish new or expand existing manufacturing plants in this state. We hold that it is manufacturing.
In late 1973 Wilson & Co. (hereinafter Wilson or plaintiff) erected at Marshall, Missouri, a new hog slaughtering and packing plant in which it installed machinery and equipment purchased for use in that process. This machinery and equipment had a total value of $3,092,431.74. Of that amount sales/use tax was paid by Wilson to the state on $21,942.92, leaving a balance of $3,070,488.82 on which no tax was paid. Following an informal hearing, the Director of Revenue on May 17, 1974, assessed a sales/use tax of $92,114.66 plus interest. Thereafter, Wilson sought a reassessment and, as a result of a rehearing in connection therewith, this plaintiff and the Department of Revenue (defendant) entered into a stipulation in which they agreed: (1) that of certain machinery and equipment (separated and described in the stipulation) purchased and used in the facility some was taxable and some was exempt from the tax; and (2) that they were unable to agree upon and there remained between them a dispute as to whether certain other machinery and equipment (described in the stipulation) purchased for and used in the facility and having a value of $2,517,497.84 was exempt from the tax under § 144.030.3(4).
Shortly thereafter, plaintiff commenced this action under § 144.685 seeking review of defendant's order assessing the tax upon the above-mentioned machinery and equipment having the agreed value of $2,517,497.84 and a judgment 'reversing the order of assessment.' Judgment was for plaintiff and defendant appealed. Construction of a state revenue law is involved; hence, this court has appellate jurisdiction. Mo.Const. Art. V, § 3.
The machinery and equipment, the taxability of which is in dispute, is installed in plaintiff's new plant and arranged to function and be utilized as parts of a 'mass-production line' or facility running through several departments and rooms of the plant. It is no doubt designed to handle several thousand hogs per day and employ several hundred persons, as plaintiff suggests in its verified petition.
The facts are not in dispute. The process by which the animal is transformed into edible meat ready for human consumption and into other products begins in the 'kill and cut' department. As the hog on hoof enters this department he is stunned with an electrical device, immediately stuck with a knife and killed, and hung from an overhead conveyer which carries the body to a scalding tub where the hair is soaked and loosened. From there the carcass is carried through a dehairing machine, to and through a singeing apparatus, and then to a polisher were any remaining hair or dirt is washed and polished off. Leaving there, the conveyer system carries the carcass through the dressing chain where it is shaved, the head and entrails removed by hand, the body cut in half by a manually operated power saw, rewashed, and deposited in the cooler for 12--14 hours which lowers the meat temperature to approximately 37 degrees. From the cooler the two halves of the carcass go to the 'cut' room of the department where they are cut up by various hand-knife, saw and mechanical means into hams, shoulders, loins and ribs, leaving only the belly and fat back. The belly is then separated from the fat back by a power-operated stationary knife. In the meantime, the entrails which were removed in this department have moved on direct to the 'meat specialty' department. The several cuts of meat then move to the 'converting' room.
In the converting room, the cuts of meat above described are reduced in weight by hand trimming, and further cut, trimmed, or deboned to meet the specifications of a particular order of a customer. Most of these cuts of meat are sold to wholesalers, processors or manufacturers. None of the meat is smoke-cured at this plant. After the trimming and deboning, these cuts move to the 'denatured pack' department.
The entrails which came from the 'cut' room are joined by the ears, snouts and brains in the 'meat specialty' department where they are again cleaned, trimmed, washed and chilled, and packed ready for shipping.
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