Section 29 Other Manufacturing Exemptions

• Library: Tax Law 2009

There are several additional manufacturing exemptions relating to specific industries or products.

Section 144.030.2(1), RSMo Supp. 2007, exempts the retail sale of fuel to be consumed in the manufacture or creation of gas, power, steam, or electrical current to be sold ultimately at retail. In Kansas City Power & Light Co. v. Director of Revenue, 783 S.W.2d 910 (Mo. banc 1990), the Court held that the purchase of coal by a public utility consumed in generating electricity for its own use was not exempt from sales tax under what is now § 144.030.2(1) because the fuel was not used to generate electricity for sale at retail. See also:

• Laclede Gas Co. v. Dir. of Revenue, Nos. RS-89-0048; RS-89-0397; RS-89-0479, 1989 WL 137523 (Mo. Admin. Hearing Comm’n, Oct. 27, 1989) (acts of storing, distributing, and heating held not to be acts of manufacturing or creating within the meaning of exemption)

• Associated Elec. Coop., Inc. v. Dir. of Revenue, No. RS-88-2006, 1989 WL 121516 (Mo. Admin. Hearing Comm’n, Sept. 29, 1989) (exemption in § 144.030.2(1) is qualified by, and dependent on, the ultimate sale of fuel at retail)

• Mo. Pub. Serv. Co. v. Dir. of Revenue, 733 S.W.2d 448 (Mo. banc 1987) (chemical compound held to constitute fuel for purposes of § 144.030.2(1) because it produced heat by burning; the compound’s functional characteristics and not purpose of use was determinative)

Section 144.030.2(3) exempts the sale of materials, replacement parts, and equipment purchased for use directly upon and for the repair and maintenance or manufacture of motor vehicles, watercraft, railroad rolling stock, or aircraft engaged as common carriers of persons or property. Motor vehicles, watercraft, railroad rolling stock, and aircraft engaged as contract carriers or as private carriers do not qualify for this exemption. 12 C.S.R. § 10-110.300.

A trailer is a “motor vehicle” within the meaning of § 144.030.2(3). Trailiner Corp. v. Dir. of Revenue, 783 S.W.2d 917 (Mo. banc 1990). Thus, purchases of materials, replacement parts, and equipment for use directly upon and for the repair and maintenance of a trailer are exempt from sales and use tax providing that the trailer is used by a qualified common carrier.

Caselaw involving this manufacturing exemptions includes:

• Rocky Mountain Helicopters, Inc. v. Dir. of Revenue, No. 90-001468RS, 1992 WL 177184 (Mo. Admin. Hearing Comm’n, July 8, 1992) (purchase of equipment and materials used on aircraft in their repair and maintenance held exempt from use tax because an ambulance company was determined to be a common carrier—i.e., it held itself out to the general public to engage in the transportation of passengers or property for hire)

• St. Louis Refrigerator Car Co. v. Dir. of...