PRESENT: Carrico, C.J., Lacy, Hassell, Keenan, Koontz, and 

Kinser, JJ., and Whiting, Senior Justice 

COCA-COLA BOTTLING COMPANY 

OF ROANOKE, INC. 

 OPINION BY 

v. Record No. 990409 SENIOR JUSTICE HENRY H. WHITING 

 March 3, 2000 

COUNTY OF BOTETOURT 

FROM THE CIRCUIT COURT OF BOTETOURT COUNTY 

George E. Honts, III, Judge 

 The issue in this appeal is whether personal property was 

used (1) in a sales business and subject to local taxation, as 

the trial court held, or (2) in a manufacturing business and a 

part of the Commonwealth's tax base as set forth in Code § 58.1-

1100, as the taxpayer contends. 

 Code § 58.1-1100 segregates most of the capital of a trade 

or business as intangible personal property subject to state 

taxation only. As pertinent here, one class of such intangible 

personal property is defined in Code § 58.1-1101(A)(2) as 

"[c]apital which is personal property, tangible in fact, used in 

manufacturing . . . businesses." The tax on tangible personal 

property used in a sales business is assessed by localities. 

Code § 58.1-3500 (all tangible personal property taxed by 

localities except property classified as intangible personal 

property under Code § 58.1-1100 or merchants' capital taxable 

under Code § 58.1-3510). 
 Coca-Cola Bottling Company of Roanoke, Inc. (the taxpayer) 

filed an application in the circuit court under the provisions 

of Code § 58.1-3984 seeking a correction in Botetourt County's 

assessment of the taxpayer's 1994 local tangible personal 

property taxes.1 The taxpayer alleged that the county improperly 

assessed vending equipment as personal property used in a sales 

business. The county filed an answer denying that the 

assessment was erroneous. 

 After overruling the taxpayer's motion for summary judgment 

on the pleadings, the court heard evidence and viewed the 

taxpayer's plant. Following argument and consideration of 

memoranda from counsel, the court denied the taxpayer's 

petition, holding that the property in issue was not used in the 

taxpayer's manufacturing business, but was used as part of the 

taxpayer's separate sales business. The taxpayer appeals. 

 The evidence, substantially undisputed, shows the 

following. The taxpayer operates under a license from the 

holder of a franchise from The Coca-Cola Company for the 

production, distribution, and sale of Coca-Cola products. The 

 

1

Code § 58.1-3984 provides that a taxpayer, aggrieved by a local 

tax assessment, may apply for relief in the local circuit court. 

The proceedings are conducted by the court sitting without a 

jury, and the burden of proof is upon the taxpayer to show that 

the assessment was invalid or illegal. 

2
taxpayer's portion of the franchise area encompasses 

southwestern Virginia, a portion of the southern Piedmont of 

Virginia, a portion of northeastern Tennessee and a portion of 

southeastern West Virginia. The taxpayer's license had the 

required approval of The Coca-Cola Company and is subject to the 

terms of the licensor's franchise. 

 Most of the taxpayer's product is mixed and bottled in its 

Roanoke plant, moved into its warehouses located throughout its 

franchise territory, and distributed from the warehouses to the 

wholesale purchasers. Approximately one-third of the taxpayer's 

employees are engaged in the manufacture of its product. The 

remainder are engaged in administration, distribution and sales 

activities. 

 The taxpayer wholesales most of its product to retailers 

such as supermarkets, convenience stores, discount retailers, 

hotels, motels, restaurants, gasoline filling stations, and 

other such retail outlets. The taxpayer's wholesale customers 

retail some cooled drinks in cooling and dispensing equipment 

furnished by the taxpayer. 

 The taxpayer retails a smaller, but substantial, portion of 

its product in coin operated machines owned or rented by it. 

The tax status of the vending machines, coolers, and fountain 

3
equipment which the taxpayer owns or rents from others is the 

subject of this opinion.2

 Citing County of Chesterfield v. BBC Brown Boveri, Inc., 

238 Va. 64, 380 S.E.2d 890 (1989), the taxpayer argues that if a 

substantial part of a firm's business consists of the actual 

process of manufacturing, the firm is a manufacturing business 

for tax purposes notwithstanding its performance of nonmanufacturing activities. And the taxpayer points out that the 

trial court found that a substantial part of its business 

consisted of manufacturing.3

 However, for a number of reasons, the taxpayer contests the 

court's finding that it conducted a separate sales business in 

which it used the taxed equipment. This finding subjected the 

taxpayer to another statutory provision that if a taxpayer is 

engaged in more than one business, the taxpayer "shall pay the 

tax provided by law on each branch of . . . its business." Code 

§ 58.1-5. 

 

2

 It makes no difference whether the taxpayer owns or leases the 

personal property in question. Its use determines its tax 

status. City of Martinsville v. Tultex Corp., 238 Va. 59, 63, 

381 S.E.2d 6, 8 (1989). 

3

 At trial, the county argued that the taxpayer was not a 

manufacturer under Code § 58.1-1102(A)(2), but it has not 

assigned cross-error to the court's ruling on this issue. 

4
 The taxpayer's first contention is that the franchise 

agreement, which controlled its licensing agreement, did not 

permit either the taxpayer's manufacturing or sales "activity 

[to] be performed independently of the other." Although the 

franchise agreement is not a part of the record, we will assume 

that the taxpayer correctly characterizes its terms. 

 Additionally, the taxpayer quotes in part the court's 

description of its manufacturing, distribution, and sales 

activities as "vertically integrated functions." Whether a 

taxpayer's activities are considered as two separate businesses 

for tax purposes, however, is not determined by the formal 

structure of the taxpayer's functions or the taxpayer's relation 

to its franchiser. Rather, that issue is determined by the 

manner in which the taxpayer actually conducts its business. 

See Caffee v. City of Portsmouth, 203 Va. 928, 930-31, 128 

S.E.2d 421, 422-23 (1962)(retail and wholesale sales in 

salesroom portion of bakery's manufacturing plant constitute a 

separate sales business for local license tax purposes). Thus, 

we reject the taxpayer's claim that the terms of the franchise 

agreement and its own organizational structure determine its tax 

status. 

 Nevertheless, the taxpayer maintains that if a taxpayer is 

a manufacturer under Code § 58.1-1101(A)(2), it cannot also be 

classified as conducting a sales business. The taxpayer claims 

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that the Caffee ruling is inapplicable here because the license 

tax statutes involved in Caffee are unlike the statutes involved 

in this case. In Caffee, we said the license tax statutes "show 

that the legislature has not classified the business of 

production and disposition of goods by a manufacturer into a 

single, separate subject of taxation." 203 Va. at 932, 128 

S.E.2d at 424. Yet the taxpayer does not indicate in what way 

Code § 58.1-110l(A)(2) has classified the production and sale of 

goods into a single business. 

 Instead, the taxpayer interprets BBC Brown Boveri as 

holding that "[Code] § 58.1-1101(A)(2) classifies a business 

that engages in manufacturing and non-manufacturing activities 

exclusively as a manufacturer, provided that its manufacturing 

activities are substantial." Significantly, the taxpayer 

provides no supporting page citation for this proposition from 

BBC Brown Boveri. Instead, we find the following statement in 

that case: 

Another area of dispute is whether the design and 

engineering stages of a manufacturing job constitute 

manufacturing. The record discloses that [the taxpayer's] 

design and engineering work was ancillary either to 

original manufacturing work or to a rebuilding job. Thus, 

because [the taxpayer's] design and engineering are 

integral parts of its manufacturing activity, such work is 

properly classified as manufacturing. 

238 Va. at 70 n.5, 380 S.E.2d at 893 n.5. 

6
 Obviously, the BBC Brown Boveri dispute was not resolved by 

applying the taxpayer's interpretation, but by considering that 

the described design and engineering work was a part of the 

later process of manufacturing. Unlike the situation in BBC 

Brown Boveri, in this case, the taxpayer's subsequent sales 

activities were not a part of its manufacturing process. 

 The taxpayer argues, however, that the sales activity in 

the taxed equipment indirectly affects its manufacturing 

activity because it, like every manufacturer, must sell its 

manufactured product in order to continue that activity. We 

effectively rejected this argument by our holding in Caffee that 

Caffee's sales room, which disposed of almost all its 

manufactured product, was a separate sales business. 203 Va. at 

930-31, 128 S.E.2d at 422-23. 

 Thus, we agree with the County that the following rule from 

Caffee applies in this case. 

 "The business of manufacturing an article is . . . 

essentially different from that of selling the article 

after it has been manufactured. And the fact that the 

article is manufactured for sale cannot have the effect of 

obliterating the line of demarkation between the two 

businesses." 

203 Va. at 930, 128 S.E.2d at 423 (quoting Consumers' Brewing 

Co. v. Norfolk, 101 Va. 171, 173, 43 S.E. 336, 336 (1903)). 

Accordingly, we disagree with the taxpayer's argument that its 

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sales activities cannot be considered as separate sales business 

for the purposes of Code § 58.1-1101(A)(2). 

 Even so, the taxpayer construes Code § 58.1-1101(A)(2) as 

"exclud[ing] all tangible personal property used in a 

manufacturing business . . . from local taxation, regardless of 

how indirectly related the property at issue is to the central 

function of manufacturing or how distant the property is from 

the manufacturing plant." (Second emphasis added.) We do not 

agree with the taxpayer's argument that this sales equipment 

thereby became a part of its manufacturing business as 

indirectly related thereto. 

 In effect, the taxpayer asks us to add the bracketed words 

to the following language of Code § 58.1-1101(A)(2): "[c]apital 

which is personal property, tangible in fact, used [directly or 

indirectly] in manufacturing . . . businesses." For much the 

same reason that we refused to add the word "directly" to this 

plain and unambiguous statute when urged to do so by the city in 

City of Winchester v. American Woodmark Corp., 250 Va. 451, 457, 

464 S.E.2d 148, 152 (1995), we refuse to add either word here. 

The word and its expansive scope simply do not appear in the 

statute, and we cannot change or amend a statute under the guise 

of construing it. Id.; City of Martinsville v. Tultex Corp., 

238 Va. 59, 63, 381 S.E.2d 6, 8 (1989). 

8
 Hence, in deciding whether this sales equipment was "used 

in a manufacturing business," we apply the plain meaning of 

those words as used in the statute. American Woodmark, 250 Va. 

at 457, 464 S.E.2d at 152. Unlike the computers and office 

equipment in the American Woodmark and Tultex cases, which were 

used, in whole or in part, in planning, directing or 

administering the manufacturing function, the evidence in this 

case indicates that the sales equipment in question was not used 

in manufacturing but merely in selling the finished product. 

Thus, we conclude that the evidence supports the court's holding 

that this equipment could be considered as sales equipment used 

in a separate sales business. We need not decide whether the 

taxpayer was also engaged in a separate wholesale business 

because the taxpayer has not borne his burden under Code § 58.1-

3984 of showing, which, if any, of the taxed property was used 

in sales at the wholesale level. 

 For these reasons, the judgment will be 

Affirmed. 

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