Opinion ID: 1774196
Heading Depth: 2
Heading Rank: 1

Heading: Product

Text: Missouri first considered the exemption status of basic telephone service in GTE Automatic Elec. v. Director of Revenue, 780 S.W.2d 49 (Mo. banc 1989). In a 4-3 decision, GTE held telephone service companies were not entitled to an exemption under the statutes. The decision rested on two related rationales. First, GTE squarely held that voice transmission was a service, not a product, and that section 144.030.2 limited the exemption to products. As the Director concedes, this issue was dispositive. [7] Second, the Court also touched on the issue of whether telecommunications constitutes manufacturing, which is discussed below. The very next year, Bridge Data substantially undercut the product centered rationale of GTE . 794 S.W.2d 204. In Bridge Data , the Court allowed an exemption for equipment used to collect, process and transmit financial data, holding that [t]he statute contains no explicit requirement that the product be `tangible' in order for the manufacturing exemption to apply. 794 S.W.2d at 206. The next decision in this line was Concord Pub. House, Inc. v. Director of Revenue, 916 S.W.2d 186, 189 (Mo. banc 1996). In that case, the Court reaffirmed the holding and rationale of Bridge Data that organizing information through computer technology is `manufacturing' and that the exemption applied to electronic equipment even though the final product was intangible. 916 S.W.2d at 191. Finally, the product holding of GTE was expressly overruled in International Business Machines Corp. v. Director of Revenue, 958 S.W.2d 554, 557 (Mo. banc 1998). IBM allowed an exemption for equipment used to analyze financial data and to transmit this data to customers, either in hard copy or electronic form. IBM specifically stated: Because a product is an output with a market value, it can be either tangible personal property or a service. To the extent inconsistent with this opinion and the recent cases, GTE 's discussion of the term `product' should no longer be followed. 780 S.W.2d at 50-52. 958 S.W.2d at 557.