Opinion ID: 2277479
Heading Depth: 2
Heading Rank: 1

Heading: Granite Countertops are Products under Section 144.054.2

Text: There is no definition of product in chapter 144. No appellate courts have construed section 144.054.2. The Director relies on International Bus. Mach. Corp. v. Dir. of Revenue, 958 S.W.2d 554, 557 (Mo. banc 1998) (extending the definition of product to include taxable services), which interpreted section 144.030.2(5). In IBM, this Court stated that a product is an output with a market value, it can be either tangible personal property or a service. [4] Id. The Director agrees that the countertops are output[s] with a market value but claims that the installed countertops are not tangible personal property which the Director claims is an essential part of IBM 's definitionand, therefore, not a product. In sales and use tax, the taxable event is the passage of title or ownership. Blevins v. Dir. of Revenue, 938 S.W.2d 899, 901 (Mo. banc 1997). E & B agreed with its customers that title would pass upon complete installation of the countertops. Because the installed granite countertops are considered a fixture on real property when title passes, not tangible personal property, the Director claims the countertops are not products under section 144.054.2. The Director relies on Blevins, 938 S.W.2d 899. In Blevins, the appellant sold and installed asphalt. Id. at 901. The asphalt company sought tax exemptions under section 144.030.2(2), which exempts sales and use taxes on purchases of: Materials, . . . which when used in manufacturing. . . become a component part or ingredient of the new personal property resulting from such manufacturing. . . and which new personal property is intended to be sold ultimately for final use or consumption, . . . (Emphasis added). This Court held that: [B]ecause title passed after the asphalt was installed, Blevins created an improvement to real property which cannot be `new personal property . . . intended to be sold ultimately for final use or consumption' within the meaning of the sales tax law. Blevins, 938 S.W.2d at 901. (Emphasis added). Blevins is distinguishable from the present case because it was interpreting section 144.030.2(2), not section 144.054.2. This Court decided Blevins 10 years before the legislature enacted section 144.054.2. Appellate courts presume the legislature is aware of appellate interpretations of existing statutes and that by enacting a new one on the same subject, it is ordinarily [the] intent of the legislature to effect some change in [the] existing law. Kilbane v. Dir. of Revenue, 544 S.W.2d 9, 11 (Mo. banc 1976). This Court assumes that the legislature does not intend to perform a useless act. Id. Although sections 144.054.2 and 144.030.2(2) both relate to sales and use tax exemptions for manufacturers, there are two notable differences. First, section 144.030.2(2) applies to personal property. . . sold ultimately for final consumption. The issue in Blevins was whether asphalt sold and installed fell within this phrase. Blevins, 938 S.W.2d at 901. [5] The legislature chose not to include this phrase in section 144.054.2; rather, section 144.054.2 broadly applies to any product. Second, section 144.030.2(2) uses the phrase new tangible personal property. The legislature did not include any reference to tangible personal property in section 144.054.2. Moreover, section 144.054.2 exemptions are in addition to any state and local sales tax exemption provided in section 144.030. Section 144.054.2. The legislature intended to provide additional exemptions that are not allowed by section 144.030. In short, section 144.054.2 is broader than 144.030.2(2) and is not restricted by the phrases personal property . . . sold ultimately for final consumption and tangible personal property. This Court must give these statutory changes meaning. Section 144.054.2 applies to products, whether or not they are eventually affixed to real property. Although E & B's granite countertops are eventually installed, they are products under section 144.054.2.