Court Opinion

ID: 5077685
Source: CourtListenerOpinion
Date Created: 2021-10-01 11:37:52.147159+00
Date Added: 2024-06-11T08:20:04.785868
License: Public Domain

WINTERSHEIMER, Justice,
dissenting.
I must respectfully dissent because the Board of Tax Appeals correctly interpreted the phrase “cost of production shall be computed on the basis of plant facilities which shall mean all permanent structures affixed to the realty at one location” pursuant to K.R.S. 139.480(3). The assessment of sales and use tax on energy purchased by Beam for use at the Clermont location was correct. The location manufactured bottled alcohol and the manufacturing process commenced with a distilling process and continued through the warehouse for aging and bottling.
The use of energy by Beam at the Cler-mont location did not meet the standards for an energy use exemption. The use of the plural “structures” clearly indicates an intent that one location could consist of more than one building or more than one isolated phase of manufacturing. If the company believes it needs relief such should come from the legislature rather than the court.
Appropriate statutory construction requires that exemption statutes be strictly construed. Delta Airlines v. Revenue Cabinet, Ky., 689 S.W.2d 14 (1985). There is no language in K.R.S. 139.480(3) that shows a legislative intent to allow any taxpayer to divide his manufacturing, processing, mining or refining into operational sections or divisions to determine eligibility for exemption. Statutory modification is the proper remedy for the company. This Court erred when it adopted the Court of Appeals incorrect interpretation of the statute which permits the company to isolate various operations and divisions to determine energy use.
The real question here is whether the distilling, warehousing for aging and bottling functions were all directly involved in the manufacturing activity at the location. Clearly all of the functions carried on by the company were necessary for the manufacturing processing. Cf Schenley Distillers, Inc, v. Commonwealth, ex rel Luckett, Ky., 467 S.W.2d 598 (1971). It is not just the manufacturing process involved but the tax in this case is imposed on the use of energy related fuels by the taxpayer. There is only one taxpayer at the location involved in this case.
COMBS and LAMBERT, JJ., join in this dissent.