Court Opinion

ID: 3199922
Source: CourtListenerOpinion
Date Created: 2016-05-03 18:33:12.567038+00
Date Added: 2024-06-11T07:39:13.520229
License: Public Domain

SUPREME COURT OF MISSOURI
                                            en banc

KRISPY KREME DOUGHNUT                                 )
CORPORATION,                                          )
                                                      )
                  Appellant,                          )
                                                      )
v.                                                    )       No. SC95181
                                                      )
DIRECTOR OF REVENUE,                                  )
                                                      )
                 Respondent.                          )

                   PETITION FOR REVIEW OF A DECISION OF THE
                     ADMINISTRATIVE HEARING COMMISSION
                       The Honorable Karen A. Winn, Commissioner

                                   Opinion issued May 3, 2016

          Krispy Kreme Doughnut Corporation petitions for review of the Administrative

Hearing Commission's decision ruling that Krispy Kreme is not entitled to a refund of

sales tax paid on food items sold from its stores between April 2003 and December 2005.

The Commission ruled Krispy Kreme failed to prove, by a preponderance of the

evidence, that not more than 80% of its food products were sold for immediate

consumption on or off the premises of the establishment; therefore, the lower tax rate

authorized by § 144.014 1 did not apply to Krispy Kreme's food sales. Krispy Kreme

argues the Commission's decision is contrary to the only evidence in the record and

conflicts with the reasonable interpretation of § 144.014.2. Because Krispy Kreme's

1
    Statutory citations are to RSMo 2000, unless otherwise indicated.
petition involves the construction of a revenue law of this state, this Court has jurisdiction

pursuant to article V, section 3 of the Missouri Constitution. The Commission's decision

is affirmed.

                             Factual and Procedural History

       This Court previously summarized much of the relevant background in Krispy

Kreme Doughnut Corp. v. Dir. of Revenue (Krispy Kreme I), 358 S.W.3d 48 (Mo. banc

2011), a decision that remanded the case to the Commission.              After remand and

subsequent disposition by the Commission, the case has returned to this Court. The

relevant pre-remand background is provided, again, for full context.

       Krispy Kreme owns and operates stores in Missouri that are engaged primarily in

the production and retail sale of donuts. The stores offer "dine-in" accommodations on

their premises and alert potential customers when freshly-made donuts are available with

a "HOT DOUGHNUTS NOW" sign. In addition to donuts, the stores sell related food

products, such as bagged coffee beans and ground coffee, coffee and related coffee

drinks, hot chocolate, milk, bottled water, bottled juices, and other soft drinks. Between

April 2003 and December 2005 (the relevant tax periods), Krispy Kreme collected and

remitted sales tax from its retail sales based on the 4% rate imposed by § 144.020.

However, in 2006, Krispy Kreme took notice of § 144.014, which imposes only a 1%

sales tax rate "on all retail sales of food." Subsection 2 of § 144.014 adds further

qualifications:

       For the purposes of this section, the term "food" shall include only those
       products and types of food for which food stamps may be redeemed
       pursuant to the provisions of the Federal Food Stamp Program as contained
       in 7 U.S.C. Section 2012, as that section now reads or as it may be
       amended hereafter, and shall include food dispensed by or through vending
       machines. For the purpose of this section, except for vending machine
       sales, the term "food" shall not include food or drink sold by any
       establishment where the gross receipts derived from the sale of food
       prepared by such establishment for immediate consumption on or off the
       premises of the establishment constitutes more than eighty percent of the
       total gross receipts of that establishment, regardless of whether such
       prepared food is consumed on the premises of that establishment, including,
       but not limited to, sales of food by any restaurant, fast food restaurant,
       delicatessen, eating house, or cafe.

       Arguing the 1% tax rate under § 144.014 was applicable, rather than the 4% tax

rate under § 144.020, Krispy Kreme sought a refund for sales tax it had remitted on retail

sales of donuts, non-hot beverages, juices, milk, coffee beans, and ground coffee during

the relevant tax periods. It did not seek a refund for sales tax remitted on retail sales of

hot drinks. Krispy Kreme's original refund claim totaled $324,237.33. The director of

revenue denied this claim. After conceding it was not entitled to a refund on dine-in

sales, Krispy Kreme reduced its claim to $277,992.20 and sought review of the director's

decision by the Administrative Hearing Commission.

       Before the Commission, Krispy Kreme argued its products, other than hot drinks,

qualified as "food" under § 144.014.2 and that its retail sales were not disqualified from

the lower tax rate by § 144.014.2's "80/20 test" because not more than 80% of its gross

receipts were derived from "food prepared . . . for immediate consumption." Because

most sales were attributable to donuts, whether Krispy Kreme derived more than 80% of

its gross receipts from food prepared for immediate consumption depended on the

characterization of its donuts. Krispy Kreme argued that, while its donuts were often

consumed immediately, not all of its donuts should count toward the 80% threshold

                                             3
because not all were prepared for immediate consumption. It asserted that any or all of

the following should not count as food prepared for immediate consumption: (1) donuts

that were not purchased within an hour of being prepared and ready to eat; (2) donuts

sold by the dozen; and (3) donuts that customers did not eat at the store or in transit. If

any of these categories of donuts did not count toward the 80% threshold, Krispy Kreme

was not disqualified from § 144.014's lower tax rate by the 80/20 test. The director

argued that all of Krispy Kreme's donuts should count as food prepared for immediate

consumption because they were all capable of being eaten without further preparation by

the customers.

       Both sides filed cross-motions for summary decision. The Commission sustained

the director's motion for summary decision, overruled Krispy Kreme's motion, and denied

Krispy Kreme's refund. The Commission ruled that although Krispy Kreme's products

qualified as "food" under the Federal Food Stamp Program's definition, the director's

interpretation of § 144.014.2 yielded a more reasonable result when considering the 80/20

test; therefore, Krispy Kreme failed to carry its burden of showing that not more than

80% of its gross receipts were derived from the sale of food prepared for immediate

consumption. Krispy Kreme then petitioned for review in this Court.

       In Krispy Kreme I, this Court rejected both the director's and Krispy Kreme's

interpretations and, instead, provided the following interpretation of § 144.014.2:

       The proper interpretation of the 80/20 test becomes apparent when all of the
       words "food prepared by such establishment for immediate consumption on
       or off the premises of the establishment" are given their full effect. Of
       particular importance are the words "on or off the premises," which modify
       "immediate consumption," clarifying that "immediate consumption" is not

                                             4
       an abstract concept (food that could be consumed immediately) but a
       concrete event (actual consumption at the time of purchase or within the
       time necessary to travel to another location "off the premises").
       Accordingly, "food prepared … for immediate consumption on or off
       the premises" means all food that is eaten at the place of preparation
       and purchase, or while traveling to, or immediately upon arrival at
       another location without any further preparation."
358 S.W.3d at 53 (emphasis added).        This Court held, therefore, neither party was

entitled "to a favorable decision based on a correct understanding of the substantive law,"

reversed the Commission's decision sustaining the director's motion for summary

decision, and remanded the case. Id. at 53.

       Following remand, Krispy Kreme attempted to produce evidence of its customers'

actual consumption habits during the relevant tax period. It conducted an online survey

between September and November 2012 that asked its customers where they eat the

donuts they purchase from a Krispy Kreme store and when they eat such donuts after

arriving at the place of consumption. Based on the results, Krispy Kreme concluded that

if "immediate consumption" meant consumed within 60 minutes, then enough of its

donuts were not immediately consumed for it to be disqualified by the 80/20 test. That is,

those donuts that were, in actuality, not consumed within an hour of arriving at the place

of consumption were not donuts prepared for immediate consumption and, therefore, did

not count toward the 80% threshold.

       Understanding that the results of its survey were based on customers' responses in

2012, rather than during the relevant tax periods, Krispy Kreme offered evidence

attempting to show the 2012 survey results were equally applicable to the relevant tax

periods. Both Alison Holder, the vice president of brand development for Krispy Kreme,

                                              5
and Mike Parker, manager of the Missouri stores, testified that customer behavior had not

materially changed from 2003 to 2012; therefore, the survey results also reflected

customer behavior during the relevant tax periods. Krispy Kreme also offered several

other past surveys tending to show that customers' motivations for purchasing Krispy

Kreme donuts had remained largely unchanged over the years. The director did not offer

any evidence, but objected to the admission of the 2012 survey.

      The Commission again denied Krispy Kreme's refund. The Commission ruled the

2012 survey was admissible, but found the survey did "not establish, by a preponderance

of the evidence, that it reflects [Krispy Kreme customers'] consumption habits during the

tax periods." The Commission explained that Krispy Kreme's witnesses and other past

surveys failed to address the key issue—"when customers eat their doughnuts." The

Commission further noted a conundrum it perceived created by this Court's interpretation

in Krispy Kreme I:

      We recognize that our conclusion raises the question: given the Supreme
      Court's framing of the issue in this case, how can a retailer prove that not
      more than 80% of its total gross receipts derives from food prepared by the
      establishment that is eaten at the place of preparation and purchase, or
      while traveling to, or immediately upon arrival at, another location without
      any further preparation? Such a question can never be answered with
      absolute certainty and precision, so is Krispy Kreme's 2012 survey and
      testimony linking consumer habits from the survey periods to the tax
      periods sufficient? Or is it possible that adequate proof for the tax periods
      at issue simply cannot be found at this point, but a similar survey, made
      during future tax periods, will suffice for future contemporaneous refund
      claims?

Krispy Kreme petitioned this Court for review.

                                           6
                                  Standard of Review

      This Court will affirm the Commission's decision when it is "authorized by law

and supported by competent and substantial evidence upon the record as a whole unless

clearly contrary to the reasonable expectations of the General Assembly." 801 Skinker

Blvd. Corp. v. Dir. of Revenue, 395 S.W.3d 1, 3–4 (Mo. banc 2013) (internal quotations

omitted); see also § 621.193. This Court defers to the Commission's findings of fact, but

reviews the Commission's determination of issues of law de novo. Michael Jaudes

Fitness Edge, Inc. v. Dir. of Revenue, 248 S.W.3d 606, 608 (Mo. banc 2008).

                                        Analysis

      Krispy Kreme first argues the Commission erred because its decision was contrary

to the only evidence in the record. Krispy Kreme argues it presented substantial evidence

of its customers' actual consumption habits that established it was not disqualified from

§ 144.014's lower tax rate by the 80/20 test. Krispy Kreme concedes that it had the

burden of proof and that the usual standard of review—upholding the Commission's

decision if "supported by competent and substantial evidence"—is not applicable when

reviewing a decision in favor of the party without the burden of proof. See, e.g., Bakelite

Co. v. Miller, 372 S.W.2d 867, 871–72 (Mo. 1963). That Krispy Kreme had the burden

of proof means it had both the burden of production and burden of persuasion. White v.

Dir. of Revenue, 321 S.W.3d 298, 304 (Mo. banc 2010). The burden of persuasion means

Krispy Kreme had "to convince the fact-finder to view the facts in a way that favors"

Krispy Kreme. Id. at 305. Krispy Kreme did not carry its burden simply by the fact that

it offered evidence to support its position and the director offered no evidence. The

                                            7
Commission "may disregard evidence which in its judgment is not credible, even though

there is no countervailing evidence to dispute or contradict it." State ex rel. Rice v. Pub.

Serv. Comm'n, 220 S.W.2d 61, 65 (Mo. banc 1949). "The rule is established in this State

that the triers of fact under their duty to weigh the evidence may disbelieve evidence

although it is uncontradicted and unimpeached." Id. The director needed only to contest

Krispy Kreme's evidence, which may be done through cross-examination or pointing out

"internal inconsistencies" or credibility issues. White, 321 S.W.3d at 308. Because the

director contested Krispy Kreme's evidence, this Court defers to the Commission's

determinations about persuasiveness of the evidence. Id.

       Here, the Commission gave little weight to Krispy Kreme's evidence and

concluded that Krispy Kreme did not carry its burden of persuasion. Krispy Kreme

suggests it offered so much persuasive evidence that this Court must apply a new, and

more appropriate, standard of review for this context and ask whether the Commission's

decision is "against the weight of the evidence." However, this ignores that "against the

weight of the evidence" is already inherently part of this Court's standard of review for

administrative cases. See Hampton v. Big Boy Steel Erection, 121 S.W.3d 220, 223 (Mo.

banc 2003) ("Whether the award is supported by competent and substantial evidence is

judged by examining the evidence in the context of the whole record. An award that is

contrary to the overwhelming weight of the evidence is, in context, not supported by

competent and substantial evidence."). And this Court will only reverse on an against-

the-weight-of-the-evidence basis as a check on "potential abuse of power in weighing the

evidence . . . in rare cases, when it has a firm belief that the decree or judgment is

                                             8
wrong." Ivie v. Smith, 439 S.W.3d 189, 206 (Mo. banc 2014). As discussed below, this

Court has no such belief that the Commission's decision is wrong.

      Krispy Kreme secondly argues the Commission erred because its decision is

contrary to the reasonable expectations of the General Assembly and conflicts with the

reasonable interpretation of § 144.014.2. Krispy Kreme asserts that this Court should

reconsider its Krispy Kreme I interpretation of the words "food prepared . . . for

immediate consumption" and that, by its plain terms, § 144.014.2 is referring only to food

that is prepared specifically for consumption at once, without delay, such as a hamburger

or steak. Krispy Kreme suggests that, under this proposed interpretation, donuts are not

food prepared for immediate consumption because, unlike a restaurant-prepared

hamburger or steak, donuts may be consumed after some delay.                Echoing the

Commission, Krispy Kreme also notes the difficulty of proof seemingly created by

Krispy Kreme I's focus on actual consumption.

      Concerns over how Krispy Kreme would meet its burden of proof required to

obtain the refund are understandable. In an effort to meet its burden of proof in accord,

Krispy Kreme attempted to demonstrate when and where its customers ate the donuts

they purchased between April 2003 and December 2005. Indeed, by interpreting the

language of § 144.014.2 to merely focus on actual consumption, this Court encouraged an

effort to determine when and where an establishment's individual customers actually

consume food that is taken off the establishment's premises. But, borrowing from the

Illinois Supreme Court, this Court does not believe the General Assembly "intended that

retailers interrogate their customers as to when they plan on eating the food. Indeed, any

                                            9
sort of policing would be impractical and absurd." Canteen Corp. v. Dep't of Revenue,

525 N.E.2d 73, 78 (Ill. 1988). Rather, § 144.014.2's terms should be "viewed in the light

of reality" and not "be stripped of common sense" or construed "to establish arbitrary

loopholes." Id. Accordingly, further analysis of the legislative history and legislative

intent from this Court appears necessary.

       Subsection 1 of § 144.014 provides that "the tax levied and imposed . . . on all

retail sales of food shall be at the rate of one percent." Subsection 2 further defines what

is meant by "food." As originally enacted, subsection 2 of § 144.014 read only:

       For the purposes of this section, the term "food" shall include only those
       products and types of food for which food stamps may be redeemed
       pursuant to the provisions of the Federal Food Stamp Program as contained
       in 7 U.S.C. Section 2012, as that section now reads or as it may be
       amended hereafter, and shall include food dispensed by or through vending
       machines.

RSMo Supp. 1997. In relevant part, the definition of "food" for purposes of the Federal

Food Stamp Program is "any food or food product for home consumption except . . . hot

foods or hot food products ready for immediate consumption." 7 U.S.C. § 2012(k)(1).

Accordingly, "food" under § 144.014 meant that which was for home consumption,

unless it was hot and ready for immediate consumption. At first glance, this definition

would appear to, for tax purposes, distinguish food purchased from grocery stores and

establishments similar to grocery stores (i.e., food for home consumption) from food

purchased from restaurants and establishments similar to restaurants 2 (i.e., food that was

2
  Hereinafter, the term "grocery stores" will be used broadly to refer to both grocery stores and
establishments similar to grocery stores, such as convenience stores. Likewise, the term
                                               10
either not for home consumption or was hot and ready for immediate consumption).

After all, the higher tax rate in § 144.020 explicitly applies to "meals and drinks furnished

at any . . . restaurant, eating house . . . or other place in which . . . meals or drinks are

regularly served to the public."     Consequently, food purchased from grocery stores

would, for the most part, be taxed at the 1% rate in § 144.014, while food purchased from

restaurants would be taxed at the higher rate in § 144.020.

       Instead of accomplishing this intended distinction, the definition of "food" created

a tax anomaly, allowing many foods sold by restaurants to be taxable at the 1% rate

largely intended for foods sold by grocery stores. This is because the tax rate applicable

to food purchased from a restaurant could very much depend on what food was ordered

and how it was ordered. If a customer purchased food from a restaurant to go or for

home delivery, the food was presumably for home consumption. Whether or not such

food was "food" for purposes of § 144.014 and its lower tax rate turned solely on whether

the food was hot. If hot, the food was not "food" for purposes of § 144.014 and taxed at

the higher rate; if not hot, the food was "food" for purposes of § 144.014 and taxable at

the lower rate. For example, a cold deli sandwich ordered to-go or for home delivery

would, under the dictates of § 144.014, be taxable at a lower rate than a hot deli sandwich

ordered to go or for home delivery from the same establishment. Moreover, if a customer

ordered a non-hot food item, whether or not it was "food" for purposes of § 144.014

turned solely on where the food was to be consumed. For example, if a cold deli

"restaurants" will be used broadly to refer to both restaurants and establishments similar to
restaurants, such as delicatessens and cafes.
                                             11
sandwich was ordered to go or for home delivery, the sandwich would be "food" for

purposes of § 144.014 and taxable at the lower rate; if the same cold deli sandwich was

ordered for "dine-in" from the same establishment, the sandwich would not be "food" for

purposes of § 144.014 because it would not be for home consumption.              In short,

unintended inconsistencies could abound due to the limited definition of "food"

incorporated by § 144.014.2.

       Accordingly, just two years after adopting § 144.014, the General Assembly added

the following to subsection 2:

       For the purpose of this section, except for vending machine sales, the term
       "food" shall not include food or drink sold by any establishment where the
       gross receipts derived from the sale of food prepared by such establishment
       for immediate consumption on or off the premises of the establishment
       constitutes more than eighty percent of the total gross receipts of that
       establishment, regardless of whether such prepared food is consumed on
       the premises of that establishment, including, but not limited to, sales of
       food by any restaurant, fast food restaurant, delicatessen, eating house, or
       cafe.

RSMo Supp. 1999.        With this addition, food sold by grocery stores is much more

effectively distinguished from food sold by restaurants for tax purposes. Because of the

80/20 test, all food sales from restaurants are now disqualified from § 144.014's lower tax

rate—not just food that is ordered for dine-in or hot and ready for immediate

consumption. That this was the intended effect is confirmed, most obviously, by the

addition's last line emphasizing that the 80/20 test is meant to capture "sales of food by

any restaurant, fast food restaurant, delicatessen, eating house, or cafe."

       Of course, this attempted distinction between grocery stores and restaurants can

only be accomplished if the establishments intended to fail the 80/20 test do indeed

                                             12
derive more than 80% of gross receipts from the sale of food prepared for immediate

consumption. Key language found in the addition to subsection 2 ensures that this 80%

threshold will be met by the intended targets. First, the addition refers to "food prepared

by such establishment for immediate consumption," without reference to whether such

food is hot, as the Federal Food Stamp Program does. § 144.014.2. This dispels any

notion that food previously qualifying for the lower tax rate as non-hot food is not

intended to count toward the 80% threshold. It does not matter whether the food that is

prepared for immediate consumption is hot, cold, or room temperature—it all counts

toward the 80% threshold.       Second, the addition refers to "food prepared by such

establishment for immediate consumption on or off the premises of the establishment."

§ 144.014.2 (emphasis added). This "on or off the premises" language dispels any notion

that food previously qualifying for the lower tax rate as food for home consumption is not

intended to count toward the 80% threshold. It does not matter whether the food that is

prepared for immediate consumption is for a dine-in order, a to-go order, or a delivery

order—it all counts toward the 80% threshold.

       "This Court's primary rule of statutory interpretation is to give effect to legislative

intent as reflected in the plain language of the statute at issue." Parktown Imports, Inc. v.

Audi of Am., Inc., 278 S.W.3d 670, 672 (Mo. banc 2009). As demonstrated above,

because the addition to subsection 2 does not limit itself to "hot" food and because it

expressly includes the words "on or off the premises," the general purpose of the addition

to subsection 2 is readily apparent—ensuring that food sold by restaurants is no longer

taxable at § 144.014's lower rate. With this purpose in mind, there is no need to place

                                             13
undue emphasis on certain terms of § 144.014.2. Because the 80/20 test was intended to

capture restaurants by counting food prepared for immediate consumption toward the

80% threshold, the pertinent question in determining whether an establishment's food

should count toward the 80% threshold is whether the food is akin to the food primarily

sold by "restaurant[s], fast food restaurant[s], delicatessen[s], eating house[s], [and]

cafe[s]." See § 144.014.2. In contrast to grocery stores, restaurants primarily sell foods

that they have prepared and that are often, though not always, consumed immediately.

Accordingly, in keeping with the plain language of § 144.014.2 and the intent of the

General Assembly, if food is prepared by an establishment and regularly consumed by

the establishment's customers immediately—that is, "at the place of preparation and

purchase, or while traveling to, or immediately upon arrival at another location without

any further preparation"—it is "food prepared . . . for immediate consumption" for

purposes of § 144.014.2. 3 See Krispy Kreme I, 358 S.W.3d at 53.

       Notably, in Krispy Kreme I, this Court rejected the argument that "food prepared

for . . . immediate consumption" meant food that was merely capable of being

immediately consumed. Id. at 52. A food that is capable of immediate consumption is

not necessarily a food that is indeed regularly consumed immediately. A loaf of bread,

for example, is certainly food capable of being immediately consumed, but is not one

3
   Krispy Kreme's argument that only foods prepared specifically for consumption at once,
without delay, are intended to count toward the 80% threshold is belied by the fact that
§ 144.014.2 does not refer only to "hot food" that is ready for immediate consumption, as the
Federal Food Stamp Program does. Rather, it refers broadly to all food prepared for immediate
consumption, without reference to temperature that could affect when the food should be
consumed. See § 144.014.2.
                                             14
regularly consumed immediately.       Restaurants typically sell foods that are not just

capable of immediate consumption, but are, in actuality, regularly consumed

immediately—such as sandwiches, hamburgers, and salads.              Merely focusing on

capability of immediate consumption is an incomplete analysis as it does not fully reach

the essence of what restaurants primarily sell. If a food is not one that is regularly

consumed immediately, it is not a food typically sold by restaurants and is not intended to

count toward the 80% threshold.

       In this limited sense, customers' actual consumption habits matter. See id. at 53.

However, the classification of a food does not change based on an individual's actual

consumption of that food. If a food qualifies as a "food prepared . . . for immediate

consumption" based on the above criteria, all sales of that food count toward the 80%

threshold regardless of whether a particular customer actually consumes the food

immediately. Krispy Kreme I's emphasis on actual consumption should not be read to

authorize otherwise. Furthermore, whether a food meets the above criteria often would

be readily apparent by the surrounding circumstances indicating the general nature of the

food, with actual or survey evidence of customer consumption optional.

       Krispy Kreme's case is illustrative of this point. Here, Krispy Kreme sells donuts

that it has fully prepared for consumption. Krispy Kreme's donuts may be eaten without

delay and without further preparation on the part of the customers and are, by their very

nature, portioned into individual servings, even when sold by the dozen. Krispy Kreme's

donuts are typically a stand-alone snack or meal, rather than food that is purchased to be

used in conjunction with other foods to create an entirely different meal. Krispy Kreme

                                            15
offers dine-in seating for the consumption of donuts and also sells drinks, such as coffee

and milk, that lose their appeal if not consumed immediately and are complementary of

donut consumption. Furthermore, Krispy Kreme alerts potential customers when freshly-

made donuts are available with a "HOT DOUGHNUTS NOW" sign, the inference being

that many customers prefer to consume donuts that have just been made. Given these

circumstances, Krispy Kreme does not dispute—and its own statistical evidence

confirms—that it prepares its donuts and that the donuts are regularly consumed

immediately by its customers. Therefore, Krispy Kreme's donuts are akin to food sold by

restaurants and count toward the 80% threshold as "food prepared . . . for immediate

consumption."

       This is true even for the donuts that are not actually consumed immediately.

Statistical evidence about individual consumption showing that some donuts are not

actually consumed immediately does not change the general nature of Krispy Kreme's

donuts. Simply put, a donut is a donut. Krispy Kreme does not prepare certain donuts

suitable only for immediate consumption and separate, different donuts that are also

suitable for non-immediate consumption.       All donuts are prepared the same in this

respect, and all donuts, in general, are regularly consumed immediately by its customers.

A donut is no less a food prepared for immediate consumption simply because a customer

chooses to eat it two hours after purchase rather than right away.

       As seen in this case, to hold otherwise encourages the hopeless endeavor of trying

to prove individual customers' actual consumption habits after they leave an

establishment's premises.    More importantly though, to hold otherwise provides a

                                            16
potential arbitrary loophole for the type of establishments that the General Assembly was

trying to preclude from the benefits of a lower tax rate provided by § 144.014. In short,

Krispy Kreme's stores operate more like restaurants than grocery stores. They are best

described as places in which "meals or drinks are regularly served to the public," and its

sales are intended to be taxed at the higher rate under § 144.020.        As the type of

establishment intended to be disqualified from the lower rate by the 80/20 test, Krispy

Kreme has failed to meet the burden of proof to be entitled to a sales tax refund pursuant

to interpretation of § 144.014.2. Giving effect to the General Assembly's intent and the

plain language of § 144.014.2, all of Krispy Kreme's donuts are "food prepared . . . for

immediate consumption."

      The Commission's decision denying Krispy Kreme a refund under § 144.014 is

consistent with the reasonable expectations of the General Assembly and authorized by

law. After review of the record, this Court concludes Krispy Kreme failed to prove that

sales of food prepared for immediate consumption did not constitute more than 80% of its

total gross receipts and failed to show it was entitled to the lower tax rate under

§ 144.014. The Commission's decision is affirmed.

                                                       Zel M. Fischer, Judge

All concur.

                                           17