Director of Revenue v. Armco, Inc.

HOLSTEIN, Judge,

dissenting.

I respectfully dissent. The majority opinion focuses solely on the words “kept by the seller” and disregards the words “as evidence” which follow immediately thereafter in § 144.210.1, RSMo 1986.

The majority opinion relies heavily on the rule of construction that exemption provisions in the revenue laws be construed strictly against taxpayers. A more fundamental principal is that words used in statutes should be given their plain and ordinary meaning and, where no ambiguity exists, the Court has no business foraging among the rules of statutory construction to look for or impose another meaning. In re Estate of Thomas, 743 S.W.2d 74, 76 (Mo. banc 1988). The plain meaning of the word “evidence” is “any species of proof, or probative matter, legally presented at a trial of an issue, by the act of the parties and through the medium of witnesses, records, documents, exhibits, concrete objects, etc. for the purpose of inducing belief in the minds of a court or jury as to their contention.” Black’s Law Dictionary, 5th ed., 1979. Evidence is something legally *725submitted to a competent tribunal as a means of ascertaining the truth of any alleged matter of fact under investigation before it. Webster’s Third New International Dictionary, unabr., 1966. To be required to keep exemption certificates as evidence can mean no more than that the certificates be kept for presentation at a trial of the issue of sales tax exemption before a competent tribunal.

The majority seems to hold that an audit is the equivalent of “the trial of an issue” and that the sales tax auditor for the Director of Revenue is a “competent tribunal” for hearing evidence. That implicit holding is simply not substantiated by law. The only statutory disclosure required by the taxpayer to the Director is the sales tax return. § 144.100. A review of chapter 144 fails to disclose any authority in the Director of Revenue to do more than make assessments of sales and use taxes based on sales tax returns or other available information. See § 144.210.2.

The statutes do not say when the exemption certificates must be obtained or how long the documents must be kept. Apparently, keeping the certificates for any period of time, however short, prior to being used or required as evidence is sufficient. The statutes have no provision requiring the presentation or keeping of exemption certificates during sales tax audits. Regulations promulgated by the Director purport to give him discretion to require that sales tax exemption certificates be available for inspection at the commencement of an audit. 12 C.S.R. 10-3.638. However, neither the regulations nor the statutes suggest that failure to produce the exemption certificates at an audit makes the certificates inadmissible when offered as evidence at a hearing.

By imposing the sanction of inadmissibility of exemption certificates which were not provided at an audit, this Court acts without statutory authority. The statute only requires the taxpayer to file a sales tax return. But the Court requires more. Hereafter, taxpayers must cooperate in the petty tyranny of random tax audits or be subject to the sanction. To so hold is to amend the statute. That prerogative belongs to the legislature. Administrative convenience and resource efficacy do not justify judicial legislation.

The first and only legally constituted tribunal to hear evidence on the question of sales tax liability is the Administrative Hearing Commission. §§ 144.261 and 621.-050. Thus, exemption certificates are only required at the evidentiary hearing before the Administrative Hearing Commission. In this case, the respondent presented exemption certificates at that hearing.

I agree with the Administrative Hearing Commission’s determination that ARMCO’s sale to Burlington and Union Pacific were retail sales in commerce between this state and another state of the United States. The sales should be exempt to the extent reflected in the exemption certificates presented at the hearing. I would affirm.