Larry Walther

Summary

The court held that machinery and equipment used to expand a municipal water-treatment plant did not qualify for Arkansas's manufacturing exemption because the plant transformed raw water into potable water but did not produce a new and different article. Applying strict construction of tax exemptions and the requirement of a transformation, the court reversed summary judgment for Carrothers and remanded for calculation of the actual tax. Justice Baker, joined by Justice Goodson, dissented and would have held that the chemical and mechanical treatment transformed nonconsumable water into consumable drinking water and therefore qualified as manufacturing.