October 19, 1979

Your recent letter requests a ruling with respect to sales taxation of an equipment package sold by your company to its retail franchised outlets for use in producing doughnuts and other food products.

The outlets are in the business of selling doughnuts, coffee, soups and muffins; the food may be consumed on the premises or taken out.

The production of doughnuts and other foods involves processing raw materials such as eggs, milk and flour into finished marketable products. The equipment used in producing these items is located on the premises of each outlet. You inquire as to whether this equipment qualifies for an exemption under the sales tax law.

Massachusetts General Laws Chapter 64H, Section 6(s) exempts from taxation "sales of machinery, or replacement parts thereof used directly and exclusively in…an industrial plant in the actual manufacture, conversion or processing of tangible personal property to be sold…" An industrial plant is defined as a "factory at a fixed location primarily engaged in the manufacture, conversion or processing of tangible personal property to be sold in the regular course of business."

Based on the foregoing it is ruled that a retail outlet which produces and sells doughnuts and other food products is not an "industrial plant" within the meaning of Chapter 64H, Section 6(s) and that equipment which is used herein is not exempt from sales tax.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

LJH/RSF/jmcd

LR 79-41