June 10, 1985

* * * * ("Company") operates restaurants in Massachusetts. The restaurants serve pizza and other food that is entirely prepared on the restaurants' premises. You inquire whether the purchase of the equipment used to prepare the food is subject to Massachusetts sales tax.

Massachusetts General Laws., Chapter 64H, Section 2 imposes a five percent sales tax on the retail sales of tangible personal property, unless otherwise exempted. Section 6(s) of Chapter 64H exempts from tax the "[s]ales 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...." "Industrial plant" is defined in Section 6(s) 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."

The production of pizza and other foods involves the processing of raw materials such as flour and yeast into an end product to be sold to customers. The entire process takes place on the restaurant premises. The restaurant, however, is not an "industrial plant" as defined in Section 6(s). The restaurant, is a retail establishment, primarily engaged in the serving of food to customers, not "primarily engaged in the manufacture of tangible personal property to be sold."
Therefore, the purchase of food preparation equipment by the Company is subject to the Massachusetts sales tax. See enclosed Letter Ruling 79-41.

Very truly yours,
Commissioner of Revenue
IAJ:JA:loc LR 85-51