The Indiana Tax Court ruled that electricity and equipment used to freeze customers' food was taxable.
A taxpayer provided freezing services to its customers. The customers were food manufacturers. The taxpayer purchased electricity and equipment to freeze food for prolonged shelf-life. The taxpayer claimed these purchases were exempt because they were used in a food production process.
Indiana exempts purchases of electricity or equipment used in an "integrated production process" to produce tangible personal property. The process must create a new product.
The Tax Court ruled that freezing the food was not a production process. Freezing the food, by itself, did not create a new product. As a result, the electricity and freezer equipment were taxable.