State v. KERSHAW MFG. CO., INC.

This is a tax case.

The Alabama State Department of Revenue assessed sales and use taxes against the taxpayer. The taxpayer appealed to the Circuit Court of Montgomery County which set aside the assessment. The Department appeals.

The dispositive issue on appeal is whether the trial court properly determined that the use of parts and materials in manufacturing prototype machines which are sold or held for sale by the manufacturer is exempt from Alabama's sales and use taxes. We hold that it did and affirm.

The record reveals this case was submitted to the court below on stipulated facts. The…