Opinion
No. 29303
Decided December 16, 1942.
Taxation — Sales tax — Dynamite used in tunneling — Not incorporated into improvement and not part of real property — Construction contract between contractor and city — Contractor a consumer, not vendor, and sale not to political subdivision — Sections 5546-1 and 5546-2 (1), General Code.
APPEAL from the Board of Tax Appeals.
Appellant, a construction firm and holder of a vendor's license, commenced operations of tunneling and laying water mains on a Public Works Administration project under a time and material contract with the city of Toledo. The contract provided for a segregation of the labor and material to be furnished and, among other items, provided that certain blasting operations were to be done by the appellant in the course of tunneling work. To perform the blasting, appellant purchased orders of dynamite from material supply companies and gave those companies certificates of exemption under Section 5546-2 (1), General Code, assigning as the ground for exemption that the property was for purchase "by a governmental instrumentality."
Thereafter the Tax Commissioner made a sales and use tax assessment against the appellant in the amount of $1,337.66 including penalty, of which amount $130.21 represented sales tax for purchases of dynamite actually used on the Toledo waterworks project by appellant in the performance of that work. After a hearing, the Tax Commissioner made a reassessment in the same amount. On appeal the Board of Tax Appeals affirmed and appellant then perfected an appeal to this court solely as to the assessment of $130.21 plus penalty.
Messrs. Gottfried, Newman Ginsberg, for appellant.
Mr. Thomas J. Herbert, attorney general, and Mr. A.A. Cartwright, for appellees.
Counsel for appellant present two questions:
1. Was the appellant a consumer or a vendor under the retail sales tax law of Ohio?
2. Was there an exempt sale to a governmental instrumentality under Section 5546-2 (1), General Code?
Section 5546-1, General Code, contains these definitions:
" 'Person' includes * * * corporations * * *.
" 'Sale' and 'selling' include all transactions whereby title or possession, or both, of tangible personal property, is or is to be transferred, * * * for a consideration in any manner, * * *.
" 'Vendor' means the person by whom the transfer effected * * * by a sale is or is to be made * * *.
" 'Consumer' means the person to whom the transfer effected * * * by a sale is or is to be made * * *"
Section 5546-2 (1), General Code, in part provides that:
"The tax hereby levied does not apply to the following sales:
"1. When the consumer is the state of Ohio, or any of its political subdivisions."
Appellant contends it was entitled to furnish to its vendor a resale certificate and a certificate of exemption under the last-quoted section, inasmuch as appellant was a vendor under a construction contract, calling for the separation of labor from the material charges, and the city of Toledo was the ultimate consumer and purchaser. Counsel reason that "the sale was from a vendor to a contractor to a municipality" and "the contractor * * * merely acted as the intermediary for the city" which "was the ultimate consumer and purchaser, receiving full benefits from the use thereof."
The agreed stipulation of facts submitted to the Board of Tax Appeals recites that appellant used the dynamite in the performance of the work. However, no proof was presented to establish that the dynamite was incorporated into a structure or improvement and became part of the real property within the purview of present Section 5546-1, General Code, paragraph 2, last sentence thereof.
Furthermore, the facts involved do not support the claimed sale of dynamite as tangible personal property by the appellant to the city of Toledo.
We are of opinion that the appellant was a consumer, not a vendor, and that there was no sale by appellant to a political subdivision of Ohio.
The decision of the Board of Tax Appeals is affirmed.
Decision affirmed.
WEYGANDT, C.J., TURNER, WILLIAMS, MATTHIAS, HART and ZIMMERMAN, JJ., concur.
BELL, J., not participating.