Opinion
No. 37751
Decided February 5, 1964.
Taxation — Use tax — Advertising material purchased outside Ohio — Used in Ohio to promote retail sales — Purchase not excepted from tax — Material not used directly by purchaser in making retail sales.
APPEAL from the Board of Tax Appeals.
This cause arose as a result of a use-tax assessment made against the appellant for the period from April 1, 1957, to and including March 31, 1960.
The assessment was in the sum of $32,626.20, plus a penalty of $4,893.93, a total sum of $37,520.13, for advertising material purchased outside Ohio and used in Ohio by the appellant to directly promote, at retail, the purchase, use and consumption of brand-name liquor products of appellant in Ohio.
A petition for reassessment filed with the Tax Commissioner was denied, with the exception that the full amount of the penalty was ordered remitted and cancelled provided the amount of the assessment was paid within 30 days after the assessment became final. Upon appeal to the Board of Tax Appeals the assessment was affirmed.
The cause is before this court on appeal from the decision of the Board of Tax Appeals.
Mr. Isadore Topper and Mr. Victor Goodman, for appellant.
Mr. William B. Saxbe, attorney general, Mr. John J. Lokos and Mr. Edgar L. Lindley, for appellee.
There is an agreement upon the facts. The position of the appellant is that no use tax was paid on the use in Ohio of this advertising material from April 1, 1957, to and including March 31, 1960, because appellant relied upon the unreversed decision of the Board of Tax Appeals in Red Top Brewing Co. v. Bowers (1955), V Board of Tax Appeals Decisions re Sales and Use Tax, Index No. 60.
It is agreed that under the judgments of this court in Coca-Cola Bottling Co. of Youngstown v. Bowers, Tax Commr. (May 25, 1960), 171 Ohio St. 26, and H.J. Heinz Co. v. Bowers, Tax Commr. (March 23, 1960), 170 Ohio St. 423, the use of such advertising material is subject to the use tax. Appellant argues at length in its brief that no use tax was due or payable from it for the period prior to the judgments in the Coca-Cola and Heinz cases, supra, for the reason that the Board of Tax Appeals decision in the Red Top case, supra, was the controlling law of the state.
It must be pointed out here that the Coca-Cola case, supra, involved a January 1, 1954, through December 31, 1957, audit period, and this court affirmed the assessment for that period.
An examination of the record in this case indicates that the only question presented to this court may be stated thus:
Was the use of advertising material appellant purchased outside Ohio and used exclusively in Ohio from April 1, 1957, to March 3, 1960, to promote, at retail, the purchase, use and consumption of brand liquor products in Ohio subject to the use tax?
This question was determined by the Coca-Cola and Heinz cases, supra. No other question is presented by this record.
This case can be summed up in one sentence. The appellant did not pay the use tax which was owed to the state because of the Board of Tax Appeals decision in the Red Top case, supra, which was not appealed from to this court. When the same question was brought before it in the Coca-Cola and Heinz cases, supra, this court held contra to the decision of the Board of Tax Appeals in the Red Top case, supra. Now the same question as was presented to this court in the Coca-Cola and Heinz cases, supra, is before this court again in this case, and this court adhers to its judgments in those cases.
The decision of the Board of Tax Appeals is affirmed.
Decision affirmed.
ZIMMERMAN, acting C.J., MATTHIAS, O'NEILL, GRIFFITH, HERBERT and GIBSON, JJ., concur.
ZIMMERMAN, J., sitting in the place and stead of TAFT, C.J.
DUFFEY, J., of the Tenth Appellate District, sitting by designation in the place and stead of ZIMMERMAN, J.
The basis of this appeal is the fact that the use of the advertising material is subject to the tax. Appellant not only concedes but relies upon Coca-Cola Bottling Co. of Youngstown v. Bowers, Tax Commr. (1960), 171 Ohio St. 26, and H.J. Heinz Co. v. Bowers, Tax Commr. (1960), 170 Ohio St. 423. Those cases create the issues in this appeal.
As presented in appellant's brief, the two issues are:
(1) Whether the tax can be applied retroactively to transactions before those cases or only prospectively to transactions after those cases.
(2) Whether the Tax Commissioner is estopped to assess the tax against transactions before those cases.
In addition to authority from other states, appellant relies upon the recent case of Recording Devices, Inc., v. Bowers, Tax Commr. (1963), 174 Ohio St. 518. Ohio does not have, and has not had, an administrative tax ruling system even remotely similar to that of the federal government and some of our sister states. Yet in the Recording Devices case the Board of Tax Appeals reversed the order of the Tax Commissioner and canceled an assessment on admittedly taxable transactions. The board held that the commissioner was bound in 1962 by a personal letter written to a taxpayer in 1938, and that the commissioner would remain so until that "ruling" was "rescinded in writing." The board held that the taxpayer, having relied on the ruling, coupled with the long-continued administrative practice of the state assessing body in following such ruling, was entitled to have its assessment canceled. 174 Ohio St., at 518 and 519. This court upheld the board's cancellation as "neither unreasonable nor unlawful."
In the present case appellant relied not upon a letter, but upon a ruling. The ruling was made not by the Tax Commissioner but by the very highest administrative tax body, and that ruling was officially made and published. Red Top Brewing Co. v. Bowers, Board of Tax Appeals Decisions re Sales and Use Tax, Vol. V, Index No. 60 (1955). Yet the board here refused to cancel appellant's assessment and this court is affirming. I consider this rank discrimination between taxpayers.
I concur in the result on the ground that the decision in the Recording Devices case upholding cancellation of the assessment was erroneous and should be overruled. Since this is only a concurring opinion, I see no point in detailing my reasons.