Harrison Conference Services of Massachusetts, Inc. v. Commissioner of Revenue

• Citation: 394 Mass. 21,474 N.E.2d 160
• Court: United States State Supreme Judicial Court of Massachusetts
• Decision Date: 07 February 1985
• Parties: HARRISON CONFERENCE SERVICES OF MASSACHUSETTS, INC. v. COMMISSIONER OF REVENUE.

Page 160

474 N.E.2d 160

394 Mass. 21

HARRISON CONFERENCE SERVICES OF MASSACHUSETTS, INC. v. COMMISSIONER OF REVENUE.

Supreme Judicial Court of Massachusetts,

Suffolk.

Argued Dec. 3, 1984.

Decided Feb. 7, 1985.

Jamie W. Katz, Asst. Atty. Gen., for Com'r of Revenue.

Philip Burling, Boston (David J. Seipp, Boston, with him), for plaintiff.

John E. Coyne and Deborah A. Marshall, Boston, for Massachusetts Restaurant Ass'n, amicus curiae, submitted a brief.

Before HENNESSEY, C.J., and LIACOS, ABRAMS, LYNCH and O'CONNOR, JJ.

O'CONNOR, Justice.

The Commissioner of Revenue (Commissioner) appeals from a decision of the Appellate Tax Board (board) abating $70,059.01 of meals and sales tax assessed by the Commissioner on meals served by Harrison Conference Services of Massachusetts, Inc. (Harrison), from June, 1975, through June, 1978. We affirm the board's decision.

In February, 1979, the Commissioner notified Harrison of the assessment in issue. Harrison applied for abatements. When, without Harrison's consent, the Commissioner failed to act on those applications within six months, they were deemed denied, see G.L. c. 58A, § 6, and Harrison appealed to the board. The board made the following findings that are supported by substantial evidence and are, therefore, final. Donlon v. Assessors of Holliston, 389 Mass. 848, 851 n. 3, 453 N.E.2d 395 (1983).

During the relevant taxable years, New England Telephone and Telegraph Company (New England) maintained a training center and conference facility in Marlborough called the New England Telephone Learning Center (center). The center had offices, classrooms, and conferences rooms, as well as lodging, recreation, and dining facilities. New England engaged Harrison to operate the center's lodging and dining facilities. New England employees participating in training sessions ate meals served at the center. New England provided those meals without charge, and New England's personnel department budgeted the cost of those meals as a training expense. New England employees participating in business conferences also ate at the center without charge, and their departments reimbursed the personnel department for their meals by interdepartmental invoices. Harrison did not collect meals or sales tax for meals that it served to the trainees and conferees.

Under the contracts between New England and Harrison, Harrison operated the facilities entirely with funds advanced by New England and deposited by Harrison in a special bank account from which Harrison paid all operating expenses. New England advanced the funds in accordance with a budget approved by New England at the beginning of each year and revised prior to each succeeding quarter. The budget encompassed all of Harrison's anticipated expenditures for the ensuing year, including expenditures for food. New England exercised general supervision over Harrison's activities, reviewing and approving any changes in menus, portions of food, equipment, security, costs, or other aspects of Harrison's operation of the facilities. The only compensation that New England paid Harrison was a "flat fee" for services. If, in operating the center, Harrison spent less money than that advanced, then the excess reverted to New England. If, on the other hand, expenses exceeded the budget, then New England advanced more money.

The board found that "the contract[s] between the telephone company and Harrison and their course of dealings demonstrate that Harrison's duties are subject to the telephone company's approval and control," and that the contracts and course of dealings "manifested the telephone company's intent to have Harrison act for it as agent in the operation of the learning center and Harrison's willingness to so act." In its "opinion," the board stated that "[t]he meals tax does not apply to meals furnished at no charge to ... employees if the meals are provided by employees ... or agents of the [employer]." Therefore, the board held that, because New England, "in acting through its agent Harrison, is acting for itself there is no sale of meals and the meals tax does not apply."

We set forth the applicable statutory provisions. From June, 1975, to January 1, 1978, G.L. c. 64B governed the taxation of meals served in the Commonwealth. General Laws c. 64B, § 2, as amended through St.1971, c. 901, § 1, provided: "An excise is hereby imposed at the rate of five per cent upon taxable charges.... Each taxpayer shall collect from the purchaser the full amount of the excise imposed...." General Laws c. 64B, § 1, as amended through St.1975, c. 684, § 56, defined "[t]axable charge" as "any amount charged for meals wherever furnished within the commonwealth," and defined "[t]axpayer" as "any person making a taxable charge." Section 1...