ITT Canteen Corp. v. Porterfield

• Decision Date: 17 May 1972
• Docket Number: No. 71-686,71-686
• Citation: 283 N.E.2d 124,30 Ohio St.2d 155
• Parties: , 59 O.O.2d 162 ITT CANTEEN CORP., Appellant, v. PORTERFIELD, Tax Commr., Appellee.
• Court: Ohio Supreme Court

Page 155

30 Ohio St.2d 155

283 N.E.2d 124, 59 O.O.2d 162

ITT CANTEEN CORP., Appellant, v. PORTERFIELD, Tax Commr., Appellee.

No. 71-686.

Supreme Court of Ohio.

May 17, 1972.

Syllabus by the Court

The cigarette excise taxes levied by R.C. §§ 5743.02, 5743.021 and 5743.023 are part of the sales price of cigarettes, within the meaning of R.C. § 5739.01(H), upon which the tax is measured for sales tax purposes.

ITT Canteen Corporation, appellant, on March 27, 1970, filed with the Tax Commissioner of Ohio its claim, in the amount of $29,308.16, for reimbursement of sales tax, including penalty, illegally or erroneously paid. The Tax Commissioner denied the refund in his final order of October 6, 1970. The assessment order was affirmed by the Board of Tax Appeals.

Appellant is engaged in the business of selling cigarettes by means of vending machines for prices varying with the location. Each of the cigarette vending machines involved had a posted selling price of either 30 cents, 35 cents or 40 cents on the outside of the machine. There was not a breakdown of the sales price, the cigarette tax and the sales tax on any of the machines. In addition, the figures used by the appellant were grouped together by eight branch territories, with no breakdown as to individual machines with different sales prices, although the sales prices of the cigarettes varied according to the location of the vending machine in a particular branch territory.

Stipulations entered into between the parties and filed with the Board of Tax Appeals included:

'3. The sales tax and penalty for which refund is sought has been paid pursuant to assessment No. Y 13152 issued by the Tax Commissioner of Ohio, whereby said official assessed a two cent per pack sales tax against cigarettes sold ty ITT Canteen Corporation for thirty-five cents per pack.

'4. For the portion of the audit period up to September, 1968 ITT Canteen Corporation remitted one cent per pack to the Treasurer of the state of Ohio for cigarettes selling for thiryt-five cents per pack and after September, 1968 ITT Canteen Corporation remitted two cents per pack, prior to any assessment, to the Treasurer of the state of Ohio.'

The cause is before this court from the decision of the Board of Tax Appeals.

Wright, Harlor, Morris & Arnold and George M. Hauswirth, Columbus, for appellant.

William J. Brown Atty. Gen., and Dwight C. Pettay, Jr., Columbus, for appellee.

CORRIGAN, Justice.

It is urged by appellant that the cigarette excise tax and the sales tax are both levied upon sales of cigarettes and it is the sale of cigarettes that is the subject of the tax. The measure of the excise tax is the quantity of cigarettes sold which is on 'each ten cigarettes sold or fractional part thereof.' Appellant argues that such measure has no legal significiance since the subject of the tax is the sale of the cigarettes to the consumer.

Argument is further advanced by appellant that the provision of R.C. § 5743.022, which requires that 'the tax shall be advanced and paid by the wholesale dealer,' merely makes the wholesale dealer a bookkeeper for the state. It is appellant's position that the cigarette excise tax is a direct tax levied on the consumer at retail and so cannot be part of the cost of the seller; that these taxes are intended to be borne by the consumer at retail.

Appellant cites Leader v. Glander (1948), 149 Ohio St. 1, 77 N.E.2d 69, for the proposition that the cigarette excise taxes levied by R.C. §§ 5743.02, 5743.021 and 5743.023, being direct taxes, are not part of the consideration received by the retailer, and therefore are not to be included in the price for Ohio sales tax purposes. It must be noted that Leader involved the question as to whether or not a three percent admissions tax should be levied on the gross receipts which included a five percent Cincinnati boxing commission tax, the three percent Ohio admission tax, and a 20 percent federal tax. The Tax...