S. S. Kresge Co. v. Bowers, 36124

• Decision Date: 23 March 1960
• Docket Number: No. 36124,36124
• Citation: 11 O.O.2d 157,166 N.E.2d 139,170 Ohio St. 405
• Parties: , 11 O.O.2d 157 S. S. KRESGE CO., Appellant, v. BOWERS, Tax Com'r, Appellee.
• Court: Ohio Supreme Court

Page 405

170 Ohio St. 405

166 N.E.2d 139, 11 O.O.2d 157

S. S. KRESGE CO., Appellant, v. BOWERS, Tax Com'r, Appellee.

No. 36124.

Supreme Court of Ohio.

March 23, 1960.

Syllabus by the Court.

1. The Board of Tax Appeals of Ohio is an administrative agency and is without jurisdiction to determine the constitutional validity of a statute.

2. Such constitutional question may be raised in this court although not previously raised before the Board of Tax Appeals.

3. Under the provisions of Section 5739.10, Revised Code, the Tax Commissioner may, in the absence of adequate records of a vendor, determine the proportion that such vendor's taxable retail sales bear to all his retail sales by making test checks of the vendor's business for a representative period, and on other information relating to such sales. (Obert v. Evatt, 144 Ohio St. 492, 59 N.E.2d 931, approved and followed.)

4. Such provisions of Section 5739.10, Revised Code, are not violative of Section 1 of the Fourteenth Amendment to the Constitution of the United States prohibiting the taking of property without due process of law.

Appeal from the Board of Tax Appeals.

On February 21, 1958, the Tax Commissioner of Ohio issued a sales tax assessment against the appellant S. S. Kresge Company for the period of four years beginning January 1, 1952, and ending December 31, 1955, for retail sales in amounts exceeding 40 cents.

The assessment issued by the Tax Commissioner was affirmed by the Board of Tax Appeals.

An appeal has been perfected to this court on the ground that the assessment is unreasonable and unlawful.

Carlton S. Dargusch, Carlton S. Dargush, Jr., and Jack H. Bertsch, Columbus, for appellant.

Mark McElroy, Atty. Gen., Joseph D. Karam, Columbus, and Robert J. Kosydar, Toledo, for appellee.

WEYGANDT, Chief Justice.

As already noted, this controversy is limited to sales in amounts in excess of 40 cents.

Amended Section 5739.10, Revised Code, reads in part as follows:

'For the purpose of this section no vendor shall be required to maintain records of individual retail sales of tangible personal property under fortyone cents, and no assessment shall be made against any vendor for retail sales of less than forty-one cents, solely because the vendor has no records of, or has inadequate records of, retail sales of less than forty-one cents; provided, that where a vendor does not have adequate records of receipts from his retail sales in excess of forty cents, the tax commissioner may refuse to accept the vendor's return, and upon the basis of test checks of the vendor's business for a representative period, and other information relating to the sales made by such vendor, determine the proportion that taxable retail sales bear to all his retail sales.'

And Section 5739.11, Revised Code, reads:

'Each vendor shall keep complete and accurate records of sales of taxable property, together with a record of the tax collected thereon, which shall be the amount due under section 5739.01 to 5739.31, inclusive, of the Revised Code, and shall keep all invoices, bills of lading, retained parts of prepaid tax receipts, and such other pertinent documents, in such form as the tax commissioner requires by regulation. Such records and other documents shall be open during business hours to the inspection of the commissioner, and shall be preserved for a period of four years, unless the commissioner shall, in writing, consent to their destruction within that period, or by order require that they be kept longer.'

The appellant questions the constitutionality of Section 5739.10, Revised Code, on the grounds that the appellant is deprived of its property without due process of law because of misconstruction and misapplication of the statutory provisions, and because an irrebuttable presumption of the validity of the test checks is thereby created, all in violation of Section 1 of the Fourteenth Amendment to the Constitution of the United States.

The appellee denies the unconstitutionality of the statute and also insists that this question can not be raised here inasmuch as it was not raised before the Board of Tax Appeals. The latter contention can not be sustained inasmuch as the Board of tax Appeals, being an administrative agency and not a court, was without jurisdiction to consider and determine a question of constitutional validity. Hence, nothing could have been accomplished by raising the question there. East Ohio Gas Co. v. Public Utilites Commission, 137 Ohio St. 225, 28 N.E.2d 599.

The question of the validity of the various test checks disappears when it is observed that they were made at each of 36 of the appellant's stores and in each department thereof for six-day periods in the manner, at the stores and at times suggested by the appellant itself. Under these circumstances the appellant can not be heard to complain that the statutory requirement for 'a representative period' was not met duly and fairly. Especially is this true when it is noted that each test was applied to that store alone and to no other.

Another of the appellant's complaints is that the Board of Tax Appeals was in error in finding that the appellant had failed to maintain adequate records of sales in excess of 40 cents within the meaning of Section 5739.10, Revised Code.

The record discloses that the appellant did no maintain register tapes or keep sales slips. The Board of Tax Appeals describes the appellant's procedure as follows:

'Each cash register in each store is supplied a bank of sales tax stamps, and stamps in the proper value are supposed to be cancelled whenever a sale in excess of 40 cents is made. From the amount of stamps so cancelled the company is then able to compute its total taxable sales. Appellant's cash registers do not have tapes and therefore there is no written record made of individual sales and only the amount of total sales can be ascertained by reading the register. Each store maintains monthly records of its sales broken down into taxable and nontaxable sales, as above noted, and at the end of each month the records are forwarded to the amin office in Detroit, Michigan, where they are placed on permanent file. Appellant's witness says that a constant supervisory check is carried on by the company to assure that stamps are cancelled in the correct sums. He further states that Kresge observes the same precautions for the collection of the tax and the cancellation of the stamps as it does for its own business affairs, including the handling of cash and ringing of the registers. For this and other reasons the appellant is of the view that...