Opinion
No. 72-430
Decided November 29, 1972.
Taxation — Sales and use taxes — Burden on taxpayer to show purchases excepted — Appeal to Supreme Court — Decision of Board of Tax Appeals affirmed.
APPEAL from the Board of Tax Appeals.
This case involves sales and use tax assessments made against the Cleveland, Ohio, facility of appellant, Bobbie Brooks, Inc., a manufacturer and distributor of wearing apparel. Its Cleveland facility comprises its corporate headquarters, certain cut-and-sew and sample-making operations, together with its over-all warehousing and shipping operations. Additionally, the permanent press treatment is performed at the Cleveland facility.
Bobbie Brooks, Inc., also has a New York facility, where the manufacturing process begins by design, fabric purchase and original pattern and sample garment making. Samples are sent to Cleveland, where they are reworked, revised and a pattern layout or "marker" produced. Fabrics are then cut in sizes of the markers. The fabrics are obtained from other organizations or from appellant's subsidiary corporations in other states.
The next function is that of "cut and sew." Some cut-and-sew operations are performed at Cleveland; other such operations are performed by appellant's subsidiary corporations, located outside Ohio, and by independent contractors under the supervision of appellant's personnel.
Upon completion of the sewing, the garments are returned to Cleveland, where they are segregated as to style, size and color, and some are permanently pressed. The garments are then inventoried and stocked for the filling of orders.
Appellant's claim of exemption for purchase of packaging materials, handling and transportation equipment and other materials, which it claims are used directly in the production of tangible personal property, is predicated upon its qualifying as a manufacturer or processor of certain items used or consumed directly in the production of tangible personal property.
The Board of Tax Appeals affirmed the sales and use tax assessments, and the cause is now before this court upon an appeal from that decision.
Mr. Gerald Kurland, for appellant.
Mr. William J. Brown, attorney general, and Mrs. Maryann B. Gall, for appellee.
The issue here is whether the decision of the Board of Tax Appeals is unreasonable or unlawful.
Although the taxpayer claims tax exemption for all purchases, it offered no evidence to show what percentage of the claimed exempted items was used in connection with its cut-and-sew operation at its Cleveland, Ohio, facility, notwithstanding some of the cut-and-sew operations occur in other states, and are performed by both subsidiary corporations and independent contractors. Further, the board noted the failure of taxpayer to establish that it performed "all steps in the transformation of cloth into finished garments."
The decision of the Board of Tax Appeals is neither unreasonable nor unlawful, and is, therefore, affirmed. Merchants Cold Storage Co. v. Glander (1948), 150 Ohio St. 524.
Decision affirmed.
O'NEILL, C.J., SCHNEIDER, HERBERT, CORRIGAN, STERN, LEACH and BROWN, JJ., concur.