Opinion
No. 37044
Decided December 6, 1961.
Taxation — Sales tax — Lump-sum construction contract — Sale of material to be fabricated and incorporated into realty — Taxable retail sale, when — Refund of tax on canceled sales — Sales in interstate commerce.
APPEAL from the Board of Tax Appeals.
This is a deficiency sales and use tax assessment case. The assessment includes deficiencies resulting from failure to follow the refund procedure prescribed in Section 5739.09, Revised Code, and sales tax not paid as to the cost of materials consumed in the construction of prefabricated wall panels sold in interstate commerce under the lump-sum construction-contractor procedure prescribed by Section 5739.01, Revised Code, as in effect during the audit period involved herein.
The appellant, a corporation located in Ohio, is a manufacturer of precast concrete curtain wall panels which are fastened to buildings. The design of such panels is originally determined by the architect or customer, and they are built to specifications and installed by the appellant on buildings by a crew of men furnished by appellant. On occasions, appellant furnishes a supervisory crew which is augmented by local labor or from the general contractor's force. After panels have been fabricated, they are shipped to the site of erection. Ordinarily, delivery is made on appellant's trucks, the erection crew accompanying the material. One-half the purchase price is due upon delivery at the erection site. The balance is due upon completion of the installation. Unless otherwise specifically requested by the customer, the purchase price is a stated figure with no breakdown as to material and labor.
The refund procedure prescribed by Section 5739.09, Revised Code, was not followed by appellant during the assessment period. At the time a sale was made, appellant entered into its sales journal a sales entry which included an entry of prepaid sales tax equal to three per cent of the sale price. When a sale was cancelled, appellant reversed in entirety the sales entries, including the sales tax portion. When a corrected sale was made, entries were then made as on an original sale. The stamps were cancelled only when a billing was sent to a customer.
The deficiency involving prefabricated wall panels is based on Section 5739.01 (B), Revised Code, which, prior to a July 1959 amendment, provided, inter alia, that a construction contractor is the consumer of tangible personal property which is or is to be incorporated into a structure or improvement on or becoming a part of real property, unless there is a separation of labor and materials in the contract. In the instant case, there was no such separation.
The Board of Tax Appeals affirmed the order of the Tax Commissioner.
An appeal from the decision of the Board of Tax Appeals brings the cause to this court for review.
Messrs. Walters, Stubbins Ringhisen, for appellant.
Mr. Mark McElroy, attorney general, and Mr. Joseph L. White, for appellee.
Two questions are presented.
First, does Section 5739.09, Revised Code, pertaining to refund procedure under the Sales Tax Act, prescribe the exclusive method whereby a refund can be obtained? This court is of the opinion that it does. Appellant, not having followed the procedure therein prescribed, is not entitled to a refund of sales tax on the returned or cancelled sales.
Second, are the sales of prefabricated wall panels in interstate commerce entitled to the exception from sales tax provided in Section 5739.02 (B) (11), Revised Code, pertaining to sales not within the taxing power of the state under the federal Constitution? The purchases of materials used in the construction of the panels, fabricated in Ohio, are taxed to appellant, a lump-sum construction contractor, as a consumer doing business in Ohio, not on a sale to an out-of-state purchaser or ultimate user of the prefabricated panels. The shipment in interstate commerce of the finished panels is of no consequence, so far as taxability in Ohio is concerned. Guy Johnston Lumber Supply Co. v. Bowers, Tax Commr., 170 Ohio St. 395; Ornamental Iron Work Co. v. Peck, Tax Commr., 160 Ohio St. 399, 403.
The decision of the Board of Tax Appeals is affirmed.
Decision affirmed.
ZIMMERMAN, acting C.J., RADCLIFF, TAFT, MATTHIAS, BELL, HERBERT and O'NEILL, JJ., concur.
ZIMMERMAN, J., sitting in the place and stead of WEYGANDT, C.J.
RADCLIFF, J., of the Fourth Appellate District, sitting by designation in the place and stead of ZIMMERMAN, J.