Summary
applying the identical definition of "vendor" under the prior General Code provision
Summary of this case from Captain Frank's, Inc. v. LimbachOpinion
No. 32834
Decided March 26, 1952.
Taxation — Sales tax — Barroom and dining room operated on permit holder's premises — Dining room operated by person other than permittee — Operations conducted as unit under trade name — Permittee liable for taxes on all sales of liquor and food.
Where a holder of a D-5 liquor permit owns the premises covered by such permit, which consist of a barroom and a dining room, operates the barroom on his own account and engages another person to operate rent free the dining room for the sale of food and intoxicating liquors, the latter being furnished by the permittee, and where these operations are conducted as a single unit and under a single trade name with an arrangement whereby the receipts from the sales of intoxicating liquors are separated from those from the sales of food, although, in the first instance, sales of intoxicating liquors and food are recorded on the permittee's cash registers by a cashier employed by him, and where the permittee pays all taxes, except those on the sales of food, and absorbs all workmen's and unemployment compensation and social security charges on all employees in the barroom and dining room, such permittee is liable for taxes on all such sales of intoxicating liquors and food.
APPEAL from the Board of Tax Appeals.
Early in 1947, the appellant, Floyd Parrish, purchased a grill and restaurant located east of Mentor, Ohio, which he operated under a D-5 liquor permit, which requires sales of liquor only at tables where meals are served. The operation included two adjoining main business rooms, one a barroom which he himself operated and the other a dining room or restaurant which he placed at the disposal of others for operation.
As of July 1, 1947, Parrish, by verbal contract, turned over rent free the dining room and kitchen with equipment to one Louise Moore who operated it until December 31, 1947. She served liquor from Parrish's bar and food which she provided in the operation of the dining room. She did not have a license to engage in this business. A relative conducted a similar business elsewhere and she obtained some sales stamps from him. Her business enterprise proved unprofitable and was discontinued as of January 1, 1948. Sales of food during her operations amounted to $30,128.96.
On January 1, 1948, Parrish made a similar arrangement with one Louis Gabowitz for the operation of the dining room, and the operation continued in like manner until December 24, 1948, during which time sales of food by Gabowitz amounted to $49,814.04. Gabowitz did not secure a license to operate a retail business at this place, although he operated a similar business at another location.
The relationship of Parrish and his two tenants, Moore and Gabowitz, and their method of operation of the business in question, as found by the Board of Tax Appeals, were as follows:
"Service charges during their respective tenures were split fifty-fifty. The businesses were operated as a unit under the name of the `Rose Room.' The salon and dining room had connecting doors between them. The dining room could be entered from the outside door. Guests were served liquor and beer in the dining room as well as in the salon. All wages paid waitresses were paid fifty-fifty by Parrish and Moore and Gabowitz. The latter paid for all kitchen help and purchased all food supplies. If merchandise was delivered to Moore and Gabowitz in their absence, or they were out of funds, Parrish paid for them and they reimbursed promptly. Waitresses served all dining room guests with liquid refreshments. All purchases of drinks at the bar were rung up on its cash register. A separate register was kept in the dining room. Appellant's wife acted as hostess or cashier in the dining room."
Parrish paid all taxes, except those on the sales of food, and absorbed all workmen's and unemployment compensation and social security charges on all employees in the barroom and dining room.
The Tax Commissioner made a sales tax assessment with penalty, in the total sum of $4,065.19, against Parrish for total sales of food and liquors made at this place of business. Parrish admits indebtedness for a portion of this sum but denies the legality of the assessment to the extent of $2,398.29 which covered sales of food by Moore and Gabowitz so far as there was a failure on their part to collect sufficient moneys for sales tax and to purchase sales tax stamps for the sale of food. The validity of this part of the assessment is the issue in this case.
Parrish appealed from a modified order of the Tax Commissioner to the Board of Tax Appeals, which affirmed the order.
The matter is now in this court on appeal as a matter of right from the decision of the Board of Tax Appeals.
Other facts are stated in the opinion.
Mr. M. Alfred Roemisch, for appellant. Mr. C. William O'Neill, attorney general, Mr. William E. Herron and Mr. Thomas R. Lloyd, for appellee.
The question involved is whether, under the circumstances of this case, Parrish is liable for the sales tax on sales of both liquor and food at such place of business.
Parrish claims that, as the operator of the place of business engaged in the sale of liquor, he was not the vendor of the food sold and is not liable for the tax on such latter sales. The oral business arrangement between Parrish and the parties whom he secured to operate the dining room branch of the business was very indefinite in terms. He turned over rent free the furnished dining room and kitchen with equipment to Moore and Gabowitz. Parrish's customers were served at the bar and in the dining room. Sales slips were so made that sales of food and taxes thereon were kept separately from sales of liquor and taxes thereon. The moneys were handled through Parrish's cash registers, and at the end of a day or several days Parrish would give Moore and Gabowitz all money for food sales less sums advanced by him for merchandise delivered to the dining room kitchens. Moore and Gabowitz furnished some sales tax stamps from their other places of business. The taxes in dispute arise from a failure to collect sufficient moneys for sales tax and to purchase sales tax stamps for the sales of food. Parrish held in his name the only vendor's license for the operation of the entire business. All sales were rung up on his cash registers and all taxes that were collected were collected through his cash registers and with his knowledge.
The Tax Commissioner imposed the tax in question against Parrish, under the provisions of Sections 5546-1 to 5546-47, General Code.
The pertinent part of Section 6064-15, General Code, is as follows:
"Permit D-5: A permit to the owner or operator of a night club to sell beer and any intoxicating liquor, at retail, only by the individual drink in glass and from the container, for consumption on the premises where sold, only at tables where meals are served * * *." (Italics supplied.)
To operate under a D-5 liquor permit the holder is obliged, under the conditions of the permit itself, to provide facilities for the serving of food at tables. If he does not conduct the operation himself, he is obliged to have others provide the food service. In the instant case, it is quite apparent that Parrish used the dining room service for that purpose and reaped the entire profit from the liquor sales in the dining room.
Section 5546-1, General Code, defines the terms, "person," "vendor" and "retail establishment," within the contemplation of the retail Sales Tax Act, as follows:
"`Person' includes individuals, firms, partnerships, associations, joint stock companies, corporations, and combinations of individuals of whatsoever form and character.
"* * *
"`Vendor' means the person by whom the transfer effected or license given by a sale is or is to be made or given; and in case two or more persons shall be engaged in business in the same retail establishment under a single trade name in which all collections on account of sales by each are made, such persons shall constitute a single vendor for the purpose of this act.
"* * *
"`Retail establishment' means any premises in which the business of selling tangible personal property is conducted or in or from which any retail sales are made." (Italics supplied.)
Parrish did not require Moore and Gabowitz to secure permits to sell and dispense liquor in connection with the operation of the dining room, which would have been necessary if the dining room was operated as a separate unit. On the contrary, Parrish permitted the operation of a dining room under and by virtue of his own license, showing substantial unity in operation.
We are of the opinion that the decision of the Board of Tax Appeals is not unreasonable or unlawful. It is, therefore, affirmed.
Decision affirmed.
WEYGANDT, C.J., ZIMMERMAN, STEWART, TAFT and MATTHIAS, JJ., concur.
MIDDLETON, J., concurs in the syllabus but dissents from the judgment.