Opinion
No. 36248
Decided May 25, 1960.
Taxation — Sales and use taxes — Advertising material purchased by wholesaler of soft drinks — Distributed to retail stores — Purchase not excepted from tax — Material not used directly by purchaser in making retail sales.
APPEAL from the Court of Appeals for Mahoning County.
The Tax Commissioner, appellant herein, issued a sales and use tax assessment against the Coca Cola Bottling Company of Youngstown, appellee herein, upon purchases by appellee of certain advertising materials during the audit period from January 1, 1954, through December 31, 1957. The appellee is engaged in the wholesale business of bottling and distributing soft drinks to retailers. In connection therewith, appellee has been providing to retailers advertising materials, consisting in the most part of outdoor advertising signs and component parts thereof, which are used at or near the places where appellee's product is being offered for sale at retail, for the purpose of aiding the retailers in making sales of the product. These signs, parts and materials are not sold or rented to the retailers, but title thereto remains in appellee. The signs are erected, installed and maintained by appellee, and it has the right to remove them if a retailer discontinues selling appellee's product. The retailers pay nothing for the use of the signs. The appellee purchases these signs and materials with its own funds. The appellee makes no retail sales of its product.
The Board of Tax Appeals, on appeal, affirmed the final assessment order of the Tax Commissioner.
The Court of Appeals reversed the decision of the Board of Tax Appeals and ordered the judgment of reversal certified to the board.
The allowance of a motion to certify the record brings the cause to this court for review.
Messrs. Manchester, Bennett, Powers Ullman and Mr. Paul J. Fleming, for appellee.
Mr. Mark McElroy, attorney general, and Mr. Joseph L. White, for appellant.
The question presented is whether the purchases by the appellee of the advertising matter above described are excepted from the sales and use taxes as purchases of items used or consumed directly in making retail sales.
Section 5739.01, Revised Code (126 Ohio Laws, 157), a part of the Sales Tax Act, excepted from the act sales in which the purpose of the consumer was "to use or consume the thing transferred * * * directly in making retail sales."
Section 5741.01, Revised Code (126 Ohio Laws, 159), a part of the Use Tax Act, excepted purchases from the tax "when the purpose of the consumer is * * * to use or consume the thing transferred * * * directly in making retail sales."
The advertising material purchased and consumed by appellee is not "used or consumed" by appellee "directly in making retail sales," since appellee makes no retail sales.
The judgment of the Court of Appeals is reversed on the authority of H.J. Heinz Co. v. Bowers, Tax Commr., 170 Ohio St. 423.
Judgment reversed.
WEYGANDT, C.J., ZIMMERMAN, TAFT, MATTHIAS, BELL, HERBERT and PECK, JJ., concur.