Opinion
No. 33310
Decided February 10, 1954.
Taxation — Sales and use tax — Exemption certificates where transaction not subject to tax — Duty of consumer to furnish — Effect of failure to furnish — Liability for refusal to furnish — Sections 5546-3 and 5546-9a, General Code.
APPEAL from the Board of Tax Appeals.
The Tax Commissioner assessed against the appellant, Shafer, sales and use taxes plus penalties on purchases by appellant of numerous items of repair equipment for use in his business as a road contractor. The appellant appealed from the assessment order of the commissioner to the Board of Tax Appeals, contending that the commissioner erred in failing to find that the items purchased were either incorporated into tangible personal property for sale or were used or consumed directly in the production of tangible personal property for sale, by manufacturing, processing or refining.
Although there was evidence that blanket exemption certificates were on file with the vendors at all times in question, the Board of Tax Appeals found to the contrary. For the purposes of this case we may assume, as found by the Board of Tax Appeals, that the evidence discloses that at the time appellant purchased the various items in question he did not issue exemption certificates to the vendors, but at the end of the current months during which the repair parts were purchased the vendors would send appellant monthly invoices of the purchases with prepaid cancelled sales tax stamps attached. When appellant paid these invoices, if he did not think the sales were subject to the tax, he would deduct the amount of sales tax charged and forward to the vendors checks for the balance, together with the prepaid cancelled sales tax stamps and blanket exemption certificates.
The Board of Tax Appeals held that certain items were used directly in appellant's processing, that the purchase thereof, in an ordinary case, should not have been taxed, and that as to other items the tax was properly assessed, but affirmed the order of the Tax Commissioner, under authority of Section 5546-3, General Code, for failure of appellant to furnish his vendors exemption certificates at and prior to the time the sales were made, although such certificates were furnished subsequent thereto.
An appeal from the decision of the Board of Tax Appeals brings the cause to this court for review.
Mr. Robert Dow Hamilton, for appellant.
Mr. C. William O'Neill, attorney general, and Mr. Jack H. Bertsch, for appellee.
Section 5546-3, General Code, provides in part:
"The tax imposed * * * shall be paid by the consumer to the vendor in every instance, and it shall be the duty of each vendor to collect from the consumer the fall and exact amount of the tax * * *. In case the tax does not apply to a sale, the consumer must furnish to the vendor and the vendor must obtain from the consumer a certificate * * * that the sale is not legally subject to the tax. * * * no certificates need be obtained or furnished where the item of tangible personal property sold is never subject to the tax."
Section 5546-9 a, General Code, provides in part:
"In case any vendor fails to collect the tax * * * he shall be personally liable for such amount as he failed to collect * * *. In case any consumer refuses to pay * * * the tax * * * or in the case of a sale exempt from the application of the tax refuses to sign and present to the vendor a proper certificate indicating the sale is not subject to the tax * * * he shall personally be liable for the amount of tax applicable to the transaction." (Emphasis supplied.)
It is apparent from a reading of the above-quoted portions of the sections that a consumer is liable only when he refuses to furnish an exemption certificate.
The record clearly discloses that the appellant did not refuse to furnish the necessary certificates, but that he actually did furnish them, even though they may not have been furnished prior to the time the sales were made.
The decision of the Board of Tax Appeals, being unlawful, is reversed.
Decision reversed.
WEYGANDT, C.J., MIDDLETON, TAFT, HART, ZIMMERMAN, STEWART and LAMNECK, JJ., concur.