Opinion
Nos. 40479, 40480 and 40481
Decided April 19, 1967.
Taxation — Sales tax — Exceptions — Items used or consumed in making retail sales — Signs — Giveaway favors — Television commercials.
APPEALS from the Board of Tax Appeals.
These three appeals arise out of three sales and use tax assessments made against the appellee, The Standard Oil Company. The three appeals were consolidated before the Board of Tax Appeals for purposes of hearing and briefs. It was agreed that all matters could be treated as though the cases involved sales tax only since the questions were the same with respect to both sales and use taxes.
The five classes of items involved in these appeals are advertising and sales promotional items purchased by appellee for use or distribution at its company-owned filling stations.
1. "Sohio" signs. These large illuminated signs are mounted on poles at the filling stations in prominent places so they can easily be seen by approaching motorists. The term, "Sohio," is a registered trademark and identifies the product sold. Evidence was presented showing a marked decrease in amount of gasoline sold during a period of time when the sign was not in place at one of appellee's stations. Appellee acquired approximately 100 filling stations operated by "Canfield." After operating the stations under that name, although selling appellee's products, the signs were replaced with "Sohio" signs, and sales increased 63.7 per cent within the first six-month period.
2. "Sohio" maps. These maps, advertising appellee's products, are distributed free at appellee's filling stations in the hope of advertising "Sohio" brand products and producing business.
3. "Sohio" giveaways. These items bearing the "Sohio" trademark consist of ash trays, small brushes, balloons, windshield ice scrapers, car key blanks, ball point pens, ice scrapers with snow brushes, and key chains. Some of these items are given directly without purchases of gasoline required.
4. Underhood record cardholders and record cards. These records setting forth the date and mileage at the time of purchase are used as a sales solicitation aid, hoping to make further sales of appellee's products.
5. Television commercials. These commercials are directed to advertising appellee's premium grade gasoline (Boron with ice-guard or as a carburetor cleaner) or to "Sohio Jackpot" and "Tip-Top" service. Evidence disclosed that whenever appellee intensified its television advertising of Boron gasoline, its Boron gasoline sales were increased.
The Board of Tax Appeals held that the items in the five classes above named, with the exception of certain items in the giveaway classification not bearing "Sohio" advertising, were used directly in making retail sales and their sales were excepted from taxation. With that exception, the determination of the Tax Commissioner was affirmed.
An appeal from the decision of the Board of Tax Appeals brings the cause to this court for review.
Messrs. McAfee, Hanning, Newcomer, Hazlett Wheeler and Mr. Rufus S. Day, Jr., for appellee.
Mr. William B. Saxbe, attorney general, and Mr. Edgar L. Lindley, for appellant.
Appellee, in its brief in this court, concedes that the "Jackpot" and "Tip-Top" commercials were taxable. The decision of the Board of Tax Appeals, modified by excepting therefrom the "Jackpot" and "Tip-Top" commercials, is neither unreasonable nor unlawful, and, as so modified, is affirmed. Zinc Engravers v. Bowers, Tax Commr., 168 Ohio St. 43; White Castle System, Inc., v. Bowers, Tax Commr., 172 Ohio St. 141.
Decision modified and, as modified, affirmed.
TAFT, C.J., MATTHIAS, O'NEILL, HERBERT and GUERNSEY, JJ., concur.
ZIMMERMAN and BROWN, JJ., dissent.
GUERNSEY, J., of the Third Appellate District, sitting for SCHNEIDER, J.