173 N.E.2d 346
No. 36780Supreme Court of Ohio.
Decided March 22, 1961.
Taxation — Sales and use tax — Gasoline pumps and storage tanks purchased by oil company — Loaned to customers to promote sale of gasoline — Customers at farms and places of business — Equipment used directly in making retail sales, when — Used directly in farming, when — Statutory construction.
APPEAL from the Board of Tax Appeals.
This is an appeal from a decision of the Board of Tax Appeals relating to sales and use taxes as to gasoline pumps and storage tanks purchased by appellant Lite Star Oil Company (hereinafter referred to as “Lite Star”).
Lite Star sells gasoline to approximately 400 rural customers at their farms, homes and places of business. In order that these so-called “route customers” may have a place to store the 100 to 300 gallon quantities of gasoline usually involved in these sales, Lite Star furnishes these “route customers” with underground, skid or overhead gasoline tanks, and with pumps in the case of the underground or skid tanks. Lite Star retains title to this equipment but furnishes and installs it on the verbal agreement of customers that they will purchase Lite Star’s gasoline. Because its competitors make similar arrangements in order to induce sales of their gasoline, it is essential that Lite Star furnish such equipment if it is to sell its gasoline to these customers.
Lite Star did not pay any sales or use tax on account of its purchase or use of these items. The Tax Commissioner assessed sales or use tax with respect to all these items.
Lite Star contended before the Board of Tax Appeals that its purchase and use of these tanks and pumps were excepted from any sales or use tax, regardless of whether these items were used by Lite Star in making sales of gasoline for farming or for nonfarming purposes, because these items were used by Lite Star “directly in making retail sales.” Sections 5739.01 and 5741.01, Revised Code, as effective prior to July 1, 1959.
Page 92
The Board of Tax Appeals sustained Lite Star’s claim of Tax exception, so far as it related to tanks furnished to customers in making sales of gasoline for nonfarm use. However, the Board held against and rejected the other contentions of Lite Star.
Lite Star has appealed to this court from those parts of the decision of the Board of Tax Appeals adverse to its contentions.
Messrs. McAfee, Hanning, Newcomer Hazlett and Mr. Rufus S. Day, Jr., for appellant.
Mr. Mark McElroy, attorney general, Mr. John J. Dilenschneider
and Mr. Stewart R. Jaffy, for appellee.
Per Curiam.
A majority of the court (Weygandt, C.J., Taft, Matthias and O’Neill, JJ.) are of the opinion that, in furnishing pumps in order to make sales of gasoline for nonfarm use, Lite Star used those pumps directly in making retail sales. Hence, the purchase of those items by Lite Star with the purpose of so using them was not subject to sales tax.
A majority of the court (Zimmerman, Taft, Matthias, Bell and Herbert, JJ.) are of the opinion that, in furnishing the tanks
and pumps to its customers in making sales of gasoline for farm
use, Lite Star did not use those items directly in making retail sales as that term is defined in Section 5739.01, Revised Code (excepting from the definition of “retail sales,” sales made where “the purpose of the consumer is * * * to use * * * the thing transferred directly in * * * farming”). Hence, sales of those items to Lite Star were taxable. That majority is further of the opinion that the definition of “retail sale” found in the sales tax statutes (Sections 5739.01 to 5739.99, Revised Code) should be followed in construing the use tax statutes (Sections 5741.01 to 5741.99, Revised Code) since, although there is no definition of “retail sale” in the latter statutes, a legislative intent should be implied to have the same meaning given to the words “use * * * directly in making retail sales” in the use tax statutes, as effective prior to July 1, 1959, as in the sales tax statutes. (See Section 5741.02 (C) (2), Revised Code, effective July 1, 1959.)
Page 93
It follows that the part of the decision of the Board of Tax Appeals denying exception from sales tax as to pumps furnished to customers with respect to sales for nonfarm use must be reversed; and that otherwise the decision appealed from must be affirmed.
Judgment accordingly.