Opinion
No. 39528
Decided April 20, 1966.
Sales tax — Purchases of patterns of models by manufacturer — Patterns delivered to customer with manufactured article, or destroyed — Purchases by manufacturer subject to sales tax.
APPEAL from the Court of Appeals for Cuyahoga County.
The Barth Corporation, appellant herein, produces and sells custom-built tools, dies, special machinery, precision parts, etc. The items, being primarily custom built, are produced on a contract or job basis.
When Barth bids on a job, it sends the prospective customer a quotation including cost of dies, patterns, castings, etc., which it may have to buy in order to fabricate the article ordered by the customer. Barth, if the successful bidder, orders from a pattern maker patterns or models which may consist of wood, metal or plaster. These patterns are delivered to a foundry which produces the castings. The castings are ground and machined into the finished product ordered by the customer. The patterns or models are purchased and paid for by Barth, but, during the audit period here involved, no sales or use tax was paid on such purchases.
Barth invoices each of its customers one price for the finished product, which price includes the cost of items purchased in connection with the customer's order, a profit and overhead. No specific charge is made for patterns.
When the completed machine or article is delivered to the customer, Barth, having no further use for the patterns, either destroys them or sends them to the customer along with the finished product.
The Tax Commissioner levied sales and use tax assessments on the purchases of such patterns, and the Board of Tax Appeals affirmed the assessment order. That decision was affirmed by the Court of Appeals, and an allowance of a motion to certify the record brings the cause to this court for review.
Messrs. Merkel, Campbell, Dill Zetzer and Mr. M. Reese Dill, for appellant.
Mr. William B. Saxbe, attorney general, and Mr. Edgar L. Lindley, for appellees.
The question presented is whether Barth purchased the patterns and models here in issue to "resell * * * in the form in which the same is * * * received by" it (Section 5739.01, Revised Code). Barth's customers were purchasing tools, dies and machines, not patterns or models. No consideration was paid for the patterns, as such, by the customers, and the transfers of possession to the customers were not "sales."
The judgment of the Court of Appeals is affirmed. United States Steel Corp. v. Bowers, Tax Commr., 170 Ohio St. 558. See San-a-Pure Dairy Co., Inc., v. Bowers, Tax Commr., 173 Ohio St. 469
Judgment affirmed.
TAFT, C.J., ZIMMERMAN, MATTHIAS, O'NEILL, JONES and BROWN, JJ., concur.
HERBERT, J., dissents.
JONES, J., of the Seventh Appellate District, sitting for SCHNEIDER, J.