Great Lakes Bar Control, Inc. v. Testa
124 N.E.3d 803
Ohio2018Background
- Great Lakes Bar Control provides services selling, installing, and servicing draft-beer systems, including periodic beer-line maintenance to remove sediment, bacteria, and yeast that taint beer or clog lines.
- Draft technicians inspect systems, use an electronic agitator and compressed gas to clear lines, and sometimes flush lines with acid or potassium rinses to disinfect and prevent bacterial growth.
- Ohio Department of Taxation audited Great Lakes (July 1, 2004–June 30, 2011) and concluded the beer-line service was "cleaning
- tangible personal property" and therefore a taxable "building maintenance and janitorial service."
- The Department assessed $102,347.91 (tax, interest, penalty) for tax not collected during the audit period.
- Great Lakes appealed; the Board of Tax Appeals reversed, finding the service primarily maintenance and that any cleaning was incidental and not taxable.
- The tax commissioner appealed to the Ohio Supreme Court; the Court affirmed the BTA, holding the beer-line service is not a taxable janitorial "cleaning."
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether beer-line maintenance is a taxable "building maintenance and janitorial service" under R.C. 5739.01(B)(3)(j) | Tax commissioner: sanitizing beer lines is "cleaning" tangible personal property in a building and thus taxable | Great Lakes: service is maintenance (mechanical/technical) and not within ordinary meaning of janitorial "cleaning"; any cleaning is incidental | Court: Not taxable — "cleaning" read in context of janitorial services does not cover beer-line maintenance |
| Proper method of statutory interpretation when term is undefined | Commissioner: apply statutory definition literally—cleaning of tangible personal property is covered | Great Lakes: use plain and ordinary meaning in context; consider common understanding of janitorial cleaning | Court: apply ordinary meaning in context per R.C. 1.42 and give "cleaning" a janitorial context-based meaning |
| Scope of "cleaning"—whether technical or non-janitorial cleanings are captured | Commissioner/dissent: "cleaning" of any tangible personal property qualifies; examples include sanitizing lines | Great Lakes/majority: such a broad reading would capture many non-janitorial services and is inconsistent with context | Court: narrow to janitorial context; dissent would apply statute literally and include beer-line service |
| whether BTA decision should be reversed | Commissioner: reverse BTA and reinstate assessment | Great Lakes: affirm BTA | Court: affirmed BTA; tax assessment reversed |
Key Cases Cited
- Rhodes v. New Philadelphia, 129 Ohio St.3d 304, 2011-Ohio-3279, 951 N.E.2d 782 (Ohio 2011) (use plain and ordinary meaning for undefined statutory terms)
- Sharp v. Union Carbide Corp., 38 Ohio St.3d 69, 525 N.E.2d 1386 (Ohio 1988) (statutory interpretation principles for undefined terms)
- Max's of Camden Yards v. A.C. Beverage, 172 Md. App. 139, 913 A.2d 654 (Md. Ct. Spec. App. 2006) (illustrative authority on the safety/health purpose of beer-line cleaning)