182 So. 1 | Ala. | 1938
Lead Opinion
This is a suit seeking a declaratory judgment to determine whether persons engaged in the restaurant business who give their employees food as an element of compensation for services rendered in and about the preparation and service of food to customers, on which the sales tax is paid, should pay a tax on the value of the food thus served.
The restaurateur purchases the material, which is compounded into edible food for consumption. This we presume is from dealers in such articles, and for such purchases *309
his seller does not pay the tax upon the ground that the sale to him is a wholesale transaction, but his sale to his customers of the food as thus prepared is a retail transaction, on which he pays the tax. Pappanastos v. Long,
We held in the case of Doby v. State Tax Commission,
And in that connection we said in Cody v. State Tax Commission,
When a restaurateur compounds food for sale, the elements of the product thus sold embrace not only the raw material but the service rendered in producing the finished article of food. The fact that in rendering that service other articles of material or of food are consumed in the process does not render the consumption of such articles sales as contemplated by the sales tax act in question. Act of February 23, 1937, Gen.Acts 1936-37, Sp.Sess., page 125. Those articles are constructively a part of that which is sold, and enhance its value on the basis of which the sales tax is paid. To tax such enhanced value on its sale, and some of its ingredients separately because they were consumed in its preparation, though they were but a feature of the service rendered, was not probably the legislative intent.
Affirmed.
ANDERSON, C. J., and BOULDIN and KNIGHT, JJ., concur.
Addendum
Our attention is called to section I (i) of the Sales Tax, Gen.Acts 1936-37, Sp. Sess., p. 125, providing that "sales of tangible personal property * * * to * * compounders, which are consumed by them in compounding 'and do not become an ingredient or component part of the tangible personal property * * * are retail sales." It is insisted that our opinion is inconsistent with this provision. And it would be if the food served to the servants of the restaurateur had been purchased for that purpose. Such was the holding in the wrapping paper case. City Paper Co. v. Long,
The distinction seems clear between this case and one where the article was purchased distinctly for consumption not as an ingredient of the compounded article.
Application for rehearing overruled.
ANDERSON, C. J., and BOULDIN and KNIGHT, JJ., concur.