As I understand it, the chief question before this court on appeal from the Board of Tax Appeals is whether "the decision of the board appealed from is reasonable and lawful." If it is it shall be affirmed, but if "upon hearing and consideration of such record and evidence" this court "decides that such decision of the board is unreasonable or unlawful, the court shall reverse and vacate the decision or modify it and enter final judgment in accordance with such modification." (Section5717.04, paragraph 8, Revised Code.) As I am of the opinion that the decision of the Board of Tax Appeals is both reasonable and lawful, I am obliged to dissent from the decision of the majority of this court in this case.
As I view the proceedings in this case, it would appear *Page 442 that they may be divided into the following stages: (a) determination of the original deficiency assessment and penalty including steps taken by the tax examiner; (b) review and redetermination of the assessment and penalty and final order by the Tax Commissioner; (c) review and affirmance by the Board of Tax Appeals on appeal; and (d) hearing, consideration of the record and evidence by this court upon appeal from the board.
As I understand the majority decision, the reversal is based upon the concept that the original steps in determining tax liability or deficiency are at the best merely preliminary and the real and only important contest does not take place until the taxpayer has a hearing before the Board of Tax Appeals. In my opinion this is incorrect. The taxpayer is under a duty to file semi-annual reports and in the first instance to determine his own tax. The taxpayer, although operating a large establishment, filed the first four semi-annual reports due for the two years of the four-year audit period and these were admittedly not correct. The taxpayer filed no semi-annual reports at all for the last two years of the audit period during which four such reports should have been filed.
It is admitted by the taxpayer that liquor, beer, cigars, food and other sales totaled $260,000 during the four-year period, yet this taxpayer purchased sales tax stamps or otherwise paid sales tax in the amount of $26.50 for the entire period. This taxpayer at the peak of business operations employed seventeen bartenders, barmaids or other employees; operated one or two cash registers, with separate keys for each class of business, making subtotals and grand totals and recording the amount of each sale, and operated from 5:30 a. m. to 2:30 a. m. on business days. It used the services of an accounting or bookkeeping firm. I find it difficult to excuse such clear and unmistakable disregard of the entire sales tax law on so colossal a basis as a mere innocent mistake.
As I understand the provisions of the sales tax law, there is a presumption of regularity which attaches at each stage in the proceeding and unless the taxpayer is able to overcome this presumption, either by showing that the law has been wrongly applied or by the introduction of evidence showing there has *Page 443 been a mistake of fact, the determination at such stage in the proceedings becomes final and collectable.
It appears that the majority opinion finds some fault or takes some exception to the action of the Tax Commissioner in reducing the tax liability of the taxpayer. It is difficult to see how the taxpayer can urge such an objection. It would seem clear that no complaint is urged today with reference to food sales, cigars or other personal property except intoxicating liquor. I am unable to determine just what basis the majority feels that the Tax Commissioner should have used other than that which he did.
As has already been pointed out, this court is limited to a determination of whether the board's decision is or is not reasonable or lawful, and in making that determination we are required to give consideration only to the record and evidence in the case. Again, in my opinion, the taxpayer was required to overcome the presumption of regularity and carried the burden of proving that the board's decision was unreasonable or unlawful, or both. She did not do so, in my opinion.
When testimony was being taken for submission to the Board of Tax Appeals, every consideration was shown to the taxpayer and her counsel. On one occasion, when the matter was set for hearing, neither the taxpayer, her manager nor anyone else from the place of business, other than her counsel, showed up. Nevertheless, such default was waived and other continuances were granted for the convenience of counsel for the taxpayer. When the hearing was held, only a single witness appeared on behalf of the taxpayer, namely, John Dixon, husband of Lois Dixon.
On behalf of the Tax Commissioner at this hearing, the testimony of the tax examiner who made the original investigation was offered and apparently would have been entered on the record except for the interference and objection of counsel for the taxpayer to the effect that this testimony was not of any consequence. I do not so regard it.
It is apparent that the board did not accept at face value the rather unrealistic testimony of the sole witness for the taxpayer. It was he who was able to look at such figures as $.60, $.90, $1.20 and, with no help from any other source than his *Page 444 memory, testify that they were not what they appeared to be, but rather a collection of smaller individual sales, each of which of course was tax-exempt. It appears that for some of the time, the taxpayer sold the cheaper brands of liquor at $.25, later sold them at $.30, and that the more expensive brands were sold at $.40 a drink. Perhaps the height of the accomplishments of this witness was reached when he was able, as the majority opinion points out, to look at the figure $.75 and testify that it represented a $.30 sale and a $.45 sale.
This becomes even more remarkable when it is recalled that the two audit periods covered four years between January 1, 1957, and December 31, 1960, and that the witness was testifying on June 5, 1962. In any event, it is apparent that the board regarded the witness' testimony as unacceptable, perhaps on the ground that it was self-serving or, as would appear to me, evasive and difficult to accept.
It may also have been that the board in weighing the testimony of this witness took into account such facts as (1) the four semi-annual reports filed and the sales tax paid were grossly inadequate; (2) no returns whatever were filed for four semi-annual periods; (3) appellant's manager had at least twelve years experience as bartender or manager, including seven years bartender or manager for other owners, and (4) no excuse was offered for not submitting cash register tapes for both of the cash registers for the entire audit period.
However, no useful purpose will be served by a further analysis of the testimony for the reason that this court is not permitted to substitute its judgment for that of the Board of Tax Appeals in this type of appeal. In the case of The Fair StoreCo. v. Board of Revision of Hamilton County (1945), 145 Ohio St. 231, the Supreme Court of Ohio in a "By The Court" decision wrote as follows:
"We are asked to reverse the decision of the Board of Tax Appeals.
"In the case of Smith v. Board of Revision of WashingtonCounty, 138 Ohio St. 564, 37 N.E.2d 386, it was held:
"`In an appeal to the Supreme Court under Section 5611-2, General Code, from a decision of the Board of Tax Appeals fixing the true value of real property for the purposes of taxation, *Page 445 the court must find such decision unreasonable or unlawful upon the record and the evidence to reverse or modify the same.'
"The statute grants to the Board of Tax Appeals widediscretion in arriving at a valuation and this court hadrepeatedly said that it will not substitute its judgment forthat of the Board of Tax Appeals.
"In the case of Citizens Building Co. of Cleveland v.Board of Revision of Cuyahoga County, 141 Ohio St. 47, at page 52, 46 N.E.2d 413, it is held:
"`This court has no power to substitute its judgment for thatof the Board of Tax Appeals but determines only whether thevaluation fixed by that board it [is] reasonable and lawful. * * *' See Ramsey v. County Board of Revision of Franklin County,141 Ohio St. 366, 48 N.E.2d 102." (Emphasis added.)
In addition to what has been set forth above, I have carefully examined the record before us for some evidence that there was a compliance with the provisions of Section 5717.04,supra, by serving a notice of appeal upon the Tax Commissioner. As I understand it, there are two parties to this proceeding, Lois Dixon, d. b. a. Tippin Inn, who is the appellant, and Stanley J. Bowers, Tax Commissioner of Ohio, who is the appellee. There can be little doubt that the Tax Commissioner is a necessary party to this appeal, nor can there be any doubt that it was the duty of the taxpayer to serve the full notice of appeal upon the Tax Commissioner. That being the case, the record must affirmatively so indicate, otherwise the appeal has not been properly effected and must be dismissed.
It must be borne in mind that so far as a notice of appeal is concerned, there must be a strict compliance and it is not a field in which implied waivers are permitted. The Supreme Court of Ohio has held that it lacks jurisdiction even where a notice of appeal has been filed setting forth errors complained of, where they are not specific or precise in terminology. See QueenCity Valves, Inc., v. Peck, Tax Commr. (1954), 161 Ohio St. 579, Lawson Milk Co. v. Bowers, Tax Commr. (1961), 171 Ohio St. 418, and the recent case of Richter Transfer Co. v. Bowers, TaxCommr. (1962), 174 Ohio St. 113. In the last-named case, the court stated the rule as follows: *Page 446
"Strict compliance with the statutory requirements with respect to appeals provided for in Chapter 5717, Revised Code, is required."
As I understand it, where several notices of appeal are required, each of such notices must be filed within the prescribed time and an affirmative showing thereof made to appear in the record, and the service of a proper notice on one of such parties does not forgive or excuse the failure to serve a notice on another such party. In the case of Kenney v.Evatt, Tax Commr. (1945), 144 Ohio St. 369, the court was considering an appeal from a decision by the Board of Tax Appeals in which a notice of appeal had been served upon the Tax Commissioner, but not upon the Board of Tax Appeals. Notice of appeal was required to be filed with the board pursuant to the provisions of Section 5611-2, General Code (Section 5717.04, Revised Code). In course of the opinion in the Kenney case,supra, it was stated "By the Court" as follows:
"The notice of appeal to this court recites that such notice was sent by registered mail to the Tax Commissioner.
"Section 5611-2, General Code, reads in part as follows:
"`Such appeals shall be taken within thirty days after the date of the entry of the decision of the Board of Tax Appeals on the journal of its proceedings, as provided by Section 5611-1 of the General Code of Ohio, by the filing by appellant of a notice of appeal with the Supreme Court of Ohio and with the Board ofTax Appeals. Such notice of appeal shall set forth the decision of the Board of Tax Appeals appealed from and the errors therein complained of. Proof of the filing of such notice with theBoard of Tax Appeals shall be filed with the Supreme Court.' (Emphasis ours.)
"The transcript of the record of the proceedings of the Board of Tax Appeals does not show that a notice of appeal was filed with that board as required by that section.
"The giving of notice of appeal to the Tax Commissioner did not constitute a compliance with the mandatory provision of Section 5611-2, General Code, for notice to the Board of Tax Appeals. See Johnson, v. Sweeney, Secy. of State, 140 Ohio St. 279, 43 N.E.2d 239."
Counsel for appellant appeared to place reliance upon a *Page 447 decision of the Board of Tax Appeals in the case of WilliamAllen, d. b. a. Bismark Grill, v. Stanley J. Bowers, TaxCommissioner, dated April 16, 1959, case No. 38468, Board of Tax Appeals. I have examined the opinion submitted by agreement. As I view it, the most that can be said for the Allen decision,supra, is that the board placed some credence on the testimony of the witness or witnesses for the taxpayer in that case. I am unable to find any basis for holding that because the board places credence on the testimony of one witness, it must therefore place identical credence on the testimony of another witness.
I have not overlooked the fact that the file contains two printed and filled-out forms entitled "Notice of Filing Proceedings." It appears that one of such forms was sent to the attorney for appellant and another to the attorney for appellee. They were made out on October 24, 1962, and, according to the endorsement on the back, were mailed on October 24, 1962. The burden of these notices is that proceedings described in the caption thereof have been filed. By no stretch of the imagination can these two documents, served by mail upon opposing counsel, be regarded as the equivalent of notices of appeal. Even if they could, they were sent too late, as the decision of the board was journalized on September 19, 1962, and notices of appeal therefrom are required to be filed within thirty days after the date of the entry of the decision of the board on the journal of its proceedings.
Thus it is that the sixth paragraph of Section 5717.04,supra, provides in part as follows:
"In all such appeals the commissioner or all persons to whom the decision of the board appealed from is required by such section to be certified, other than the appellant, shall be made appellees. Unless waived, notice of the appeal shall be servedupon all appellees by registered mail." (Emphasis added.)
Inasmuch as appellant has clearly designated the Tax Commissioner as the appellee, it would appear that no question can be raised at this point as to the necessity for the service of a notice of appeal with all the appended documents upon the Tax Commissioner and affirmatively showing the same in the record in this case. *Page 448
The record being defective in this respect, in my opinion, the appeal should be dismissed and the cause remanded to the Board of Tax Appeals for enforcement of its order.
(November 5, 1963.) ON MOTION for reconsideration.
Per Curiam. Appellee Tax Commissioner has filed a motion for reconsideration. In the principal opinion the majority of the court held the order of the board to be unreasonable in that it was not consistent with, and therefore unsupported by the evidence.
We reaffirm our previous decision to reverse and remand to the board for further proceedings. The motion for reconsideration is overruled.
Motion overruled.
DUFFY, P. J., and DUFFEY, J., concur.
BRYANT, J., dissents.