This proceeding comes before us as an appeal from the Board of Tax Appeals, and involves the assessment of sales tax, aggregating about $23,000, against the appellant St. Francis Hospital Association, which is now a private hospital in the city of Cambridge.
No sales tax was included in the charges against patients for medicines or other supplies; and in the statements or bills rendered patients there was no "breakdown" between the amount charged for drugs and other medicines, and other service. On that theory the Tax Commissioner, upheld by the Board of Tax Appeals, assessed this tax against all services rendered, all supplies furnished, and all expenses incidental to the operation of the institution.
Two errors are assigned, to wit:
"1. The commission erred in assessing the sales tax on the entire hospital bill of patients at St. Francis Hospital. *Page 134
"2. The commission erred in assessing the sales tax on medicines and drugs administered patients by appellant St. Francis Hospital."
Counsel for the commission place reliance directly upon the case of Wilson v. Glander, Tax Commr., 151 Ohio St. 479,86 N.E.2d 761, the syllabus of which is:
"Where a person sells material to another and in connection therewith furnishes labor or service in applying such material to his customer's property, the entire transaction shall be considered a sale and subject to tax, unless there is a clear separation, in the making or billing of a charge therefor, of the material furnished and the labor or service performed."
It is a far cry from the recapping of automobile and truck tires to the restoration of the health of a human being. And in any event, two suggestions are to be made about this Wilson case. In the quoted syllabus there is a limitation upon the proposition in that it is indicated there may be an exemption if there is "a clear separation, in the making or billing of a charge therefor."
In other words, the mere failure to bill the patient for these items separately does not warrant the assessment of the tax if there is a clear separation in the making of the charge. And in concluding the opinion on page 485, the court in theWilson case says: "We do not mean to hold that there must be any particular or scientific method of bookkeeping or invoicing to show a separation of material from labor or service performed, in order for a transaction to be exempt from the sales tax so far as the labor or service is concerned, but we hold that the separation must be such as to clearly show in the invoice or charge what the sale price is for the material and what the charge is for labor or service."
In any event — and with natural hesitancy do we assume to interpret the opinions of a higher court, or place limitations upon them — the later case of Roberts v. Glander, Tax Commr.,156 Ohio St. 247, 102 N.E.2d 242, seems to us to be directly applicable to the instant case rather than the Wilson case,supra. The syllabus in the Roberts case is:
"By virtue of the provisions of Sections 5546-1 and 5546-3, General Code, a sales tax is determined by the consideration *Page 135 for both services rendered and the materials furnished in an upholstery repair job unless the consideration for services is separately stated from the consideration for materials furnished, and a vendor who separately states such consideration on his books of account available to the Tax Commissioner and who collects the proper tax from his customer is entitled to have excepted as a predicate for the sales tax the consideration for services rendered even though he fails to make such separate statement on an invoice delivered to his customer-vendee for such repair job."
And on page 251 of the opinion the court says:
"Doubtless a purchaser may demand an invoice for, as he may demand an inspection of, goods purchased before payment may be required. On the other hand, it is apparent that the purposes to be served in making the separation of charges are to enable the Tax Commissioner to determine and assess the tax and to enable the vendor to make his tax return to the state and claim his exception by keeping copies of his invoices or by keeping books of account reflecting the breakdown of the charges. And it is quite apparent that such a breakdown on the books of the vendor would be just as efficacious for the purpose and more permanent in form than the retention of invoices as and when made."
In the instant case one of the examiners for the commission testified that hospital records were available from which specific charges could have been determined, although they were not separated upon any statements rendered. An auditor for the appellant testified to the same effect and further that actual drugs and other medicines furnished would not exceed 20 per cent of the total charge in any event, or $4,600 as distinguished from $23,000.
Frankly, we think that the charge made is an outrageous charge in view of the law and the records actually available from this hospital, even though there was not a strict compliance with the rules of the commission. This conclusion seems to us inevitable on the basis of reason, and on the authority of theRoberts case, supra, which, while not specifically doing so, certainly does modify and qualify the Wilson case, supra.
In other words, we hold against the appellant in its suggestion *Page 136 that the bills for medicine were purely incidental and that no sales tax should be levied, but we hold with it on its contention that the commissioner erred in assessing sales tax on things other than medicines and drugs.
It follows that, quoting the concluding paragraph in theRoberts opinion: "The decision of the Board of Tax Appeals is reversed and the Tax Commissioner is directed to revise the sales tax assessed against the appellant in accordance with this opinion."
Decision reversed.
PUTNAM, P. J., concurs.