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Steelcase, Inc. v. Crystal, 238 Conn. 571, 680 A.2d 289

Facts

Steelcase, a manufacturer of office furniture based in Michigan, sold products to independent retailers located outside Connecticut. The retailers, who certified the sales as for resale, directed Steelcase to ship the products directly to their customers in Connecticut. Steelcase delivered the goods to common carriers at its facilities outside Connecticut, and title passed to the retailers upon delivery to the carrier. The Commissioner of Revenue Services assessed Steelcase for sales tax, claiming that the delivery constituted retail sales in Connecticut.

The relevant facts have been stipulated. Steelcase is a manufacturer of office furniture and systems with its principal place of business in Grand Rapids, Michigan. During the tax period at issue in this case, Steelcase was registered with the Connecticut department of revenue services as a retailer subject to sales tax. During this period, Steelcase, as a general business practice, sold its products to independent office furniture retailers located in various states. The retailers were obligated to Steelcase for payment of the wholesale price of the goods purchased, regardless of whether the retailers received payment for such goods from the retailers' own customers or the amount of such payment from the retailers' customers.

Issue

Whether the trial court properly determined that Steelcase, an out-of-state manufacturer, is not liable for sales tax on its sales to out-of-state retailers.

The issue in this tax appeal is whether the trial court properly determined that the taxpayer, an out-of-state manufacturer, is not liable for sales tax; see General Statutes § 12–408 ; 1 with respect to its sales *573 of its products to out-of-state retailers from whom it accepted resale certificates, and for whom it sent its products directly from its out-of- **291 state warehouse to the retailers' customers in Connecticut.

Rule

Under General Statutes § 12–407(3), a retail sale includes a sale for any purpose other than resale, and delivery in this state of tangible personal property by an owner or former owner to a consumer constitutes a retail sale.

General Statutes § 12–407(3) provides: “ ‘Retail sale’ or ‘sale at retail’ means and includes a sale for any purpose other than resale in the regular course of business of tangible personal property…. The delivery in this state of tangible personal property by an owner or former owner thereof or by a factor, if the delivery is to a consumer pursuant to a retail sale made by a retailer not engaged in business in this state, is a retail sale in this state by the person making the delivery.

Analysis

The court analyzed whether Steelcase's actions constituted retail sales under the statute. It determined that Steelcase's delivery of goods occurred at its plant in Michigan, where the goods were placed in the possession of a common carrier. Since the delivery was not made in Connecticut, the court concluded that Steelcase did not make retail sales subject to sales tax in the state.

The trial court reasoned that, under § 12–410 , if Steelcase demonstrated that it had taken a certificate of resale from the purchaser-retailer in each of the five transactions, the burden to show that the sales were not sales for resale shifted to the commissioner. Relying on the stipulation that Steelcase had in good faith accepted certificates of resale from the retailers, which certificates were acceptable in the retailers' respective states, the court determined that the commissioner bore the burden of demonstrating that those sales were not for resale and further determined that it had not met that burden.

Conclusion

The Supreme Court affirmed the trial court's judgment, concluding that Steelcase did not deliver its products in Connecticut and therefore was not liable for the sales tax assessed by the Commissioner.

The judgment is affirmed.

Who won?

Steelcase prevailed in the case because the court found that it did not make retail sales in Connecticut, as the delivery of goods occurred outside the state.

Steelcase prevailed in the case because the court found that it did not make retail sales in Connecticut, as the delivery of goods occurred outside the state.

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