Columbia Gas of Ohio, Inc. v. Limbach - Ohio Supreme Court Opinion - Ohio Supreme Court Decision

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OPINIONS OF THE SUPREME COURT OF OHIO
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Columbia Gas of Ohio, Inc., Appellant, v. Limbach, Tax Commr.,
Appellee.*
[Cite as Columbia Gas of Ohio, Inc. v. Limbach (1994),
Ohio St.3d .]
Taxation -- Public utilities -- Excise tax -- Denial of
application for certificate of abatement -- R.C. 5703.05
-- Board of Tax Appeals decision affirmed when overpayment
of tax not proven.
(No. 92-1985 -- Submitted December 7, 1993 -- Decided
March 2, 1994.)
Appeal from the Board of Tax Appeals, No. 89-X-44.
Columbia Gas of Ohio, Inc., appellant, challenges the
denial of its application for a certificate of abatement. If
the application were granted, Columbia would receive a refund
of the additional public utility excise tax levied by Section 6
of Am. Sub. H.B. No. 100, 140 Ohio Laws, Part I, 1855, 1924
(Effective February 24, 1983) that it paid for tax year 1983.
Columbia sells natural gas to ordinance customers, special
contract customers, and customers who have rates set by the
Public Utilities Commission of Ohio ("PUCO"). As to the
ordinance customers, Columbia negotiates with individual
municipalities to supply a municipality's residents. After
Columbia and the municipality have negotiated the rate, the
municipality passes an ordinance that adopts the contract with
Columbia and sets forth the rates to be paid to Columbia by the
municipality's residents. Columbia normally includes clauses
in the contract that permit it to obtain reimbursement from the
residents for any increased taxes. Columbia supplied gas to
residents of approximately three hundred sixty municipalities
under this type of contract in 1982 and 1983.
As to the special contract customers, Columbia sells gas
to large-volume industrial and commercial customers. Columbia
negotiates the rate and signs a contract with the customer.
Again, Columbia includes provisions in its contracts with the
customers that allow it to recover any increase in taxes.
Finally, Columbia sells gas to customers who have rates
set by the PUCO in rate cases. Normally, R.C. 4909.161 permits
Columbia to pass increases in taxes on to these customers.

Cleveland Elec. Illum. Co. v. Pub. Util. Comm. (1986), 24 Ohio
St. 3d 135, 24 OBR 357, 493, N.E.2d 1340.
Section 6 of Am. Sub. H.B. No. 100 increased the gross
receipts tax rate by adding half a percentage point to it for
tax year 1983, and Columbia paid a one-time, additional
$7,289,817 in taxes. Concluding that it could not obtain
reimbursement from any of its customers under Section 29 of
this Act, which suspended R.C. 4909.161, it filed the instant
application with the Tax Commissioner, appellee. After
reviewing the application, the commissioner rejected all
constitutional claims, determined that the excise tax had been
neither illegally nor erroneously paid, and denied the
application.
On appeal, the Board of Tax Appeals ruled that it had no
jurisdiction to determine the constitutional validity of the
Act, noted that E. Ohio Gas Co. v. Limbach (1986), 26 Ohio
St.3d 63, 575 OBR 54, 498 N.E. 2d 453, a declaratory judgment
action, appeared to apply, and affirmed the commissioner's
order. In E. Ohio Gas Co., we declared that neither Section 6
nor Section 29 of this Act violated the ban on retroactive
legislation contained in Section 28, Article II of the Ohio
Constitution.
The cause is now before this court upon an appeal as of
right.

Porter, Wright, Morris & Arthur and George M. Hauswirth;
Andrew J. Sonderman and James R. Berendsen, for appellant.
Lee I. Fisher, Attorney General, and Richard C. Farrin,
Assistant Attorney General, for appellee.

Per Curiam. We hold that Columbia has not established
that it overpaid the disputed tax, a condition for obtaining a
certificate of abatement, and that its constitutional claims do
not, in fact, contest the levy of this tax. Consequently, we
affirm the decision of the BTA.
R.C. 5703.05(B) provides:
"* * * the commissioner may on written application of any
person, firm, or a corporation claiming to have overpaid to the
treasurer of state at any time within five years prior to the
making of such application any tax payable under any law which
the department of taxation is required to administer which does
not contain any provision for refund, or on his own motion
investigate the facts and make in triplicate a written
statement of his findings, and, if he finds that there has been
an overpayment, issue in triplicate a certificate of abatement
payable to the taxpayer, his assigns, or legal representative
which shows the amount of the overpayment and the kind of tax
overpaid. * * * Except as provided in sections 5725.08 and
5725.16 of the Revised Code taxpayer's copy of any certificates
of abatement may be tendered by the payee or transferee thereof
to the treasurer of state as payment, to the extent of the
amount thereof, of any tax payable to the treasurer of state[.]"
In essence, Columbia argues that Section 29, the provision
of Am. Sub. H.B. No. 100 that prevents it from recovering the
additional tax by passing it through to its customers in its
rates, is unconstitutional for various reasons and renders the
tax imposed by Section 6 unconstitutional. Thus, so it argues,

it overpaid the tax and should receive the certificate. The
commissioner argues that Columbia is not charging that the levy
of tax itself is unconstitutional but actually is challenging
the constitutionality of its being prevented from recovering
the tax from its customers. The commissioner maintains that
the commissioner has no authority to issue the certificate
since she has no authority over whether Columbia may recover
the taxes through its rates. We agree with the commissioner.
According to Chicago Freight Car Leasing Co. v. Limbach
(1992), 62 Ohio St.3d 489, 491, 584 N.E.2d 690, 693, to obtain
an abatement of overpaid taxes:
"The applicant must: (1) overpay the tax under a statute
not providing for a refund, (2) overpay under a law
administered by the Department of Taxation, (3) overpay to the
state treasurer, and (4) file an application within five years
of the alleged overpayment."
However, if no overpayment occurred, no certificate of
abatement may be issued. Ellsworth Freight Lines, Inc. v.
Bowers (1962), 173 Ohio St. 117, 18 O.O. 2d 363, 180 N.E. 2d
152. In Ellsworth, a lessee paid highway use tax under a
statute which required the owner of commercial vehicles to pay
the tax. Under the lease, the lessee could withhold sufficient
funds to pay the taxes from lease payments due the owner.
However, the lessee, instead, applied for a certificate of
abatement seeking reimbursement of the tax, claiming that it
had not been legally obligated to pay it.
We held that the lessee's position was unsound because no
overpayment of the tax had occurred. The tax paid to the state
was actually due it. According to the decision, id. at 118, 18
O.O. 2d at 364, 180 N.E. 2d 153, "[t]he controlling fact in
this matter is not that the tax was voluntarily paid, which it
was, but that there was no overpayment of the tax due the
state. Overpayment is a requirement of Section 5703.05,
Revised Code, before the Tax Commissioner has authority to
issue a certificate of abatement."
In this case, Columbia does not really challenge the
propriety of the tax, except as being a retroactive statute,
and E. Ohio Gas Co. decided it was not. Columbia's real claim
is that preventing it from recovering the tax from its
customers is unconstitutional. The tax Columbia paid to the
state was due the state. Thus, under Ellsworth, Columbia may
not obtain this certificate.
As to the retroactivity of the tax under Section 28,
Article II of the Ohio Constitution, stare decisis bars
Columbia's claim. In E. Ohio Gas Co., we held that the
additional tax was imposed prior to the end of East Ohio Gas's
tax year and was not retroactive. Under the precedent cited
therein, we conclude that Columbia has no claim that the tax
operated retroactively on Columbia's income.
Since Columbia's remaining constitutional claims pertain
to obtaining reimbursement of the tax from its customers under
public utility laws and regulations, and not to paying the tax,
we refuse to rule on them.
Accordingly, we affirm the decision of the BTA.

Decision affirmed.
Moyer, C.J., A.W. Sweeney, Douglas, Wright, Resnick, F.E.