Szabo Food Service, Inc. v. State Board of Equalization

The State Board of Equalization appeals a judgment which sustained the claim of Szabo Food Service, Inc. of California for a refund of $32,582.08 plus interest for sales taxes paid under protest. (Rev. & Tax. Code, § 6001 et seq.)

The stipulated facts in summary: Szabo operated cafeterias on the premises of public and private employers. The employers provided the cafeterias as a convenience to their employees because of a lack of adequate nearby reasonably priced food facilities. The employers provided the physical plant and equipment; Szabo hired and trained cafeteria personnel, purchased, prepared and served the food, purchased maintenance supplies and services, and provided bookkeeping and administrative services.

Szabo entered a management operating agreement with each employer. Szabo retained little control over income and expenses since each employer determined or approved food prices and set cafeteria locations and hours. Prices were based on projected operating results and were in substantial relation to costs, but profitability varied from item to item and from cafeteria to cafeteria. The agreements therefore provided for Szabo to recover from cafeteria sales…