DENVER (Legal Newsline) – The Supreme Court of Colorado has upheld a decision made by the Colorado Court of Appeals in favor of Sodexo, the food service provider for the Colorado School of Mines, regarding a sales tax dispute.
The court ruled May 20 that Sodexo sold meal-plan meals to the university at wholesale and not to the students at retail, thus exempting the vendor from taxation.
The case stems from a dispute between the city of Golden, Colorado, where the university is located, and Sodexo, with the city arguing that the food-service provider sold its meals directly to the students at retail, which would have been taxable under state law. While a trial court originally ruled in favor of Golden, an appellate court unanimously reversed the decision in favor of Sodexo, and the state’s Supreme Court upheld the decision.
In the official decision, Justice William W. Hood III ruled in favor of Sodexo, explaining that under the company’s contract with the University, “the sale of its food and services constituted a 'sale for resale,' and not a sale to the 'ultimate consumer' because Sodexo didn’t receive and consideration from the ultimate consumer, the students who purchased meal plans."
He went on to state that it was the school who acted as the ultimate retailer of Sodexo’s products.
The Court of Appeals in its own ruling reasoned that "consideration is exchanged for food on two occasions: once when a student pays Mines for a meal plan or Munch Money, and again when Mines pays Sodexo periodically based on the number and types of meals provided to the meal-plan students," Wood mentioned in the ruling.
Considering this fact, when students purchased meals with their student identification cards, they were never directly paying Sodexo for the meals they had loaded on previously as part of their residence hall contracts.
Under Golden's municipal code, wholesale transactions are exempted from taxation.