Dave & Buster’s Dodged $2.5 Million in Sales Tax, Texas Says

Dave & Buster’s was wrongly granted a $2.58 million sales tax refund on candy and toys it bought as prizes for its arcade games, the Texas Comptroller told a state appeals court.

The state’s “sale-for-resale” exemption doesn’t apply to the purchases because they were bought to perform coin-operated games, which weren’t themselves taxed, the state told the Texas Court of Appeals, Fifteenth Judicial District in its opening brief filed Monday.

The legislature created this carve-out to the resale exemption to prevent a situation in which neither the initial sale of the goods nor the subsequent performance of a service was ...