Carey Transportation, Inc. v. Perrotta

Nunez, J. In this article 78 proceeding petitioner, Carey Transportation, Inc., seeks to annul a determination of respondent Finance Administrator of the City of New York denying Carey’s claim for a refund of $4,583.36 paid under title Q [148] (Q41-1.0 to and including Q41-18.0) of chapter 41 of the Administrative Code of the City of New York (“ City Utility Tax Law ”) which provides for a tax of 1% of the gross operating revenues derived from the operation of omnibuses carrying more than seven persons operating wholely within the City of New York during the period from September 1, 1956 to and including August 31, 1958 (the “ Tax Period”). Concededly, petitioner operates buses of this character. There is no dispute as to this or any other factual issue. Carey made application to respondent for a refund of part of the tax paid claiming that the City of New York had received its authority from the State Legislature to impose a utility tax “such as ” is imposed by section 186-a of the New York State Tax Law which, during the Tax Period, contained a specific exemption of the first $125,000' of gross operating revenue in each quarter-annual period from the utility tax imposed by said section 186-a. Respondent denied Carey’s claim for refund for the reasons ‘that (a) with respect to the taxes paid for that portion of the Tax Period beginning September 1, 1956 and ending September 30, 1957, the application for refund was not filed with the Comptroller within one year from the date of payment of the tax, as required by the City Utility Tax Law, and (b) the basis of the claim was deemed to be untenable. Respondent thereafter held a formal hearing to review his determination. At this hearing the parties stipulated to limit the Tax Period to the period between October 1, 1957 and August 31, 1958 thereby removing from contention that portion of the refund claim which was denied for the reason that it had been made more than one year after the payment of the tax. The claim for refund was accordingly reduced to $4,583.36. Following the hearing respondent denied the claim for refund. The City Utility Tax Law was enacted pursuant to section 20-b of the General City Law which enabled the City of New York to adopt a local law imposing a tax on utilities, such as the tax imposed on utilities by section 186-a of the Tax Law, subject, however, to the restrictions that (i) the city’s tax shall not exceed 1% of gross operating income, (ii) it shall have application only within the territorial limits of the city, and (iii) all of the provisions of section 186-a, so far as the same are or can be made applicable, shall apply. Section 186-a of the Tax Law provided that in computing its gross operating income for the period covered by each quarterly return any utility engaged in the business of operating omnibuses having a seating capacity of more than seven passengers may exclude from its receipts, otherwise includable in each such [149] return, the amount of $125,000 and thereby the base for the tax was the gross operating income less $125,000 per quarter. Carey was, therefore, entitled to exclude from its gross operating income taxable under the City Utility Tax Law for the Tax Period in question the sum of $458,336, which is the total computed at the rate of $125,000 per quarter for said Tax Period. One percent of this figure gives the $4,583.36 refund to which we hold Carey is entitled. Respondent was empowered to impose a tax upon Carey’s gross income during the Tax Period herein involved only by virtue of section 20-b of the General City Law and not by the general taxing power granted by the Legislature. We have so previously decided in Matter of Brooklyn Union Gas Co. v. McGoldrick (270 App. Div. 186 [1st Dept., 1945], affd. without opn. 298 N. Y. 536 [1948]). Reference to the legislative history of subdivision 2-a of section 186-a does not bolster respondent’s position. Governor Harriman’s message to the Legislature requested relief for omnibus companies that was eventually enacted as subdivision 2-a of section 186-a of the Tax Law. That message does not unequivocally assist in the interpretation of the unambiguous language in the legislation. For that reason legislative history should not be considered. Ordinarily courts will defer to legislative interpretation or interpretation given by the agency to the legislation that it administers. However, the rule is otherwise with respect to a statute that levies a tax: u In determining the meaning of these taxing statutes we must be guided by the rule of construction which provides: ‘ A statute which levies a tax is to be construed most strongly against the government and in favor of the citizen. The government takes nothing except what is given by the clear import of the words used, and a well-founded doubt as to the meaning of the act defeats the tax.’” (Matter of Brooklyn Union Gas Co. v. McGoldrick, supra, p. 195.) Although we find none, if doubt there were as to the applicability of the $125,000 quarterly exemption, the rule of construction requires that the doubt be resolved in favor of the petitioner taxpayer. Determination denying petitioner’s claim for a tax refund should be annulled on the law with costs and disbursements and refund in the sum of $4,583.36 granted.