Commonwealth v. Philadelphia Gas Works

Opinion by Judge Mencer, This case involves five appeals brought by the Philadelphia Gas Works (appellant) from a decision rendered by the Board of Finance and Revenue (Board) on May 30, 1974, granting in part and denying in part appellant’s claim for a refund of taxes paid under The Liquid Fuels Tax Act1 (Tax Act). Originally, a single appeal was taken from the Board’s decision on four separate refund requests. An appeal from each separate request was subsequently taken as a precautionary measure. Because these appeals involve identical issues, they were consolidated for argument and decision. Appeals taken pursuant to Section 1104 of The Fiscal Code 2 are heard de novo. As is often the case, the parties here have submitted a stipulation of facts which we adopt as our findings for the purpose of this case and some of which we will refer to in the course of this opinion. Between January 1, 1962 and December 31, 1972, appellant was operated and managed by the United Gas Improvement Company (UGI), a private corporation, in accordance with an agreement with the City of Philadelphia. On December 29, 1972, pursuant to [69] an ordinance of Philadelphia City Council, the City entered into an agreement for the management and operation of appellant with Philadelphia Facilities Management Corporation (PFMC), a nonprofit corporation created especially for that purpose. The new agreement became effective January 1, 1973. On April 1, 1970, an amendment to the Tax Act3 became effective which, among other things, exempted political subdivisions of the Commonwealth from the payment of the tax. Appellant claimed, before the Board, to be entitled to refunds with interest for all liquid fuels taxes paid after that date. The claim was made under Section 17 of the Tax Act, 72 P.S. §2611q, which provides in part: “The Board of Finance and Revenue may refund to distributors taxes, penalties, and interest paid by them on liquid fuels delivered to the United States government, or paid as the result of an error of law or of fact or of both law and fact. Claims for such refunds shall be made under the procedure prescribed by The Fiscal Code.” Appellants assert that they have paid the tax under a mistake of both law and fact. The Board granted refunds, without interest, for all liquid fuels taxes paid by appellant since January 1, 1973, on which date management of appellant by PFMC began. The Board denied refunds for taxes paid between April 1, 1970 and January 1, 1973 on the ground that appellant was not, before January 1, 1973, a political subdivision entitled to an exemption under Section 4 of the Tax Act, 72 P.S. §2611d, which reads in part: “A permanent State tax of eight cents a gallon, or fractional part thereof, is hereby imposed and assessed upon all liquid fuels used or sold and delivered by distributors within this Commonwealth, . . . excepting liquid fuels delivered to the Common [70] wealth [and] every political subdivision. ...” (Emphasis added.) Appellant raises two major objections to this decision. First, appellant contends that it was, at all times subsequent to April 1, 1970, entitled to an exemption as a political subdivision.4 Second, appellant contends that it should be allowed to recover interest on the refunds to which it is entitled. We find both contentions to be without merit and therefore dismiss the appeal. Taxpayers claiming exemptions from a tax must bear the burden of proving that they come within the exempted class. We have examined the stipulations before us, as well as the management contracts between the City and UGI and PFMC respectively, and find them insufficient to carry the burden of proof that appellant could in any way be considered a political subdivision during the period in question. We begin with the proposition that words used in a statute are not lightly to be given a meaning other than their normal one. Treaster v. Union Township, 430 Pa. 223, 242 A.2d 252 (1968). This is especially true of provisions exempting persons and property from taxation. According to the Statutory Construction Act of 1972, 1 Pa. C.S. §1.928(b) (5), such provisions are to be strictly construed. See also Wanamaker v. Philadelphia School District, 441 Pa. 567, 274 A.2d 524 (1971). A political subdivision is defined as “[a]ny county, city, borough, incorporated town, township, school district, vocational school district and county institution district.” 1 Pa. C.S. §1991. Clearly, the appellant, which consists only of a collection of real and personal property, cannot qualify for the exemption as a political subdivision. [71] In Commonwealth v. Erie Metropolitan Transit Authority, 444 Pa. 345, 281 A.2d 882 (1971), the Pennsylvania Supreme Court, although upholding the Authority’s exemption from the liquid fuels tax on other grounds,5 specifically rejected the Authority’s argument that it was a political subdivision. Applying the rules of statutory construction as they were applied in Erie, we hold that appellant is not a political subdivision, nothwithstanding the fact that it is composed of public property used for a public purpose. We next turn to the question of appellant’s entitlement to interest on the refunds it has already obtained. Appellant relies heavily on Cities Service Oil Company v. Pittsburgh, 449 Pa. 481, 297 A.2d 466 (1972), for the proposition that interest may be awarded on claims for refunds of taxes. We find Cities Service inapposite for two reasons. First, in Cities Service the taxing authority was a municipality and not the sovereign as in this case. The instant case is controlled by the holding in Purdy Estate, 447 Pa. 439, 291 A.2d 93 (1972), that the sovereign is not liable for interest unless a statute or contract, reasonably construed, provides for liability. In this case, we do not find statutory language which would allow such a construction. Secondly, in Cities Service the tax at issue was paid under protest and not voluntarily as in this case. This fact leads us to believe that, even if interest were properly payable, which it is not, the date on which interest would begin to run is the date of the Board’s decision, not the date of payment. 449 Pa. at 486, 297 A.2d at 469. Therefore, the amount of interest accrued would, at best, be zero. Finally, appellant, in its brief, asks us to find a regulation, dated September 18, 1970, 1 Pa. B. 278, in [72] valid because it allegedly conflicts with Section 503 of The Fiscal Code, 72 P.S. §503. This we must decline to do since the issue was not raised in the specification of objections, nor will it affect, in any way, the result in this case.6 Conclusions of Law 1. For the period April 1, 1970 to December 31, 1972, Philadelphia Gas Works was not entitled to an exemption from the liquid fuels tax as a political subdivision under Section 4 of The Liquid Fuels Tax Act, 72 P.S. §2611d. 2. Appellant is not entitled to interest on refunds recovered under Section 17 of The Liquid Fuels Tax Act, 72 P.S. §2611q, for taxes paid after January 1, 1973. Decebe Nisi Now, this 3rd day of June, 1976, the appeals from the orders of the Board of Finance and Bevenue denying refunds of liquid fuels taxes paid by Philadelphia Gas Works are hereby dismissed, and it is directed that the Commonwealth of Pennsylvania shall refund, unless it has previously made payment as provided herein, to the Philadelphia Gas Works the sum of $37,301.76 relative to the proceeding docketed at M-607;.the sum of $4,569.84 relative to the proceeding docketed at M-608; the sum of $10,584.96, less filing fee of $1.50, relative to the proceeding docketed at M-609; the sum of $2,126.88, less filing fee of $1.50, relative to the proceeding docketed at M-816, unless exceptions be filed hereto within thirty (30) days. The Prothonotary is directed to notify forthwith the parties hereto or their counsel of this decree. Footnotes [1] Act of May 21, 1931, P.L. 149, as amended, 72 P.S. §2611a et seq. [2] Act of April 9, 1929, P.L. 343, as amended, 72 P.S. §1104. [3] Act of March 3, 1970, P.L. 109. [4] By letter dated August 23, 1973, the Department of Revenue granted the appellant’s request for an exemption as a political subdivision, effective January 1, 1973. This ruling has not been appealed by the Commonwealth and is not before us. [5] The Court found an exemption on the ground that the Authority, a creature of the General Assembly, was cloaked with the Commonwealth’s exemption. [6] We note that the regulation and Section 503 do seem to he in conflict; however, we must reserve our judgment on that question for a case in which the issue is directly raised.