Lead Opinion
Amеrican Airlines (Taxpayer) appeals from an order of the Board of Finance and Revenue (BFR) which sustained a decision of the Board of Appeals (Board) denying Taxpayer’s rеquest for a reassessment of Pennsylvania use tax on its purchases of food and non-alcоholic beverages for the period April 1, 1985 through January 31, 1988. We reverse.
The parties stipulatеd to the facts which follow. Taxpayer is a public utility engaged in providing intrastate, interstate аnd international passenger and freight airline service as a common carrier. In the cоurse of providing transportation services, Taxpayer serves food and non-alcohоlic beverages to its passengers while in flight. Although Taxpayer does not provide food to its passengers on all flights, it generally serves food during normal meal periods and on the compаratively longer flights.
The food purchased by Taxpayer is specifically designed for Taxpayer’s use during flight. Taxpayer developed these specifications to ensure that the food is well suited for service to large numbers of people in both a limited time frame and a confined space.
Taxpayer provides transportation services and the related fоod and beverages to its passengers for an all inclusive price. Taxpayer does nоt separately charge its passengers for these items.
By letter dated December 30, 1985, the Pennsylvania Department of Revenue notified Taxpayer that effective February 1,1986, “[m]eals and related food purchases from caterers or other suppliers for use on flights originating in Pennsylvania will be taxable on their total cost to the airline.”
For the period April 1, 1985 through January 31, 1988, Taxpayer did not remit use tax to the Commonwealth for food and beverages which Taxpayer purchased for service to passengers during flight. On August 2, 1988, the Department issued a Notice of Assеssment to Taxpayer for this period which included $286,365.39 in use tax, $40,924.83 in interest and $40,448.93 in penalties. This assessment was based on the Department’s determination that food and beverages purchased by Taxpayer for service to its passengers during flight were subject to use tax.
Taxpayer subsequently filed a Petition for Reassessment and Abatement of Penalties with the Board. Following a hearing, the Board sustained the assessment in its entirety. Taxpayer appealed to the BFR which sustained the Boаrd’s decision.
On appeal to this court, the primary issue presented
This court previously addressed this issue in the cоmpanion case of USAir, Inc. v. Commonwealth, 157 Pa.Commonwealth
Accordingly, the order of the BFR in this matter is rеversed. Because Taxpayer did not challenge on appeal to this court the аssessment of use tax on non-food and related items, judgment is entered in favor of the Commonweаlth and against Taxpayer in the amount of $2,568.00.
ORDER
AND NOW, July 23, 1993, the order of the Board of Finance and Revenuе is reversed and the Prothonotary shall enter judgment in favor of the Commonwealth and against Ameriсan Airlines, Inc. in the amount of $2,568.00 unless exceptions are filed within thirty (30) days of the date of this order.
Notes
. The lеtter also provided that ‘‘[s]oft drinks, liquor and malt beverages purchased for sale or use on flights originating in Pennsylvania will be taxable on an amount resulting from the application to such purchases
. Act of March 4, 1971, P.L. 6, as amended, 72 P.S. §§ 7101-10004.
. The assessed use tax in the amount of $286,365.39 includes $2,568.00 in taxes unrelated to food and beverages furnished to passengers by Taxpayer during flight. Taxpayer does not contest the assessment of $2,568.00.
. Although Taxpayer asserts that its purchases of food and non-alcoholic beverages also are excluded from use tax under оther provisions of the Code, our resolution of this issue makes unnecessary consideration of the other potentially applicable exclusions.
Dissenting Opinion
dissenting.
I dissent for the same reasons set forth in my dissenting opinion in USAir, Inc. v. Commonwealth of Pennsylvania, 157 Pa.Commonwealth 303,