422 Pa. 573 | Pa. | 1966
Opinion by
This appeal raises the question of whether diesel fuel used to propel vehicles used by Central Pennsylvania Quarry Stripping & Construction Company (appellant) in its highway and other real estate construction business is taxable under the Selective Sales and Use Tax Act of March 6, 1956, P. L. (1955) 1228, as amended, 72 P.S. §§3403-1 to 3403-605. Appellant, following receipt of a use tax assessment for the period January 1, 1959, to May 31, 1962, from the Department of Revenue, pursued its administrative remedies and an appeal to the Court of Common Pleas of Dauphin County, all to no avail. It then took this appeal.
As originally enacted, the “Selective Sales and Use Tax Act” (Act) imposed a tax upon the use of tangible personal property within the Commonwealth. “Tangible personal property” was specifically defined in seventeen categories, the ones bearing on the present problem being as follows: “(1) Motor vehicles, trailers, semi-trailers and aircraft and all accessories, parts and equipment used in the maintenance, operation or repair of such motor vehicles, trailers, semi-trailers and aircraft, except gasoline.
“(4) Furnishings, appliances, supplies, fittings, ornaments, furniture, equipment and accessories for home, business, industrial or commercial use for indoor or outdoor purposes.
“(5) Business, industrial, professional and commercial supplies, equipment and machines of all types, including parts and accessories purchased on, or used in connection therewith.
“(13) Fuel oil and petroleum products for heating purposes, natural, manufactured and bottled gas and steam.”
This initial enactment, however, had a short life for the Act of May 24, 1956, P. L. (1955) 1707, completely revised the Act. The relevant portions of the definition of tangible personal property became: “(1) Motor vehicles, trailers, semi-trailers and aircraft and all accessories, supplies, parts, lubricants and equipment used in the maintenance, operation or repair of such motor vehicles, trailers, semi-trailers and aircraft.” (3) and (4) were unchanged. In (5) the word “on” was changed to “for.” “(13) Fuel oil and petroleum products for heating purposes; steam and natural, manufactured and bottled gas; electricity, intra-state telegraph service and intra-state telephone service.” In addition, the May 24 amendment added an exemption
Obviously, we deal with a confusing problem of statutory interpretation. Is diesel fuel used to propel highway construction equipment “tangible personal property” as that term is used in the Act?
We turn first to category (13) since the present assessment was based upon a determination by the Department of Revenue that diesel fuel used for propulsion purposes was “fuel oil” as used in that section. Bureau of Sales and Use Tax, Legal Unit Ruling No. 143a. This departmental position, of course, recognized that use of such fuel was not taxable if liquid fuels or fuel use tax had been paid thereon; but here the parties have stipulated as a fact that these other taxes were not paid.
In support of its second point appellant notes that elsewhere in the categorical definitions a modifying phrase (such as “for heating purposes” here) appearing after a recital of more than one item (such as “fuel oil and petroleum products” here) has been held to modify both. It refers specifically to §2(1) (6) of the Act (as it read during the period involved here) which included: “(6) Cosmetics, toilet preparations, toilet articles, drugs and medical supplies, except when sold on prescription:” and points out that the excepting phrase clearly modifies more than just “medical supplies.” Similarly, in §2(1) (15), “(15) Live animals, fish and birds (except when purchased as food for human consumption), and supplies, food and equipment used in connection therewith”; the concluding phrase “use in connection therewith” applies to “supplies” and “food” as well as “equipment” since food for humans is not taxable. All of this, says appellant, reveals a consistent grammatical approach taken by the legislature, one which requires a subsequent modifying phrase to apply to more than just the immediately preceding word or words.
Nevertheless, we are persuaded that category (13) does not include fuels used for propulsion purposes and that the inclusion of the words “fuel oil” in the category was done in order to emphasize the nature of what was being taxed — heating oils. We arrive at this position not only because we find recognized technical differences between the terms “diesel fuel” and “fuel oil” but also because we find an indication elsewhere in the categorical definitions that fuels used for propulsion were not to be included in category (13). Thus, in the original Act of March 6, 1956, supra, “gasoline” was excepted from the items contained in category (1), thus revealing a rather clear legislative intent that motor fuels otherwise were “accessories” used in the “'operation” of the transportation equipment listed therein. The changes made by the Act of May 24, 1956, supra, in eliminating the single word “gasoline” from category (1) and establishing a broad exemption for all “motor fuels” subject to the other fuel excises also shows that the legislature knew that the words “motor fuels” could be distinct from “fuel oil.”
Therefore, we believe that diesel fuel used to propel appellant’s vehicles is not “fuel oil” as that term is used in category (13) of the definitions of “tangible personal property.” It remains to be determined, however, if diesel fuel is included in one of the other categories.
True, this approach can be carried too far. For example, the Commonwealth could not avoid its obligation under §1104 by saying the question is whether appellant is subject to tax and then raising a host of issues extraneous to the one on which the proceeding had developed. This is not the case here, however; so we shall proceed to an examination of the other categories.
First, the Commonwealth argues that the diesel fuel used by appellant is a material or supply used in the
Next, we turn to the application of category (1). It can easily be argued that diesel fuel is one of the “supplies” referred to in the amending act of May 24, 1956, supra, and even that it is one of the “accessories” referred to in the original language under the Act of March 6, 1956, supra. And since it is neither “gasoline” as set forth in the original excepting phrase nor a fuel subject to Liquid Fuels Tax nor Fuel Use Tax as set forth in the exemption provision of the amending act, it is not thereby excluded from coverage.
However, to be included it still must be used in connection with “motor vehicles, trailers, semi-trailers, and aircraft.” The equipment used here by appellant is not “trailers, semi-trailers” or “aircraft”; the question is whether it is “motor vehicles.” There is no definition of “motor vehicle” in the Act, but the Secretary of Revenue originally promulgated a regulation under the Act which defined the term as including such equipment.
This leaves for consideration only the question of whether diesel fuel is included in the general categories (4) or (5), supra. This involves specific consideration of the Rohm & Haas Go. decision, supra. As pointed out above, the Court of Common Pleas of Dauphin County in that case held that railroad tank cars were not included in categories (4) or (5) because another category specifically covered transportation equipment and had omitted such cars. We are inclined neither to disagree with this conclusion nor to agree that its application is controlling here.
First, no category deals specifically with motor fuels used for propulsion purposes. Category (13), we have concluded, does not include such fuels at all. Category (3), we have determined, does not include such fuels by indirection. Category (1) includes, by reference to their use in specified types of transportation equipment, certain motor fuels; but it cannot be described as a category dealing specifically with motor fuels. In short, motor fuels as such receive no specific treatment in the categories and are thus subject to inclusion within categories (4) and (5).
More confusing, but still of assistance in interpreting the statute, is the exemption in §203 (m) for coal. Coal, eo nomine, is a fuel used both for heating and propulsion. It is clearly not included among the heating fuels listed in category (13), and strict application of the Rohm, é Haas Go. decision, supra, would require our concluding that it could not be included under categories (4) or (5). Since this question is not before us, however, we specifically refrain from passing any judgment on this involved question. On the other hand, coal used as a fuel for propulsion purposes is in the same position as the diesel fuel involved here. It would not be an accessory or supply under category (1) since it is not used to propel motor vehicles, trailers, semi-trailers or aircraft; so the only interpretation which lends meaning to its exemption by §203 (m) is one which recognizes its inclusion in categories (4) or (5).
For these reasons, therefore, we believe categories (4) and (5) are applicable here; and since diesel fuel used in the operation of construction equipment qualifies as a supply for business or commercial use under category (4) and as a business and commercial supply under category (5), it is “tangible personal property”
In concluding, we want to emphasize that the problem involved in this case well illustrates the confused, and sometimes contradictory, nature of the categorical definitions of tangible personal property
The judgment of the court below is affirmed.
For the nature of the nontaxables set forth in §203 see Commonwealth v. Sitlein’s Junto Co., 412 Pa. 132, 194 A. 2d 199 (1903).
We note, as supporting the position taken by us on this point, that the current regulations under the Act (not applicable during
Por a discussion of this problem generally, although not always in agreement with the conclusions expressed here, see Garfinkel, The Categorical Definition of Tangible Personal Property Under the Pennsylvania Selective Sales and Use Tax Act, 62 Dickinson L. Rev. 1 (1957).