15 Pa. Commw. 403 | Pa. Commw. Ct. | 1974
Opinion by
In December of 1968, the City of Pittsburgh (City) enacted Ordinance No. 675 imposing a tax upon the privilege of operating or conducting business in the City. The ordinance, which became effective on February 1, 1969, required the tax to be paid annually and
Two years after the enactment of Ordinance No. 675, the City enacted Ordinance No. 594, the purpose of which was to amend and supplement Ordinance No. 675. The City Treasurer then promulgated new regulations, effective January 1, 1971, and Section 314(a) of the new regulations provided in part: “In the case of the general contractor, prime contractor or subcontractor employing lower-tier subcontractors, no deduction may be made with respect to amounts paid to subcontractors and materialmen, unless it can be shown that the subcontractor has paid the Business Privilege Tax to the City of Pittsburgh on the same gross receipts stemming from the same contract.”
George A. Fuller Company, Inc., the appellant, was engaged in the business of general contracting in the Pittsburgh area. Most of its undertakings were let out to subcontractors who did the actual construction work for that part of a construction contract assigned to them. In December of 1971 the appellant, who had not yet paid the City’s business privilege tax for the years 1969 and 1970, filed amended returns for those years and took subcontracting deductions based on the new 1971 regulations. The appellant also took a deduction for the amount of gross receipts it had received as payments under its contracts with the General State Authority (GSA), which is an agency of the state government. As described by the parties, these contracts were
The case was presented to the trial court upon a stipulation of facts submitted by the parties, which included, along with the facts stipulated, a stipulation of the following two questions for the court’s consideration:
“A. Whether the regulations amended and revised January 1, 1971, by the Treasurer of the City of Pittsburgh should be applied prospectively from the date of revision or whether they should be applied retroactively to the date of enactment of the original Ordinance.
“B. Whether a general contractor can deduct from its Business Privilege Tax Receipts the amount of payments made to it by a state agency which is exempt from business taxes.”
In his opinion filed on January 17, 1973, Judge Silvestri Silvestri of the Allegheny County Court of Common Pleas found it unnecessary to resolve Question A, as framed by the parties. Instead, he found the relevant portion of Section 314(a) of the new 1971 regulations to be “a nullity as not within the authority delegated to the Treasurer and beyond the bounds of the authority of the Ordinance.” As to Question B, he held that the receipts from construction work performed for the GSA are includable in gross receipts for purposes of the Ordinance. The appellant filed exceptions, and on May 2, 1973 the court en banc affirmed the prior holding of Judge Silvestri and dismissed the exceptions. An appeal to this Court ensued.
The appellant first argues that the lower court erred in failing to restrict its opinion to a resolution of the narrow issues presented to it by the parties in their stipulation of facts. As to the binding effect of stipulations, the general rule is that the parties may stipulate, and be bound by their act as the law of the case,
We must consider, of course, whether or not the City Treasurer did exceed the scope of his authority in promulgating Regulation 314(a) in 1971, as the court below held. He derived whatever authority he had in this respect from two separate sections of the ordinance in question: Section 7(b), which empowered him “to prescribe, adopt, promulgate and enforce rules and regulations relating to any matter pertaining to the administration and enforcement of this ordinance. . . and Section 4(c), which provided that “[w]here a receipt in its entirety cannot be subjected to the tax imposed
It is well established, of course, that “the power of an administrative agency to prescribe rules and regulations under a statute is not the power to make law, but only the power to adopt regulations to carry into effect the will of the Legislature as expressed by the statute.” Volunteer Firemen’s Relief Association of the City of Reading v. Minehart, 425 Pa. 82, 89, 227 A. 2d 632, 635-636 (1967); Commonwealth v. DiMeglio, 385 Pa. 119, 124, 122 A. 2d 77, 80 (1956). Certainly the same rule must apply when a municipal legislative body, the Pittsburgh City Council in this case, has vested rule making power in an administrative agent, here the City Treasurer.
Section 3 of ordinance No. 675 of 1968, as amended by Ordinance No. 594 of 1970, provides: “Beginning with the tax year 1971 and annually thereafter, every person engaging in any business in the City of Pittsburgh shall pay an annual tax at the rate of six (6) mills on each dollar of volume of the gross annual receipts thereof.”
“Gross Receipts” is defined in Section 2(f) as: “Cash, credits, property of any kind or nature, received in or allocable or attributable to the City of Pittsburgh from any business or by reason of any sale made, including resales of goods, wares or merchandise, or services rendered, or commercial or business transaction had within the City of Pittsburgh, without deduction therefrom on account of the cost of property sold, materials used, labor, service, or other cost, interest, or discount
The appellant also argues that it should be exempt from tax on the payments it received from the GSA in fulfillment of its contracts for “the construction of state and general public facilities.” It argues that it is entitled to this exemption under the Act of May 22, 1933, P. L. 853, Art. II, §204, as amended, 72 P.S. §5020-204, which provides in part:
“(a) The following property shall be exempt from all county, city, borough, town, township, road, poor and school tax, to wit:
“(7) All other public property used for public purposes, with the ground thereto annexed and necessary for the occupancy and enjoyment of the same . . . .” The appellant claims an exemption merely because it has entered onto state owned land to perform contracts with a state agency. We believe this view to be in error. The statute creates an exemption for the use of public property, not for the taxpayer’s mere presence on such property, and not for his mere construction thereon of*410 facilities which are intended to become public property if satisfactorily completed and paid for under the contract.
In cases where exemptions for certain activities have been allowed, and when such activities were not conducted by a public agency itself, the allowance was made only when the activities have involved the acquisition of some interest in the property itself or at least in the operation of a concession upon the property and the use of that property for a public purpose. In Moon Township Appeal, 425 Pa. 578, 229 A. 2d 890 (1967), the operation of a hotel, restaurant and newsstand by concessionaries on county property was found to be exempt. In In Re Spectrum, Arena, Inc., 330 F. Supp. 125 (E.D. Pa. 1971), the leasing of a building and site as a public assembly facility for sports, entertainment and conventions was held to be an exempt activity. In Gulf Oil Corporation v. Middletown Area School District, 92 Dauph. 123 (1969), cited by the appellant, the leasing of real estate from the Pennsylvania Turnpike Commission for the operation of a restaurant and service station was tax exempt. It is obvious that the appellant in this case has not used public property in the same way as it was used in these other cases. It has merely entered upon public property to construct public facilities, for which it will be paid under the terms of its contracts. It must, therefore, be liable for the payment of a validly levied municipal tax upon its privilege to operate or conduct a business, whether that business has been conducted with the GSA or any other public agency or with some non-public individual or agency.
The Order of the court below, therefore, is affirmed.