(a) In the first class is “every utility doing business in this State which is subject to the supervision of the State Department of Public Service,” except a utility “engaged in the business of operating or leasing sleeping and parlor railroad cars or of operating railroads other than street surface, rapid transit, subway and elevated railroads”. Such utilities are taxable on gross income. Utilities in this class are mainly street surface, rapid transit, subway and elevated railroads, and all other nonoperating railroads which lease their property to others, omnibus lines, gas, electric, steam, water, telephone, telegraph, bridge, express, baggage, transfer and freight terminal companies. However, the law exempts motor carriers or brokers subject to the supervision of the State Department of Public Service under article 3-b of the Public Service Law. This provision does not exempt motor carriers or brokers who are subject to such supervision under other provisions of law.

1. (1) In the second class, is “every other utility doing business in this state”, which includes every “person” (as defined in the law) “engaged in the business of operating one or more omnibuses having a seating capacity of more than seven passengers, and every person * * * who sells gas, electricity, steam, water, refrigeration, telephony or telegraphy, delivered through mains, pipes or wires, or furnishes gas, electric, steam, water, refrigerator, telephone or telegraph service, by means of mains, pipes, or wires; regardless of whether such activities are the main business of such person or are only incidental thereto, or of whether use is made of the public streets”. Such utilities are taxable on gross operating income. The word person is defined as “persons, corporations, companies, associations, joint-stock associations, co-partnerships, estates, assignee of rents, any person acting in a fiduciary capacity, or any other entity, and persons, their assignees, lessees, trustees or receivers, appointed by any court whatsoever, or by any other means, except the State, municipalities, political and civil subdivisions of the State or municipality, and public districts”.
2. (2) Utilities in the second class are mainly those which, generally speaking, would not be classed as utilities but which are made utilities by statute for the purpose of this tax. Ordinarily, although there are exceptions, such as omnibuses, utilities in this group resell utility services which are purchased from utilities in the first class.

3. (3) The following questions and answers are illustrative of utilities in this class: Question 1: Question 2: Question 3: Question 4: Question 5: Question 6: Question 7: Question 8:

   Question 1:

   Is the owner or lessee of a hotel, apartment house or office building, who purchases gas, electricity, steam, water, refrigeration or telephony and resells any part of all of the same to tenants, subject to tax? Answer: Yes.

   Question 2:

   A tenant in a hotel apartment house or office building pays a lump sum as monthly rental, which includes gas, electric, steam, water and telephone services or any one or more of such services. Is the landlord subject to the tax? Answer: No. The landlord becomes taxable only if he sells one or more of such utility services at identifiable, flat or metered rates.

   Question 3:

   Is a mutual telephone company, not subject to public service regulation, subject to tax? Answer: Yes.

   Question 4:

   Is a hotel subject to tax where it supplies telephone services to its guests and makes a charge therefor? Answer: Yes.

   Question 5:

   A stock quotation company sells telegraph ticker service to brokers in various localities, using wires leased from a telegraph company. Is it engaged in the sale of telegraphy so as to be subject to the tax? Answer: Yes.

   Question 6:

   Is a cold storage plant, which stores perishable foods or other articles for others, but does not deliver refrigeration to others through mains or pipes, subject to tax? Answer: No.

   Question 7:

   Is a concern that supplies refrigeration to others by transmitting refrigeration fluid from a central point to the premises of such other individuals, corporations or entities subject to tax? Answer: Yes.

   Question 8:

   A gas tank is installed on the premises of a householder and connected with household outlets by a pipe, through which gas is sold to him, either at metered rates or otherwise. The tank is refilled from time to time. Is the householder's seller taxable? Answer: No.

(b)