Appeals, Nos. 135 and 136, March T., 1961, from orders of County Court of Allegheny County, Nos. A 1903 and A 1904 of 1958, in case of Kerchner, Marshall & Company v. City of Pittsburgh et al., and Same v. School District of Pittsburgh et al. Orders reversed.
Regis C. Nairn, Assistant City Solicitor, with him David Stahl, City Solicitor, for City of Pittsburgh, appellant.
Edmund W. Ridall, Jr., Assistant Solicitor, and Niles Anderson, Solicitor, for School District of Pittsburgh, appellant.
Frank J. Gaffney, with him Thorp, Reed & Armstrong, for appellee.
Before Bell, C.j., Musmanno, Jones, Cohen, Eagen and Alpern, JJ.
OPINION BY MR. JUSTICE COHEN
The City and School District of Pittsburgh have appealed from decisions of the County Court of Allegheny County determining that Kerchner, Marshall & Company, appellee, is a "wholesale vendor" of goods, wares and merchandise within the meaning both of the mercantile tax ordinance of the City and of the Act of June 20, 1947, P.L. 745, as amended, 24 P.S. §§ 582.1-582.13, authorizing the collection of a mercantile license tax by school districts of the first class.*fn1 Since the rate
of tax for wholesale vendors is one-half that for retail vendors, the lower court's orders called for a refund in each case to appellee.
Kerchner, Marshall & Company is a Pennsylvania corporation which sells mineral and metal products (e.g., silicon carbide, silicon-aluminum-titanium alloy, sand, fluorspar and limestone), to manufacturers of iron, steel and glass products. The latter use the taxpayer's goods for various purposes in the manufacturing process, the purchased goods being either absorbed by or combined into the finished product or passed off as carbon dioxide or slag. From 1947, the year of inception of the mercantile taxes, the corporation reported its sales as wholesale transactions; and, indeed, in 1951, the City and School District, upon specifically reconsidering the corporation's status, ruled that the corporation was a wholesale vendor.
In 1958, however, the City and School District reexamined the taxpayer's position and assessed mercantile taxes for the years 1953 through 1957 plus penalties and interest to August 15, 1958, on the ground that the company's sales were retail in nature. Of the total assessments - $10,364.94 by the City and $5,098.74 by the School District - 65.37% represent sales of the products named above; and the lower court applied this percentage in ordering refunds to the company. The lower court concluded that the sales were wholesale in nature because the products sold by taxpayer were "ultimately resold" by the customers despite their absorption into the customers' finished products. The ...