Appeal, No. 135, Jan. T., 1962, from order of Court of Common Pleas No. 1 of Philadelphia County, March T., 1960, No. 1782, in case of Tax Review Board of City of Philadelphia v. Elster & Prager and Frank E. Elster. Order affirmed.
Levy Anderson, First Deputy City Solicitor, with him Ellis A. Horwitz and Leonard B. Rosenthal, Assistant City Solicitors, James L. Stern, Deputy City Solicitor, and David Berger, City Solicitor, for Tax Review Board, appellant.
Benjamin F. Kivnik, for appellees.
Before Bell, C.j., Musmanno, Jones, Cohen, Eagen and O'brien, JJ.
OPINION BY MR. JUSTICE EAGEN
The appellee has operated a street-corner newsstand in the City of Philadelphia for several years. The
city's Tax Review Board ruled that he was liable for the payment of mercantile tax based upon the gross volume, or receipts, of the business and made assessments accordingly. The lower court reversed the board and held that as a matter of law the tax must be based upon the commissions, that is, the gross receipts of the sales less the cost of the goods sold. The City of Philadelphia questions the correctness of this ruling by this appeal.
The basic facts are not in serious dispute. The business involved is limited to the sale of newspapers, magazines and periodicals, which are delivered to the appellee by various publishers with an invoice showing a description and quantity of the items, the sales price to the public and the percentage or portion of the sales price which is to be retained by the appellee. Spoiled or damaged items (when received) are returned to the suppliers. For items damaged or stolen after they come into his possession, the appellee is responsible. No inventory is maintained by the appellee. The supplies are paid for by the appellee after the sales are made for those items actually sold. The commissions are retained.
The narrow question for decision is this: Under the City of Philadelphia's Mercantile License Tax Law (Ordinance of December 9, 1952, p. 515, as amended, Section 19-1000 of the Philadelphia Code), is the appellee a factor or commission agent, or is he a retail vendor or buyer for resale? If he is in the former category then admittedly the lower court was correct, and he is subject to mercantile tax figured on his commissions only. If he is a vendor of goods, or a buyer for resale, then the tax must be based upon his gross receipts.
Section 508 of the regulations promulgated under the city's Mercantile License Tax Ordinance defines a "factor or commission merchant" as "an agent employed to sell ...