Appeals, Nos. 32 and 33, May T., 1961, from judgment of Court of Common Pleas of Dauphin County, Nos. 301 and 240 Commonwealth Docket, 1959, in case of Commonwealth of Pennsylvania v. Chas. A. McHugh, surviving partner of Chas. A. McHugh, and Chas. A. McHugh, II, trading as M. and J.B. McHugh. Judgment reversed.
Manus McHugh, with him John Y. Scott, and Strong, Sullivan, Saylor & Ferguson, for appellant.
Lewis Kates, Deputy to the City Solicitor, with him Leonard B. Rosenthal, Assistant City Solicitor, and David Berger, City Solicitor, for City of Philadelphia, intervenor-appellant.
N. David Rahal, Deputy Attorney General, with him David Stahl, Attorney General, for Commonwealth, appellee.
David Dunlap, for utility associations, as amici curiae.
Park B. Dilks, Jr., Thomas V. Lefevre, Ernest R. von Starck, and Morgan, Lewis & Bockius, for water companies, as amici curiae.
Leon D. Metzger, William H. Wood, John B. King, and Hull, Leiby and Metzger, for telephone company, amici curiae.
Before Bell, C.j., Musmanno, Jones, Cohen and Eagen, JJ.
OPINION BY MR. JUSTICE EAGEN
The appellant contractor entered into a series of five contracts with the water department of the City of Philadelphia to construct and install water-pipe lines, extending the existing water system of the city. The narrow, but difficult, question involved in this appeal is: Are the materials purchased in the fulfillment of these contracts subject to a use tax assessment under the provisions of the Pennsylvania Selective Sales and Use Tax Act of March 6, 1956, P.L. (1955) 1228, as amended, 72 P.S. § 3403-1 et seq.?
The appellants contend, inter alia, that the use of the materials involved was for the purpose of the construction of facilities used in a public utility service and, therefore, specifically exempt under the statute. The lower court disagreed and ruled that the exemption asserted applied only to materials used in connection with already existing facilities and not those used in the construction of new public utility facilities. It concluded that the water mains involved constituted a new construction and, therefore, did not come within the tax exclusion. We cannot subscribe to this view.
The original 1956 act specifically excluded from the tax, tangible property used "in the producing, delivering or rendering of a public utility service." However, the ...