Appeals, Nos. 430, 436, 437 and 438, Jan. T., 1962, from orders of Court of Common Pleas No. 2 of Philadelphia County, Sept. T., 1960, No. 2292, and Court of Common Pleas No. 3, Sept. T., 1960, No. 2293, in cases of Tax Review Board v. Lou Green, Inc., and Same v. Lou Green. Orders affirmed in part and reversed in part.
Louis Kattelman, Assistant City Solicitor, with him James L. Stern, Deputy City Solicitor, and David Berger, City Solicitor, for City of Philadelphia.
J. J. Shestack, with him Stuart M. Neely, Fred L. Rosenbloom, and Schnader, Harrison, Segal & Lewis, for taxpayers.
Before Bell, C.j., Musmanno, Jones, Cohen, Eagen and O'brien, JJ.
OPINION BY MR. JUSTICE MUSMANNO
Lou Green, first as an individual trader, and then as Lou Green, Inc., conducted an automobile auction business.*fn* He purchased automobiles, had them overhauled and repaired, and then sold them at auction. To learn of and obtain these cars, Green employed persons
known as "buyers", who would purchase the cars in the name of Green.
After the purchase of any given car, it would be washed, and otherwise cleaned and repaired so as to render it saleable. Much of this repair and reconditioning work was done at Green's place of business by his own employees; some of it was hired out to independent repair shops, because of lack of facilities at Green's place.
On the business done through the resale of cars, Green filed, as he was required by the Philadelphia mercantile license tax ordinance, tax returns for the years 1955, 1956 and 1957. The mercantile license tax provisions of The Philadelphia Code, Subsection (1)(a) of Section 19-1003, state:
"(1) Every person engaging in any of the following businesses in the City shall, in addition to paying a license fee as herein provided, pay an annual mercantile license tax for the license year 1953 and annually thereafter at the rate set forth: (a) A wholesale dealer or wholesale vendor at the rate of 3 mills on each dollar of the volume of the annual gross volume of business transacted by such person or, in the alternative, at the option of the wholesale dealer or wholesale vendor, at the rate of 3% of the annual gross volume of business transacted by such person, less the cost of goods and less the cost of labor;" (Emphasis supplied.)
Green chose the alternative rate, that is, 3% of the annual gross volume of business transacted by him, less the cost of goods and cost of labor. Under the heading "cost of goods," he listed expenses incurred in repairing and reconditioning the cars, whether done at his place or ...