Appeals from judgment of County Court of Allegheny County, Nos. A1932 and A1933 of 1963, in cases of T. Y. Schomaker et al. v. City of Pittsburgh et al.; and Same v. School District of Pittsburgh et al.
Gilbert E. Morcroft, for appellants.
Niles Anderson, School Solicitor, with him Justin M. Johnson, Assistant School Solicitor, Regis C. Nairn, Assistant City Solicitor, and David Stahl, City Solicitor, for appellees.
Ervin, P. J., Wright, Watkins, Montgomery, Jacobs, and Hoffman, JJ. (Flood, J., absent). Opinion by Hoffman, J.
[ 207 Pa. Super. Page 200]
Appellants are individuals trading and doing business as Schomaker Company. The company sells flour
[ 207 Pa. Super. Page 201]
and other supplies to bakers. These products are not resold but are used for baking bread and pastries. Appellee, School District of Pittsburgh, imposes a mercantile tax under the authority of the Act of June 20, 1947, P. L. 745, § 1, as amended, 24 P.S. § 582.1 et seq. Appellee, City of Pittsburgh, levies a mercantile tax pursuant to the Act of June 25, 1947, P. L. 1145, § 1, as amended, 53 P.S. § 6851 et seq. The tax rate for retail vendors is double the rate for wholesale vendors. During the years 1960 through 1963 the company filed annual returns as a wholesale dealer and assessed itself at a wholesale rate. In August, 1963, the joint collector of mercantile taxes re-examined the returns and reassessed the company at a retail rate. The collector added interest and penalties to the deficiency assessments. The company appealed to the Allegheny County Court which sustained the reassessments, interest and penalties for the years 1962 and 1963.*fn1
The company contends that the tax collector, in reexamining and reassessing its returns, has acted contrary to the following statutory provision:*fn2 "No tax return shall be reexamined nor an additional tax imposed on any taxpayer on account of any rule or regulation which declares certain activities to be included in the retail business classification and which were allowed by the taxing authorities to be included in the wholesale business classification in previous returns, unless such rule or regulation is approved prior to the date such return is required to be filed." Act of July 13, 1953, P. L. 450, No. 104 § 1, 24 P.S. § 582.8a.
[ 207 Pa. Super. Page 202]
The company's argument, simply stated, is that both the City and School District of Pittsburgh were obliged to adopt or approve an ordinance, rule or regulation as a prerequisite to the action taken by the tax collector, and that neither did.
Assuming arguendo that the appellants ". . . were allowed by the taxing authorities to be included in the wholesale business classification in previous returns, . . ."*fn3 the question is whether the deficiency assessment is ". . . on account of any rule or regulation which declares certain activities to be included in the retail business classification . . . ." The meaning of the words "rule or regulation" is clarified by another statutory provision: "The collector is hereby charged with the administration and enforcement of the provisions of this act, and is hereby empowered to prescribe, adopt, promulgate and enforce rules and regulations relating to any matter pertaining to the administration and enforcement of this act, including provision for the reexamination and correction of returns, and payments alleged or found to be incorrect, or as to which an overpayment is claimed, or found to have occurred." Act of June 20, 1947, P. L. 745, § 8, Subd. (b), as amended, 24 P.S. § 582.8, Subd. (b). It is evident that a rule or regulation, in the context of this Act, is adopted by the collector rather than the School District or the City and relates to administration and enforcement.
In deciding if the reassessment was "on account of a rule or regulation," the judicial history of mercantile license taxes in Pennsylvania is significant. In 1933, the Supreme Court held that a milling ...