Appeal from order of Commonwealth Court, 219 C.D. 1971, and orders of Court of Common Pleas, Civil Division, of Allegheny County, Nos. 1460 and 1461 of 1957, in re Cities Service Oil Company v. City of Pittsburgh, and David A. Smith, City Treasurer; Same v. School District of Pittsburgh, and David A. Smith, School Treasurer.
J. Robert Maxwell, with him Maxwell and Huss, for appellant.
Grace S. Harris, Special Assistant City Solicitor, and Bernard Markovitz, Assistant Solicitor, with them Ralph Lynch, Jr., City Solicitor, and Justin M. Johnson, Solicitor, for appellees.
Jones, C. J., Eagen, O'Brien, Roberts, Pomeroy and Nix, JJ. Opinion by Mr. Chief Justice Jones. Mr. Justice Manderino took no part in the consideration or decision of this case. Dissenting Opinion by Mr. Justice Roberts. Mr. Justice Nix joins in this dissenting opinion.
Cities Service Oil Company, doing business in the City of Pittsburgh, operated a retail service station at Coltart and Bates Streets and maintained a business office at 32 East Carson Street.*fn1 In April 1957, the City of Pittsburgh and the School District of Pittsburgh audited the records of Cities Service's business office on Carson Street and assessed mercantile tax deficiencies including penalties and interest totaling $47,381.65 for the years 1949 through 1952. Cities Service paid this sum, under protest, in June 1957 and promptly
petitioned for a refund of the amount paid. The City Treasurer representing both the City and the School District upheld the deficiency on June 24, 1957. On August 29, 1957, Cities Service filed an appeal to the Allegheny County Courts. A hearing was held upon the request of the City and School District on June 4, 1970. On November 17, 1970, the lower court held that Cities Service was entitled to a repayment of improperly assessed and collected mercantile taxes, penalties and interest on its Carson Street business office, along with simple interest at 6%, calculated from the date the petitions for refund were filed in 1957. The City and School District appealed to the Commonwealth Court of Pennsylvania.
The Commonwealth Court held that Cities Service was not subject to the mercantile taxes on its Carson Street business office and that, even if Cities Service was subject to the taxes, the deficiency assessments were barred by the legislation's statute of limitations.*fn2 Pittsburgh v. Cities Service Oil Company, 2 Pa. Commonwealth Ct. 567, 280 A.2d 463 (1971). In affirming the lower court decision, the Commonwealth Court (with Judge Kramer concurring in part and dissenting
in part) modified the judgment for Cities Service by only allowing interest from the date of the lower court's judgment, November 17, 1970.
Review was sought by the City and the School District on whether the tax assessment on the Carson Street business office was improper and by Cities Service on whether the lower court judge properly exercised his equitable powers in awarding interest from the date of appeal and demand on August 29, 1957. We granted review only to determine the date from which interest should be computed when a taxpayer has paid an improper mercantile tax assessment and subsequently made demand for a refund.
If a taxpayer is entitled to a tax refund, he is also entitled to interest on the refund so long as no statute or public policy militates against it. Philadelphia & Reading Coal & Iron Company v. Tamaqua Borough School District, 304 Pa. 489, 496, 156 Atl. 75, 77 (1931). The Commonwealth Court, in determining the date from which to compute the interest due Cities Service, stated, ". . . before interest will accrue there must be an improper detention by the taxing authority; and the taxpayer must make a demand for refund. Girard Trust Company v. City and County of Philadelphia, 359 Pa. 319, 59 A.2d 124 (1948). However, the ...