Appeals from the Orders of the Board of Finance and Revenue in cases of In Re: Appeal of Paul E. Bortner and In Re: Appeal of Bortner Charter Bus Service, Inc. Transferred from the Court of Common Pleas of Dauphin County to the Commonwealth Court of Pennsylvania, September 1, 1970.
William J. Joyce, with him Cusick, Madden, Joyce & McKay, for appellants.
Edward T. Baker, Deputy Attorney General, for appellee.
President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt. Opinion by Judge Rogers. Concurring Opinion by Judge Kramer.
The appellant, Paul E. Bortner, during the calendar year 1966, was engaged in the business of transporting persons by bus. He owned 28 vehicles, seven of which were of the large cruiser type and the remaining 21 of which were standard yellow school buses. The so-called cruisers and to some extent the school buses were used in the rendering of services to the public under a Certificate of Public Convenience issued by the Pennsylvania Public Utility Commission which authorized Bortner to transport, as a common carrier, groups and parties from certain cities and boroughs in northwestern Pennsylvania to points and places in the Commonwealth and to transport, as a common carrier, persons on schedule over described routes in and near the city of Sharon, Mercer County. However, the predominant use of the 21 school buses was in the transportation of school children under contracts with public school districts and with another business enterprise furnishing the same service for parochial schools in the area.*fn1 The amounts charged for these school services were not covered by any tariff filed by the appellant with the P.U.C.
The Department of Revenue, Bureau of Taxes for Education, made an assessment of use taxes against Bortner for the year 1966 in the amount of Two Thousand Four Hundred Twenty Dollars and Forty-Four Cents ($2420.44), being five per cent (5%) of the price of school type buses purchased by appellant and five per cent (5%) of seventy-five per cent (75%)*fn2 of
the cost of repairs and maintenance of all buses owned by the appellant during the tax period. The Board of Finance and Revenue sustained the Bureau and this appeal followed.
The Tax Act of 1963 for Education, Act of March 6, 1956, P.L. 1228 (1955), as reenacted and amended, 72 P.S. § 3403-1 et seq., imposes a tax of five per cent (5%) upon the use and repair within the Commonwealth of tangible personal property. By Section 2(n)(4)(c)(iii) it is provided that the term "use" shall not include "[t]he producing, delivering, or rendering of a public utility service . . . ." 72 P.S. § 3403-2(n)(4)(c)(iii). The appellant contends that he is within this exclusion.
There have been two cases construing Section 2(n)(4)(c)(iii). The first, Commonwealth v. Equitable Gas Co., 415 Pa. 113, 202 A.2d 11 (1964), established that the meaning to be given to the words of the section must be determined by reference to the Public Utility Law, Act of May 28, 1937, P.L. 1053, as amended, 66 P.S. § 1101 et seq., and held specifically that the use by Pennsylvania public utilities of gas and electric meters was excluded from tax as included in the delivery or rendering of public utility service. The second, Commonwealth v. Lafferty, 426 Pa. 541, 233 A.2d 256 (1967), held that a contract carrier, not a public utility, rendering a service identical to that which would be rendered by a common carrier, a public utility, was not entitled to the exemption. In Lafferty, the Court wrote: "We feel then that the statutory exclusion in question was meant by the Legislature to apply only to Public Utility Code 'public utilities' when they
render Public Utility Code 'services.'" 426 Pa. at ...