Appeal from the Order of the Court of Common Pleas of Allegheny County in case of City of Pittsburgh, a municipal corporation, and Joseph L. Cosetti, Treasurer, v. George A. Fuller Company, Inc., a Pennsylvania corporation, No. 2841 January Term, 1971A.
John G. Kish, with him John Miles Kish and Kish & Kish, for appellant.
Grace S. Harris, Special Assistant City Solicitor, with her Ralph Lynch, Jr., City Solicitor, for appellees.
A. Sieber Hollinger, with him Reed, Smith, Shaw & McClay, for amicus curiae, Construction Industry Advancement Program of Western Pennsylvania Fund.
President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt. Opinion by Judge Blatt.
[ 15 Pa. Commw. Page 404]
In December of 1968, the City of Pittsburgh (City) enacted Ordinance No. 675 imposing a tax upon the privilege of operating or conducting business in the City. The ordinance, which became effective on February 1, 1969, required the tax to be paid annually and
[ 15 Pa. Commw. Page 405]
its amount to be determined by the volume of the taxpayer's gross annual receipts. It authorized the City Treasurer to promulgate rules and regulations in connection with administration and enforcement of the tax, and, purportedly pursuant to this authority, the City Treasurer issued such regulations in 1969. Section 312(a) of these regulations provided in part: "In the case of a contract, no deduction may be made with respect to amounts paid to subcontractors and materialmen."
Two years after the enactment of Ordinance No. 675, the City enacted Ordinance No. 594, the purpose of which was to amend and supplement Ordinance No. 675. The City Treasurer then promulgated new regulations, effective January 1, 1971, and Section 314(a) of the new regulations provided in part: "In the case of the general contractor, prime contractor or subcontractor employing lower-tier subcontractors, no deduction may be made with respect to amounts paid to subcontractors and materialmen, unless it can be shown that the subcontractor has paid the Business Privilege Tax to the City of Pittsburgh on the same gross receipts stemming from the same contract."
George A. Fuller Company, Inc., the appellant, was engaged in the business of general contracting in the Pittsburgh area. Most of its undertakings were let out to subcontractors who did the actual construction work for that part of a construction contract assigned to them. In December of 1971 the appellant, who had not yet paid the City's business privilege tax for the years 1969 and 1970, filed amended returns for those years and took subcontracting deductions based on the new 1971 regulations. The appellant also took a deduction for the amount of gross receipts it had received as payments under its contracts with the General State Authority (GSA), which is an agency of the state government. As described by the parties, these contracts were
[ 15 Pa. Commw. Page 406]
for "the construction of state and general public facilities." The City Treasurer ...