No. 107 January Term, 1977, Appeal from Order of the Commonwealth Court of Pennsylvania dated September 28, 1976, Docket Nos. 1384 & 1385 Commonwealth Docket 1975
Frederick C. Sturm, III, Philadelphia, McNees, Wallace & Nurick, John S. Oyler, Harrisburg, for appellant.
R. Scott Shearer, Robert P. Coyne, Deputy Attys. Gen., Harrisburg, for appellee.
Eagen, C. J., and Roberts, Nix, Manderino and Larsen, JJ. O'Brien, J., did not participate in the consideration or decision of the case. Larsen, J., filed a dissenting opinion in which Eagen, C. J., joined.
This is an appeal*fn1 from the Commonwealth Court's affirmance of the Board of Finance and Revenue's order denying appellant's petitions for refund of an alleged Gross Receipts Tax*fn2 overpayment. Hams Express, Inc. v. Commonwealth Board of Finance and Revenue, 26 Pa. Commw. 448, 363 A.2d 1340 (1976). The controlling issue is whether Hams Express, Inc., appellant, is entitled to claim as a credit against the Gross Receipts Tax the license and registration fees for a number of motor vehicles*fn3 leased by appellant from a leasing corporation. The Commonwealth Court held that appellant was not so entitled. Id. For the reasons discussed herein, we disagree and reverse the order of the Commonwealth Court.
The pertinent facts, as stipulated by the parties, are as follows: Hams Express is a company engaged in the intrastate
and interstate business of carrying property for hire via motor vehicles. As such, Hams is subject to the Gross Receipts Tax, 72 P.S. §§ 2183-2191 (1949 & Supp.1978-79), the rate of which is levied upon that portion of Ham's gross receipts as is represented by the ratio that the mileage on routes operated by the company within the Commonwealth bears to the total mileage on all routes, during the relevant period. Id. § 2185 (Supp.1978-79). For the taxable periods ending December 31, 1971 and December 31, 1972, Hams paid gross receipts taxes of six thousand sixty-five dollars sixty-four cents ($6,065.64) and six thousand six hundred forty-five dollars twenty-nine cents ($6,645.29), respectively. During each taxable period, appellant sub-leased motor vehicles from a company which in turn had leased the same vehicles from a corporate lessor.*fn4 Although a different corporate lessor was a party to the lease agreements in effect for each of the two taxable periods in question, the relevant lease terms are essentially identical. Therefore, for purposes of brevity, we will set forth the pertinent terms of the lease agreements in effect during the taxable period ending December 31, 1971. On May 8, 1968, Berman Leasing Co. (Berman) leased twenty-seven motor vehicles to Blue Bird Food Products Co. (Blue Bird). On April 24, 1971, Blue Bird sub-leased the same vehicles to appellant Hams. The lease agreement between Berman and Blue Bird states:
Berman hereby agrees to furnish, supply and do the following, at its sole cost and expense, except as hereinafter modified, for the purpose of maintaining the equipment units in good working order and for proper operation: (Emphasis added)
(e) License Tags: to pay all license tag fees for the State of Pennsylvania for ...