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decided: July 18, 1980.


Appeal from the Order of the Board of Finance and Revenue in case of In re: S.D. Richman Sons, Inc., Docket No. R-1668.


Bernard Eizen, Pelino & Lentz, P.C., for petitioner.

Robert Patrick Coyne, Deputy Attorney General, for respondent.

Judges Wilkinson, Jr., MacPhail and Williams, Jr., sitting as a panel of three. Opinion by Judge MacPhail.

Author: Macphail

[ 53 Pa. Commw. Page 111]

The only issue raised on this appeal is whether the amendment adding paragraph number 14 to Section 602(c) of the Tax Reform Code of 1971*fn1 (Code), 72 P.S. § 7602(c), is to be applied prospectively or retroactively from its effective date, July 20, 1974.*fn2 For the reasons which follow, we hold that it is to be applied prospectively only.

The facts, as stipulated by the parties, may be stated briefly. S. D. Richman Sons, Inc. (Petitioner) is a Pennsylvania corporation engaged in the business of salvaging, recycling, and reprocessing various metal products. Petitioner timely filed its Pennsylvania Corporate Tax Report for its fiscal year ending September 30, 1974. The Capital Stock Tax Return filed by Petitioner indicated a valuation of "None."*fn3 This valuation

[ 53 Pa. Commw. Page 112]

    was based on Petitioner's belief that it was exempt from paying a capital stock tax for the entire fiscal year because of the exemption to the tax provided by Sections 602(a) and (c) of the Code, 72 P.S. §§ 7602(a) and (c).*fn4 Following receipt of Petitioner's tax return, the Commonwealth taxing authorities settled the taxable value of Petitioner's capital stock at $2.5 million and fixed Petitioner's tax due and owing at $25,000. Petitioner filed a Petition for Resettlement with the Resettlement Board (Board). The Board, pursuant to Section 602(c)(14), granted Petitioner partial relief by exempting it from capital stock tax from July 20, 1974, the effective date of the amendment, to September 30, 1974, the close of Petitioner's fiscal year. The Board disallowed the exemption for that portion of Petitioner's fiscal year preceding the effective date of the amendment. Petitioner then filed a Petition for Review with the Board of Finance and Revenue. The Board of Finance and Revenue affirmed the decision of the Resettlement Board and the case is now before us for disposition.

It is undisputed by the parties that Petitioner was eligible for the processing exemption on and after July 20, 1974. Petitioner continues to assert, however, that it was also entitled to the exemption for October 1, 1973 through July 19, 1974, inclusive. The Commonwealth argues that it was not so entitled.

[ 53 Pa. Commw. Page 113]

The law of the Commonwealth is clear that statutory provisions granting taxpayers exemptions from taxation are to be construed strictly. Commonwealth Page 113} v. Deitch Co., 449 Pa. 88, 95, 295 A.2d 834, 838 (1972); Chrysel Corp. v. Commonwealth, 6 Pa. Commonwealth Ct. 368, 372, 295 A.2d 624, 626 (1972); Section 1928(b)(5) of the Statutory Construction Act of 1972 (Act), 1 Pa. C.S. § 1928(b)(5). The law is also clear that a statute will be construed prospectively only unless the legislature manifests a clear and unambiguous intent that it should be applied retroactively. See Farmers National Bank and Trust Co. of Reading v. Berks County Real Estate Co. 333 Pa. 390, 393, 5 A.2d 94, 95 (1939); Lansing v. Department of Public Welfare, 49 Pa. Commonwealth Ct. 287, 293, 410 A.2d 982, 985 (1980); Section 1926 of the Act, 1 Pa. C.S. § 1926. When the words of a statute are free and clear of ambiguity, we must ascertain and give effect to the legislative intent expressed in the language of the statute. Axe Science Corp. Tax Appeal, 6 Pa. Commonwealth Ct. 103, 109, 293 A.2d 617, 621 (1972). See also Woolworth Co. v. Pittsburgh, 2 Pa. Commonwealth Ct. 338, 284 A.2d 143 (1971).

The issue of whether Petitioner is exempt from paying capital stock tax for all of its 1973-74 fiscal year or only for that portion postdating July 20, 1974 rests upon our interpretation of Section 2 of the Act of July 20, 1974 which reads "This act shall take effect immediately." On its face, there seems to be no question that the statutory exemption is to apply only on and after July 20, 1974. Petitioner, however, draws our attention to a number of taxing statutes which specifically provide for future or past apportionment of taxes and argues that if the Section 602(c)(14) exemption were to be apportioned pre- and post-July 20, 1974, the legislature would have so ...

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