No. 3 January Term, 1979, Appeal from the Order of the Commonwealth Court of Pennsylvania, at No. 1550 Commonwealth Docket 1977.
Robert R. Guzzardi, Philadelphia, for appellant.
Paul S. Roeder, Deputy Atty. Gen., for appellee.
Barton A. Hertzbach and Frank E. Hahn, Philadelphia, for Delaware Valley House Owners' Association.
O'Brien, C. J., and Roberts, Nix, Larsen, Flaherty, and Kauffman, JJ. Larsen, J., filed a dissenting opinion.
This is an appeal by a taxpayer, Aldine Apartments, Inc. (appellant), from an order of the Commonwealth Court*fn1 affirming the decision of the Pennsylvania Board of Finance and Revenue sustaining the Sales Tax Board of Review in denying appellant's petition for refund of $4,685.58 in sales tax paid on purchases of electricity, gas and fuel oil. The basic issues raised are the tax implications resulting from
the purchases of utilities made by appellant for the residential use of its tenants and the constitutional propriety of those provisions of the Tax Reform Code of 1971 (Code), Act of March 4, 1971, P.L. 6, No. 2, art. I, § 101 et seq., as amended ; 72 P.S. § 7101 et seq. (Supp. 1980-81).
In this case a sales tax was paid on purchases of electricity from the Philadelphia Electric Company; gas from the Philadelphia Gas Works; and fuel oil from National Heat & Power Company. All electricity, gas and fuel oil were purchased by appellant for use in operating its apartment complex. The residential tenants of appellant paid a monthly rental which included possession of apartments with utilities provided. The appellant's argument reduced to its essence is that because the ultimate use is for residential purposes, it should be exempt from taxation although not purchased directly by the user.
The provisions of the Code pertinent to this inquiry are § 202(a) and 201(m), 72 P.S. § 7202(a) and § 7201(m). Section 202(a) provides:
There is hereby imposed upon each separate sale at retail of tangible personal property or services, as defined herein, within this Commonwealth a tax of six per cent of the purchase price, which tax shall be collected by the vendor from the purchaser, and shall be paid over to the Commonwealth as herein provided.
Section 201(m) defines "tangible personal property" as:
Corporeal personal property including, but not limited to, . . . steam and natural and manufactured and bottled gas for non-residential use, electricity for non-residential use, . . . . Nor shall said term include steam, natural and manufactured and bottled gas, fuel oil, electricity when purchased ...