Appeal from the Order of the Court of Common Pleas of Philadelphia County in case of Lipschutz Brothers, Inc. v. Tax Review Board of the City of Philadelphia, No. 2235 April Term, 1975.
Stewart M. Weintraub, Deputy City Solicitor, with him Serena H. Dobson, Assistant City Solicitor, and Alan J. Davis, City Solicitor, for appellant.
Ronald H. Isenberg, Isenberg, Goldin & Blumberg, for appellee.
President Judge Crumlish and Judges MacPhail and Palladino, sitting as a panel of three. Opinion by Judge MacPhail.
[ 63 Pa. Commw. Page 503]
Lipschutz Brothers, Inc. (Taxpayer) maintains a Customs Bonded Warehouse and an Internal Revenue Export Warehouse (collectively Warehouses) in Philadelphia from which it sells liquor, cigarettes and tobacco for use and consumption beyond the territorial jurisdiction of the United States on vessels that have cleared the port of Philadelphia in foreign commerce. The City of Philadelphia (City) in 1952 enacted the Philadelphia Mercantile License Tax (Tax) which imposed a tax upon the gross receipts of persons doing business in Philadelphia for the privilege of doing business there. Taxpayer filed timely reports pursuant to the provisions of the Tax but in 1972, as the result of an audit, the City's Department of Revenue made a delinquent tax assessment against Taxpayer in the sum of $19,612.11 plus interest and penalties for the years 1966 through 1972. The assessment disallowed the exemption claimed by Taxpayer for receipts from the sales of liquor and cigarettes from its Warehouses.
Taxpayer appealed the assessment to City's Tax Review Board (Board). The Board, feeling itself bound by a ruling from City's Law Department, upheld the tax assessment except as to liquor imported and subsequently resold in the original unbroken package, but found the Taxpayer had acted in good faith and that the penalties, therefore, should be abated.
Taxpayer then appealed to the Court of Common Pleas in Philadelphia where Judge Doty, in a very able opinion, Lipschutz Bros., Inc. v. Tax Review Board, 4 Phila. 374 (C.P. Pa. 1980), reversed the
[ 63 Pa. Commw. Page 504]
Board and remanded to the Board for findings of fact and conclusions of law consistent with his opinion. Board has appealed to this Court from that order.*fn1
There is no dispute of fact in this case. Taxpayer deposits and stores in its Warehouses alcoholic beverages and tobacco products. The liquor arrives in a bonded carrier consigned to the United States Bureau of Customs for delivery to Taxpayer's Warehouse. The liquor remains in its original case from the time it arrives at the Warehouse, to which Taxpayer has no access, until it is placed in a vessel engaged in foreign commerce and that vessel is beyond the territorial waters of the United States. The same procedure is followed with respect to tobacco products except that the Taxpayer does have access to the Internal Revenue Export Warehouse.
In his opinion, Judge Doty stated that the issue of the case presented was whether or not the goods involved were in foreign commerce. After an examination of Article I, Section 8, Clause 3, and Article I, ...