Appeal from the Order of the Commonwealth Court entered May 6, 1986, at No. 1462 C.D. 1985, affirming the Order of the Court of Common Pleas of Allegheny County entered April 29, 1985 at No. G.D. 82-12576 Civil Division.
Nix, C.j., and Larsen, Flaherty, McDermott, Zappala and Papadakos, JJ. Hutchinson, Former Justice, did not participate in the consideration or decision of this case.
Appellant, Harsco Corporation (Harsco), appeals from an order of the Commonwealth Court which affirmed an order of the Court of Common Pleas of Allegheny County. The latter court had refused appellant's request for a refund of business privilege taxes paid to appellee, the City of Pittsburgh, for the years 1979 through 1981.
The germane facts of this case are as follows. During the tax years in question Harsco conducted a business known as metal recovery, which was designed to recover iron particles from molten slag. Slag is a necessary waste product of steelmaking, some of which can be redeemed. As a result of Harsco's process iron particles which are trapped within the slag can be reclaimed, and returned to the production of steel.
Harsco conducted its operation in close proximity to Jones & Laughlin Steel Corporation's steelmaking plant. From that plant Harsco received its slag. It then subjected the slag to a regulated cooling and retrieval process, from which it generated three categories of metals: larger than two inch pieces, which contained at least 70% iron; 5/8 inch to two inch pieces, which contained at least 60% iron; and less than 5/8 inch pieces, which contained approximately 60% iron. The first two categories of metal were returned to Jones & Laughlin for a price which ranged as high as thirty-five dollars a ton; while the third category of metal was sold to an outside customer.
Harsco's operation was located within the city limits of Pittsburgh. As a result Harsco was subject to the City's business privilege taxes for the years in question. The Business Privilege Tax of the City of Pittsburgh, codified in Chapter 243 of the Pittsburgh Code, is authorized under the Commonwealth's Local Tax Enabling Act.*fn1 Although the Act authorizes the general type of tax at issue here, there are restrictions upon a municipality's ability to tax certain activities. One of these restrictions provides:
Such local authorities shall not have authority by virtue of this act:
(4) To levy, assess and collect a tax on goods and articles manufactured in such political subdivision or on the by-products of manufacture, or on minerals, timber, natural resources and farm products produced in such
political subdivision or on the preparation or processing thereof for use or market, or on any privilege, act or transaction related to the business of manufacturing, the production, preparation or processing of minerals, timber and natural resources, or farm products, by manufacturers, by producers and by farmers with respect to the goods, articles and products of their own manufacture, production or growth, or on any privilege, act or transaction relating to the business of processing by-products of manufacture, or on the transportation, loading, unloading or dumping or storage of such goods, articles, products or by-products; except that local authorities may levy, assess and collect taxes on the occupation, occupational privilege, per capita and earned income or net profits of natural persons engaged in the above activities whether doing business as individual proprietorship or as members of partnerships or other associations; . . .
Based upon this restriction to the City's taxing power, Harsco brought an action in the Court of Common Pleas of Allegheny County seeking a tax ...