Original Jurisdiction in the case of Philadelphia Electric Company v. Commonwealth of Pennsylvania, Department of Revenue and Penn Center House, Inc. and Council of 220 West Rittenhouse Square.
Charles W. Bowser, Pechner, Dorfman, Wolffe, Rounick & Cabot, for petitioner.
Paul S. Roeder, Deputy Attorney General, with him, Bryan E. Barbin, Deputy Attorney General, LeRoy S. Zimmerman, Attorney General, for respondent, Commonwealth of Pennsylvania, Department of Revenue.
Craig E. Ziegler, Montgomery, McCracken, Walker & Rhoads, for respondent, Penn Center House, Inc.
E. Gerald Donnelly, Jr., with him, Ronald J. Shaffer, of counsel, Fox, Rothschild, O'Brien & Frankel, for respondent, Council of 220 West Rittenhouse Square.
Judges Craig, MacPhail, Barry, Colins, and Palladino. Opinion by Judge Barry.
[ 114 Pa. Commw. Page 115]
In this action filed in our original jurisdiction, Philadelphia Electric Company (PECO) has filed a motion for summary judgment against the Commonwealth of Pennsylvania, Penn Center House, Inc. and the Council of 220 West Rittenhouse Square.
The facts as stipulated to by the parties are as follows. PECO, a public utility, provides both electricity
[ 114 Pa. Commw. Page 116]
and steam heat to Penn Center House, Inc., a cooperative of individually owned condominium units and the Council of 220 West Rittenhouse Square, an unincorporated association of condominium unit owners that manages the building containing the individually owned units. The electricity and steam heat sold to each of the condominiums are measured by single meters; each of the condominiums receives a single bill.
The Tax Reform Act of 1971, Act of March 1, 1971, P.L. 6, as amended, 72 P.S. § 7201(m) (Supp. 1987), excludes, inter alia, electricity and steam from the Act's definition of "tangible personal property" when those items are purchased for residential use. Such purchases are exempt from sales tax. The Commonwealth's Department of Revenue rejected claims of the condominiums here and others similarly situated that they were entitled to the sales tax exemption. Both condominiums here refused to pay any sales tax to PECO since 1981, awaiting the outcome of litigation which would decide whether condominiums were entitled to the sales tax exemption. In 1984, we held that the sales tax exemption was applicable to condominiums, Summit House Condominium v. Commonwealth, 84 Pa. Commonwealth Ct. 291, 479 A.2d 1162 (1984); the Supreme Court affirmed, 514 Pa. 221, 523 A.2d 333 (1987).
During the period when these condominiums were refusing to pay sales taxes on the purchases of electricity and steam, PECO paid the sales taxes to the Commonwealth. Section 247 of the Tax Reform Act requires utilities to prepay sales taxes before collecting the same from its customers, 72 P.S. § 7247, while Section 237 makes the person collecting the sales tax, the vendors, liable for those taxes in the event the full amount of the sales taxes owed is not collected. 72 P.S. ...