Appeal from the Order of the Secretary of the Department of Revenue, in the case of R & P Services, Inc. v. Commonwealth of Pennsylvania, Department of Revenue, Cigarette Tax Board Docket Number 602, dated July 17, 1986.
Gerard M. Mackarevich, with him, Ira H. Weinstock, Ira H. Weinstock, P.C., for petitioner.
Ronald H. Skubecz, Deputy Attorney General, with him, LeRoy S. Zimmerman, Attorney General, for respondent.
Judges Doyle and Barry, and Senior Judge Kalish, sitting as a panel of three. Opinion by Judge Barry.
[ 116 Pa. Commw. Page 231]
R&P Services, Inc. (R&P) which does business as Allegheny Cigarette, Music & Games, appeals from the order of the Secretary of Revenue (Secretary), who ordered the revocation of the cigarette stamping agency and wholesale dealer licenses of R&P based upon the recommendations of the Cigarette Tax Board (Board).
[ 116 Pa. Commw. Page 232]
R&P was licensed as a cigarette stamping agent, wholesale dealer and retail vendor until February 28, 1986, when those licenses expired, as they do each year, by operation of law. On March 3, 1986, R&P filed with the Department of Revenue (Department) an Application for Cigarette Dealers License and included the appropriate licensing fee for cigarette stamping agency, wholesale dealer and 370 retail vending machine licenses. On March 15, 1986, amendments to Department regulations regarding grounds for denial, suspension or revocation of the cigarette stamping agency and wholesale dealer licenses went into effect. These amendments empowered the Department to deny, suspend or revoke those licenses based on an applicant's, or licensee's, delinquency or liability in any tax system administered by the Department. Prior to the time that these amended regulations went into effect, R&P, shortly after it had filed its application, was orally informed, upon inquiry made by it, that its cigarette dealer licenses would not be renewed, pursuant to the then yet-to-be effective amended regulations, on the basis that it owed delinquent sales tax. Subsequently, on March 28, 1986, the Department entered its formal denial of renewal on the basis that R&P owed approximately $186,000.00 in delinquent sales tax, was delinquent in filed sales and use tax returns for the third and fourth quarters of 1985, and also was delinquent in filing a W-3 form for 1973 Employer Withholding Tax.
R&P then filed a complaint with the Board seeking an order that would require the Department to renew its cigarette dealer licenses. At the same time, it sought the issuance of temporary cigarette dealer licenses from the Department for use during the pendency of the administrative proceeding and a "supersedeas" of the Department's decision not to renew its licenses from the Board. The Department granted R&P's request for temporary
[ 116 Pa. Commw. Page 233]
cigarette dealer licenses and did not oppose the application for a supersedeas. Thereafter, it filed a complaint with the Board seeking an order revoking R&P's temporary cigarette stamping agency and wholesale dealer licenses.
The Board, acting upon these complaints, issued separate citations to both parties, requiring them to appear before it and present testimony relevant to the allegations made in the two complaints at a consolidated hearing thereon. After that hearing, the Board issued an adjudication, in which it recommended that the Secretary revoke R&P's cigarette stamping agency and wholesale dealer licenses, while allowing it to keep its retail vending machine licenses. The ground for the Board's decision was its conclusion that R&P, because of its failure to timely file required tax returns and pay taxes that were legally due, failed to meet the requirements of the amended regulations. It also concluded that because of those delinquencies, R&P also failed to meet certain statutory eligibility requirements for holders of those licenses. Specifically, it concluded that R&P and its president and principal shareholder, William Brody, failed to meet the statutory requirements that a cigarette stamping agent "be of good moral character, of reasonable financial stability and reasonably experienced in the wholesale cigarette business"*fn1 and that a wholesale dealer "be of reasonable financial stability, and reasonable business experience."*fn2
Following the Board's adjudication, the Secretary, acting upon the Board's recommendations, ordered that R&P's cigarette stamping agency and wholesale dealer ...