Appeal from the Order of the Board of Finance and Revenue in the case of In Re: Carlos R. Leffler, Inc., Docket No. MOF-16,874.
Gerard P. Fox, with him, R. Timothy Columbus and Marcy M. Rehberger, Collier, Shannon, Rill & Scott, and Sherill T. Moyer, Rhoads & Sinon, for petitioner.
Michael A. Roman, Deputy Attorney General, with him, LeRoy S. Zimmerman, Attorney General, for respondent.
President Judge Crumlish, Jr., Judge Smith, and Senior Judge Narick, sitting as a panel of three. Opinion by Judge Smith. Judge MacPhail did not participate in the decision in this case.
[ 124 Pa. Commw. Page 307]
Carlos R. Leffler, Inc. (Taxpayer) appeals from the September 27, 1985 order of the Board of Finance and Revenue (Board) denying Taxpayer's petition for refund of taxes paid on revenues derived from the sale of No. 2 diesel fuel oil (diesel fuel). Questions presented on appeal are whether the Oil Company Franchise Tax Act (Franchise Tax)*fn1 applies to consideration derived from sales of diesel fuel within the state; and whether the regulations promulgated by the Department of Revenue (Department) pursuant to the Franchise Tax are invalid. The Board is affirmed.
Taxpayer is a corporation headquartered in Richland, Pennsylvania and is engaged in the sale and importation of petroleum products into the Commonwealth of Pennsylvania. Stipulation of Facts, No. 1. Taxpayer does not operate any refining facilities and is not involved in the manufacturing or processing of petroleum products;
[ 124 Pa. Commw. Page 308]
rather, Taxpayer merely resells petroleum products which it purchases within the state or outside the state and imports into the state or from its affiliates within the state. Diesel fuel in question is a liquid petroleum product which may be used as a motor fuel, residential heating fuel, or as fuel for generation of electricity by a public utility. Stipulation of Facts, Nos. 8, 10-11.
On July 12, 1985, Taxpayer filed with the Board a petition for refund of taxes paid in the amount of $1,035,278.38 pursuant to the Franchise Tax during the period of January 1, 1985 through May 31, 1985. Stipulation of Facts, Nos. 3-4. On September 27, 1985, the Board denied the refund and issued the order in question whereupon petition for review to this Court followed.
Taxpayer initially argues that revenues from the sale of diesel fuel do not constitute petroleum revenues within the meaning of the Franchise Tax. Taxpayer's challenge to the imposition of the tax is premised on the fact that the tax levied by the Franchise Tax is only against those petroleum products which are "liquid fuels" within the meaning of the Liquid Fuels Tax Act.*fn2 Taxpayer asserts that since diesel fuel is specifically excluded from the Liquid Fuels Tax Act definition of liquid fuels, it is therefore not subject to the tax imposed by the Franchise Tax. Taxpayer further claims that applicable rules of statutory construction do not support the position advocated by the Board.
In support of its contention that the Board has ignored rules of statutory construction, Taxpayer claims that words of a statute may not be disregarded under the pretext of pursuing the spirit of the statute and that in construing its meaning the legislature never ...