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Senex Explosives, Inc. v. Commonwealth

Commonwealth Court of Pennsylvania

May 22, 2013

Senex Explosives, Inc., Petitioner
v.
Commonwealth of Pennsylvania, Respondent

Submitted: April 17, 2013

BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE BONNIE BRIGANCE LEADBETTER, Judge HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE ANNE E. COVEY, Judge

OPINION

ROBERT SIMPSON, Judge

Pursuant to Pennsylvania Rule of Appellate Procedure 1571(i), both the Commonwealth of Pennsylvania Board of Finance and Revenue (Commonwealth), and Petitioner Senex Explosives, Inc. (Taxpayer) filed exceptions to this Court's December 19, 2012, Opinion and Order.[1] In that order, we affirmed the Board of Finance and Revenue (Board) as to tax liability for fuel use under the Motor Carriers Road Tax Act (Act), [2] which implements the International Fuel Tax Agreement (IFTA), [3] but we reduced liability by the amount attributed to mileage of special mobile equipment (SME), which is not subject to the Act. Upon careful review, we deny the exceptions.

I. Background

In our initial decision, we determined the Board properly denied Taxpayer's claim to tax paid fuel credits because Taxpayer lacked the requisite records to show the amount of fuel used in its qualifying motor vehicles. Significant to our rationale, Taxpayer did not maintain records to monitor fuel disbursements from the bulk fuel tanks as to its qualifying and non-qualifying vehicles. The parties' exceptions were submitted on briefs to this Court en banc.

The underlying facts, which are set forth fully in our initial panel opinion, need not be restated here. We briefly review the facts pertinent to the exceptions before us.

Taxpayer owns a bulk fuel tank, for which it purchased fuel from a supplier, and from which it fueled both qualifying vehicles and non-qualifying vehicles used in its drilling business.

Qualifying vehicles include trucks and tractor-trailers and are subject to tax under the Act. See 75 Pa. C.S. §9603. Non-qualifying vehicles are exempt from tax, including SME.[4] 75 Pa. C.S. §2105(a)(7). Notably, Taxpayer placed IFTA decals on 13 vehicles operated as SME. Because these 13 SME were improperly decaled, indicating IFTA operating privileges, the auditor included the mileage of these drilling rigs in its calculation of tax liability. Despite their exempt status under the Act, the Board subjected SME to tax liability on the same basis as the properly decaled IFTA vehicles.

In our prior opinion, this Court affirmed the Board as to the tax credit issue, and disallowed credits related to Taxpayer's operation of bulk fuel tanks because Taxpayer did not maintain records of fuel allocated to specific vehicles as IFTA required. We also determined SME should not have been included in the tax liability because SME are expressly exempt from the Act pursuant to Section 2105 of the Vehicle Code, 75 Pa. C.S. §2105. Consequently, the Board lacked authority to impose taxes on SME. We address the parties' exceptions in turn.

II. Taxpayer's Exceptions

In turning to Taxpayer's exceptions, which are limited to the tax credit issue, we note Taxpayer presents the same issues and arguments this Court addressed in our prior opinion. As Taxpayer presents no basis for abandoning our reasoning or reliance upon R&R Express v. Commonwealth, 37 A.3d 46 (Pa. Cmwlth. 2012), aff'd, __ Pa. __, __ A.3d __ (Pa., No. 20 WAP 2012, filed Apr. 24, 2013), recently affirmed by our Supreme Court, we overrule Taxpayer's exceptions.

III. Commonwealth's Exceptions

The Commonwealth filed exceptions to this Court's conclusion that Taxpayer did not owe fuel tax on the use of SME. The Commonwealth argues the Court shifted the burden of proof as to Taxpayer's use of SME to the Commonwealth when the taxpayer bears the burden of proving an exemption from assessment. The Commonwealth also takes exception to the amount of relief to be awarded to Taxpayer if its SME are not subject to tax. The Commonwealth contends this Court's order ...


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