ABINGTON TOWNSHIP v. ROSE, 02-26628 (Pa.Commw. 1-26-2007)


Nos. 02-26628, 02-26630, 02-26632 02-26633.Court of Common Pleas.
January 26, 2007.


The Defendant/Appellant, Angelo J. Rose, Jr. operates Angelo’s Auto Repair located at 1363 Easton Road, Roslyn, Montgomery County, Pennsylvania, and sells gasoline as part of his business. Typically, one or more distributors delivers the gasoline to the Defendant for sale. When the distributor buys the gasoline from the refinery, certain federal and state taxes are included in the price paid by the distributor. The Defendant pays the distributor for the gasoline, and a portion of that price represents the state and federal taxes paid by the distributor. Indeed, the invoice provided by the distributor to the Defendant itemizes the specific amount of taxes included in, or passed on, in the total cost, namely,

the Federal Excise tax, imposed at the rate of 18.3 cents per gallon pursuant to 26 U.S.C. Section 4081;
the Pennsylvania Excise tax, imposed at the rate of 12 cents per gallon pursuant to 75 Pa.C.S. Section 9004(a);
the Pennsylvania Oil Company Franchise Tax, imposed pursuant to 75 Pa.C.S. Section 9004(b) at a cents-per-gallon rate which varies from year-to-year based on the average wholesale price of gasoline; and,
the Pennsylvania Underground Storage Tank Fee, imposed pursuant to the Pennsylvania Storage Tank Fee, imposed to the Pennsylvania Storage Tank and Spill Prevention Act (35 P.S. Section 6021.101 et seq), and the regulations enacted thereunder, specifically 25 Pa. Code Section 977.12, at the current rate of 1.1cent per gallon.

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The Defendant then sells the gasoline at retail to the traveling public, passing the cost of the federal and state taxes to the end user or consumer. The Defendant is not required to pay any portion of the receipts he receives from the retail sale of gasoline to the federal, state or local governments (either as taxes collected at the point of sale, or for any other purpose), nor is Defendant required to file any returns pertaining to these state and federal taxes with any government entity.

Also with reference to taxation, Abington Township imposes a Mercantile License Tax (hereinafter the “MLT”) upon all businesses located in the Township which are engaged in the sale of goods at retail. The MLT is imposed upon a business’s gross volume of business derived from the sale of goods at retail at the rate of one and one-half (1 ½) mills. (Ordinance 1266, adopted November 13, 1969, Chapter 152 of the Code of Abington Township, Sections 1-16)

In 1997, 1999, 2000 and 2001, the Defendant refused to pay the MLT imposed on his retail gasoline sales, claiming that the portion of his gross receipts relating to the itemized distributor taxes cited above, should be excluded from the calculation of his gross receipts when imposing the MLT.

In response thereto, Plaintiff/Appellee, Abington Township Office of the Treasurer, filed the above captioned consolidated cases against the Defendant for his failure to pay the Abington Township MLT for the years 1997 (02-26628); 1999 (02-26630); 2000 (02-26632) and 2001 (02-26633).

Thereafter, the parties filed Cross-Motions for Summary Judgment. The Office of the Treasure claimed that it was entitled to judgment under the clear language of the Abington MLT Ordinance. The Defendant claimed that he was entitled to judgment, because, the itemized taxes supra, do not fit within the MLT Ordinance’s definition of “gross volume of business” Defendant also argued that the MLT as applied is unconstitutional.

On August 1, 2006, after argument on the matter, we issue the following order:

“And now, this 1st day of August, 2006, after oral argument and review of briefs, it is hereby ORDERED and DECREED that the Plaintiff’s Motion for Summary Judgment in the above captioned matter is hereby GRANTED, and Judgment is entered in favor of the Plaintiff and against the Defendant.
Accordingly, based on the foregoing, it is also ORDERED that the Defendant’s Motion for Summary Judgment is hereby DENIED.”

The Defendant timely appealed our August 1, 2006, ruling. We support our decision below.

The MLT Ordinance imposes a tax on retail vendors and dealers “for each dollar of the gross volume of business transacted by such person during the license year.” (MLT, 152-3.A.2) The MLT is imposed at a rate of one and one-half (1 ½) mills on the gross volume of business generated by the business entity on goods, wares and merchandise of every kind. (MLT, Section 152-1) The Ordinance states that “Gross

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Volume of Business-includes both cash and credit transactions and trade-in transactions as provided by law.” (Id.)

Defendant argues that the Pennsylvania Excise Tax, Pennsylvania Oil Company Franchise Tax; Pennsylvania Underground Storage Tank Fee; and the Federal Excise Tax do not fit within the definition of “gross volume of business” under the MLT, and should be excluded from its calculation. (See, Concise Statement of Matters Complained of on Appeal, Issues #1 and 2)

More specifically, Defendant contends that the term “gross volume of business” in the MLT is not synonymous with the accounting term “gross receipts.” Otherwise, the drafters would have stated the same. Rather, “gross volume of business” should be interpreted as income after certain exclusions, namely, the itemized taxes paid by the distributor listed above. We disagree.

The language of the MLT Ordinance is clear. The tax shall be imposed on each dollar of the gross volume of business transacted during that license year, on goods, wares and merchandise of every kind, including both cash and credit transactions. We fail to see any ambiguity therein. If the drafters had meant net volume of business, they would have said so.

However, assuming arguendo, that the Ordinance language is ambiguous, the principles of statutory construction indicate that courts may look to dictionary definitions for terms left undefined by the legislature.P.R. v. Pennsylvania Department of Public Welfare, 759 A.2d 434
(Cmwlth.Ct. 2000); Bailer v. Zoning Board of Adjustment of City ofPhiladelphia, 801 A.2d 492 (Pa. 2002). And in so doing, we determined that “gross volume of business” as cited in the MLT Ordinance clearly means the generated business without any consideration of, or reference to, the requested exclusions.

That is, Webster’s defines “gross” as consisting of an overall totalexclusive of deductions (gross earnings) (gross production) (grossannual profit)-opposed to net. Webster’s defines “volume” asamount, bulk, mass, quantity. Id. Websters Third New International Dictionary Thus, based on common usage as provided by Websters “gross volume of business” means the overall or total amount or quantity of business exclusive of deductions. In short, it does not mean “net.” And accordingly, the MLT was properly imposed on the Defendant gross business regardless of the itemized exclusions, supra.

Defendant’s Constitutional arguments also lack merit. In his Concise Statement of Matters Complained of on Appeal, Defendant asserts that “to the extent that the Local Tax Enabling Act, 53 P.S. Section 6901, et seq, permits the exclusion from local taxation of the Pennsylvania Sales Tax collected by the retailer, but fails to permit the exclusion of other state taxes collected by a retail gasoline service station merchant, it violates the Pennsylvania Constitution, Article VIII, Section 1, of the Uniformity of Taxation Clause. This relevant section reads,

“All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws.”

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The holding in Blair Candy Company, Inc. v. Altoona Area SchoolDistrict, 613 A.2d 159, 161 (Cmwlth Ct. 1992) is dispositive of this issue. In Blair Candy, a wholesale vendor of cigarettes was responsible for placing tax stamps on cigarette packages. Blair received a commission of three percent of the value of the tax stamps it purchased from the Commonwealth as compensation for services and expenses incurred in affixing the stamps. Blair filed MLT tax returns with the school district, and claimed an exemption from his gross receipts the amount of the cigarette taxes it paid to the Commonwealth. The Commonwealth Court held that Blair was not entitled to claim an exemption for the taxes paid to the Commonwealth, because such taxes were excise taxes, and not sales taxes. Id. The Blair Court reasoned,

“The School District would be prohibited from taxing the funds collected by Blair, if as Blair asserts, the cigarette tax is a sales tax. We do not think it is. The cigarette tax is an excise tax imposed at the specific rate of one and fifty-five hundredths of a cent per cigarette. Therefore, the cigarette tax is a specific tax, imposed at a stated dollar amount per diem. By contrast the Pennsylvania sales tax is an ad valorem tax imposed on each separate sale at retail of tangible personal property or services at a rate of six percent of the purchase price to be paid by the vendor.”

The Blair holding applies to the case at bar. Defendant argues unequal treatment of gasoline retailers under The Local Tax Enabling Act and the MLT Ordinance. He contends that other retailers are permitted to exclude sales tax from gross sales, however, gasoline retailers are treated differently under the MLT Ordinance because they cannot exclude any of the taxes itemized supra. The Local Tax Enabling Act deals with the exclusion of sales taxes. However, pursuant to Blair, the taxes that the Defendant claims as exclusions under the MLT are imposed at a specific rate per gallon of gas, and are therefore, excise taxes, not sales taxes under Blair. Accordingly, Defendant attempts to compare apples to oranges, and his claim of unequal treatment under the two statutes fails.

Finally, Defendant claims that “the imposition of the MLT on the itemized taxes, supra, which are imposed on the consumer, but collected by the retail gasoline service station merchant, violates the due process clause of the Fourteenth Amendment by levying taxation upon taxes.” (Concise Statement of Matters Complained of on Appeal, Issue #4)

In Tax Review Board of Philadelphia v. Humble Oil, 227 A.2d 658-59
(Pa. 1967), a case also dealing with a gasoline distributor and a MLT, our Supreme Court held that the liability for the payment of the federal excise tax at issue was imposed upon the producer who made the sale. The mere fact that the tax was passed on to the purchaser did not determine upon whom the tax was imposed. The economic burden of all taxes incident to the sale of merchandise is traditionally passed on as part of the overhead. Id.

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In the case at bar, Defendant does not collect, nor is he responsible for, any of the itemized taxes, imposed on the gasoline that he sells — the distributor is. The taxes are merely passed on to the consumer via the purchase price of the gasoline. Thus, pursuant to Humble, those itemizations are not taxes imposed on the Defendant, instead they are considered part of Defendant’s overhead, and ultimately there is no tax on taxation via the MLT.

Accordingly, for the foregoing reasons, our August 1, 2006, order should be AFFIRMED.

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