Philadelphia Gas Works v. Com.

• Decision Date: 02 December 1999
• Citation: Philadelphia Gas Works v. Com., 741 A.2d 841 (Pa. Commw. Ct. 1999)
• Parties: PHILADELPHIA GAS WORKS to the Use of the CITY OF PHILADELPHIA, Petitioner, v. COMMONWEALTH of Pennsylvania, Respondent.
• Court: Pennsylvania Commonwealth Court

741 A.2d 841

PHILADELPHIA GAS WORKS to the Use of the CITY OF PHILADELPHIA, Petitioner, v.COMMONWEALTH of Pennsylvania, Respondent.

Commonwealth Court of Pennsylvania.

Argued October 7, 1999.

Decided December 2, 1999.

Michael P. Weinstein, Philadelphia, for petitioner.

Carol L. Weitzel, Chief Deputy Atty. General, Harrisburg, for respondent.

Before SMITH, J., LEADBETTER, J. and MIRARCHI, Jr., Senior Judge.MIRARCHI, Senior Judge.

The Philadelphia Gas Works (PGW) appeals from an order of the Board of Finance and Revenue(Board) that affirmed the decision of the Board of Appeals denying PGW's petition for refund, determining that PGW was not entitled to a refund of the sales taxes prepaid to the Commonwealth due to its failure to file the petition for refund within the time period set forth in Section 247 of the Tax Reform Code of 1971(Tax Code), Act of March 4, 1971, P.L. 6, as amended, 72 P.S. § 7247.We affirm.¹

I.

On appeal, the parties have stipulated to the relevant facts in "Joint Stipulation of Facts" submitted to this Court.²PGW is a public utility, owned and operated by the City of Philadelphia, providing natural gas services to residential and commercial customers within the City.PGW, as the public utility vendor, is required to prepay sales taxes to the Commonwealth before those taxes are collected from customers pursuant to Section 247 of the Tax Code, which provides in relevant part:

Whenever a vendor is forbidden by law or governmental regulation to charge and collect the purchase price in advance of or at the time of delivery,³ the vendor shall prepay the tax as required by section 222 of this article, but in such case if the purchaser shall fail to pay to the vendor the total amount of the purchase price and the tax, and such amount is written off as uncollectible by the vendor, the vendor shall not be liable for such tax and shall be entitled to a credit or refund of such tax paid....Tax prepaid after the effective date of this articleshall be subject to refund upon petition to the department under the provisions of section 252 of this article, filed within one hundred five days of the close of the fiscal year in which such accounts are written off.(Emphasis added.)

On January 12, 1998, PGW filed with the Board of Appeals a petition seeking a refund of the sales taxes in the amount of $713,112.76 which had been prepaid to the Commonwealth on certain customers' accounts and subsequently written off as uncollectible at the close of the 1997 fiscal year beginning September 1, 1996 and ending August 31, 1997.The Board of Appeals denied PGW's petition, determining that PGW was not entitled to a refund because the petition filed twenty-nine days after expiration of the 105-day time period under Section 247 on December 14, 1997 was untimely.On appeal, the Board rejected various contentions raised by PGW and affirmed the decision of the Board of Appeals in its entirety.PGW has appealed the Board's decision to this Court, raising the same contentions rejected by the Board.⁴

II.

PGW first contends that under Section 247 of the Tax Code providing that the prepaid taxes "shall be subject to refund upon petition to the department under the provisions of section 252,"Section 247 should be construed in conjunction with Section 252,72 P.S. § 7252, andSection 253,72 P.S. § 7253, which was referred in Section 252, in determining the time limitation for filing a petition for refund applicable to this matter.

Section 252 of the Tax Code provides in relevant part: "The department shall, pursuant to sections 253and254, refund all taxes, interest and penalties paid to the Commonwealth ... and to which the Commonwealth is not rightfully entitled."(Emphasis added.)Section 253(a) provides: "Except as provided for in section 256 and in subsection (b) and (d) of this section, the refund or credit of tax, interest or penalty provided for by section 252 shall be made only where the person who has actually paid the tax files a petition for refund with the department within three years of the actual payment of the tax to the Commonwealth."(Emphasis added.)⁵

PGW argues that when Section 247 is construed in conjunction with Sections 252and253(a), public utilities are permitted to file a petition for refund within the later of(1) the 105-day time period under Section 247 or (2) the three-year time period under Section 253(a), and that its petition for refund filed within three years of the prepayment of the sales taxes to the Commonwealth was therefore timely.PGW urges this Court to adopt its interpretation of the Tax Code, asserting that the interpretation of the Department of Revenue would result in an absurd and unreasonable result of allowing public utility vendors to obtain a refund or a credit, even after three years of the prepayment, as long as a petition for refund is filed within 105 days of the close of the fiscal year in which the prepaid sales taxes are written off as bad debts.

At the outset, it must be noted that the interpretation adopted by the Department of Revenue, which is charged with execution and application of the Tax Code, is entitled to considerable weight and should not be disregarded or overturned absent very cogent and convincing reasons.Federal Deposit Ins. Corp. v. Board of Finance & Revenue,368 Pa. 463, 84 A.2d 495(1951);Gray v. Commonwealth,714 A.2d 1124(Pa.Cmwlth.1998).

In ascertaining the time limitation for filing a petition for refund applicable to this matter, this Court is guided by the rule of statutory construction that provisions of a statute are to be construed in the context in which they appear and with reference to other pertinent provisions.Consulting Engineers Council of Pennsylvania v. State Architects Licensure Board,522 Pa. 204, 560 A.2d 1375(1989);Bellefonte Area School District v. Workmen's Compensation Appeal Board (Morgan),156 Pa.Cmwlth. 304, 627 A.2d 250(1993),aff'd,545 Pa. 70, 680 A.2d 823(1994).Further, "[s]tatutes or parts of statutes are in pari materia when they relate to the same persons or things or to the same class of persons or things."Section 1932(a) of the Statutory Construction Act of 1972,1 Pa.C.S. § 1932(a);MacElree v. Chester County,667 A.2d 1188(Pa. Cmwlth.1995), appeal denied,545 Pa. 666, 681 A.2d 180(1996).

In addition, "[e]very statute shall be construed, if possible, to give effect to all its provisions."Section 1921(a) of the Statutory Construction Act of 1972,1 Pa. C.S. § 1921(a).Even where an irreconcilable conflict exists between two provisions enacted at the same time, those provisions should be construed, if possible, to give effect to both: one as a general provision, and the other as a special provision prevailing over the general provision.Section 1933 of the Statutory Construction Act of 1972,1 Pa.C.S. § 1933.

Under the Tax Code, every person who sells or leases service or tangible personal property, the sale or use of which is subject to sales taxes, is required to obtain a license, collect the taxes as an agent for the Commonwealth and then hold in trust the taxes thus collected for the Commonwealth.Sections 208and225 of the Tax Code,72 P.S. §§ 7208and7225;Silberman v. Commonwealth,738 A.2d 508(Pa. Cmwlth.1999).Unlike other vendors, however, public utility vendors are required by Section 247 to prepay the sales taxes to the Commonwealth before they are collected from the customers.In imposing such requirement, Section 247 permits the public utility vendors to seek a refund or a credit of the prepaid sales taxes by filing a petition for refund with the Department of Revenue within 105 days of the close of the fiscal year, in which the prepaid taxes are written off as bad debts.

Where, as here, the words in a statute are clear and free from all ambiguity, the letter of the statute is not to be disregarded under the pretext of pursuing its spirit.Section 1921(b) of the Statutory Construction Act of 1972,1 Pa.C.S. § 1921(b).Moreover, the Legislature is presumed to have intended to avoid mere surplusage in words, sentence and provisions in a statute.Habecker v. Nationwide Ins. Co.,299 Pa.Super. 463, 445 A.2d 1222(1982).To accept PGW's position that it was permitted to file the petition for refund beyond the 105-day time period would render the time limitation specifically provided in Section 247 superfluous and meaningless.

Further, the Legislature did not intend to provide an additional time limitation for the public utility vendors.Section 253(a), unlike Section 247, provides that the person, who has actually paid, as opposed to prepaid, the sales taxes, must file a petition for refund within three years of the actual payment, as opposed to prepayment, to seek a refund or a credit.Moreover, while the 105-day time period under Section 247 begins to run on the date of the close of the fiscal year, in which the taxes prepaid to the Commonwealth are written off as uncollectible, the three-year time period under Section 253(a) begins to run on the date of the purchaser's actual payment of the sales taxes to the vendor, not on the date of the vendor's payment of the collected taxes to the Commonwealth.Silberman.

In addition, Section 253, referred in Section 252, contains not only the three-year time limitation in subsection (a), but also detailed procedures to be followed in filing petitions for refund, including information to be included in the petitions, in subsections (a) through (d).Section 254,72 P.S. § 7254, another section referred in Section 252, provides for the procedures for obtaining the Board's review of the Department of Revenue's decision on the petitions for refund.Thus, when the relevant sections of the Tax Code are considered in its entirety, it is obvious that the language in Section 247, "upon petition to the department under ... section 252," refers only to the procedures for filing a petition for refund and seeking the Board's...