Stiehler v. PUBLIC SERVICE COM'N

• Decision Date: 12 August 1993
• Docket Number: No. 92-AA-1162.,92-AA-1162.
• Citation: 629 A.2d 1211
• Parties: Robert STIEHLER, et al., Petitioners, v. PUBLIC SERVICE COMMISSION OF the DISTRICT OF COLUMBIA, Respondent.
• Court: D.C. Court of Appeals

629 A.2d 1211

Robert STIEHLER, et al., Petitioners, v.PUBLIC SERVICE COMMISSION OF the DISTRICT OF COLUMBIA, Respondent.

No. 92-AA-1162.

District of Columbia Court of Appeals.

Argued March 30, 1993.

Decided August 12, 1993.

Linda Hanten, Washington, DC, for petitioners.

Lawrence D. Crocker, Asst. Gen. Counsel, with whom Daryl L. Avery, Gen. Counsel, and Josephine Scarlett-Simmons and Veda M. Shamsid-Deen, Staff Counsel, Washington, DC, were on the brief, for respondent.

Before STEADMAN, SCHWELB and KING, Associate Judges.

SCHWELB, Associate Judge:

Robert O. Stiehler and L. Leonard Hacker(the consumers) have petitioned this court for review of orders of the Public Service Commission of the District of Columbia(the Commission) holding that the District's gross receipts tax (GRT) allows public utilities to collect a "tax-on-tax" from their customers.The consumers contend that the plain language of the statute precludes any "tax-on-tax" effect.We affirm.

I.

On June 12, 1991, the Council of the District of Columbia enacted the District of Columbia Gross Receipts and Toll Telecommunication Service Tax Emergency Amendment Act of 1991, which amended D.C.Code § 47-2501(1990) to increase the GRT for public utility and toll telecommunications services from 6.7 percent to 9.7 percent.The statute now provides, in pertinent part, as follows:

(a) Before the 21st day of each calendar month, each gas, electric lighting and telephone company that sells public utility services or commodities within the District of Columbia shall:

(1) File an affidavit with the Mayor indicating the amount of its gross receipts for the preceding calendar month from the sale of public utility services and commodities within the District of Columbia; and

(2) Pay to the Mayor 9.7% of these gross receipts.

D.C.Code § 47-2501(Supp.1993).

On November 5 1991, the Office of People's Counsel(OPC) requested the Commission to conduct an investigation to determine whether the GRT was being collected properly.Initially, the consumers, who participated in the hearings and were then represented by the OPC, contended primarily that the proposed "tax-on-tax" effect conferred an unwarranted cost of service premium to the utilities or, to put it another way, that the utilities were realizing a net gain to which they were not entitled.It was established by expert testimony before the Commission, however, that the utilities were not being enriched in this way.OPC so stipulated on behalf of the consumers in a partial settlement which was subsequently approved by the Commission.The consumers no longer press this argument.¹

Represented by a different attorney (who is also their counsel in this court), the consumers filed a motion for reconsideration, contending that the "tax-on-tax" effect was the result of an incorrect interpretation of the GRT statute, and that it provided the District government (rather than the utilities) with funds to which the District was not entitled.The Commission denied the petition, holding that the consumers' dispute was really with the GRT law, and not with its construction.The consumers have asked this court to review the Commission's decision.

II.

The question which the consumers have presented to us in their petition for review comes to us with some unusual wrinkles.First, given the procedural history of this controversy and the consumers' initial focus on a completely different (and now abandoned) issue, there is some question whether they have properly preserved a point which they unambiguously presented for the first time in their motion for reconsideration.Second, it is unusual for a question which appears to be one of first impression with respect to the District of Columbia tax laws to be litigated before the Public Service Commission, an agency whose expertise lies in other areas.Finally, we have received no substantive brief from the District of Columbia, which is the real party in interest among the consumers' adversaries.²Nevertheless, we assume without deciding that the consumers' contentions are properly before us, and we therefore address the merits.

Section 47-2501(a)(1), as the consumers point out, governs gross receipts "from the sale of public utility services and commodities..."According to the consumers, taxes collected by the utilities are not "services" or "commodities," and this ends the inquiry.

We are of the opinion, however, that the consumers' construction of the statutory language as excluding from gross receipts the taxes collected by the utilities is unduly parsimonious.The GRT is a gross receipts tax.The gross receipts from the sale of services and commodities may reasonably be construed to include all money collected as a result of such sales, including the GRT."The statute is all-inclusive — covering gross earnings from whatever source."Potomac Electric Power Co. v. Hazen,67 App.D.C. 161, 163, 90 F.2d 406, 408, cert. denied,302 U.S. 692, 58 S.Ct. 11, 82 L.Ed. 535(1937);see alsoMetropolitan Life Ins. Co. v. Rouillard,92 N.H. 16, 24 A.2d 264, 265(1942)(usual meaning of "gross" is "whole, entire, total, without deduction");Commonwealth v. Koppers Company, Inc.,397 Pa. 523, 156 A.2d 328, 332(1959), appeal dismissed,364 U.S. 286, 81 S.Ct. 43, 5 L.Ed.2d 38(1960)("gross receipts" means "the whole total gross receipts without any deductions).As the Supreme Court of Pennsylvania stated more than half a century ago,

the language of the ordinance is "the gross receipts of said corporation" — not some of the gross receipts — from all its business — not some of its business or such part of its business as requires a franchise or license from the City....By "gross receipts ... from all its business" must be understood all receipts arising from the employment of its capital...It is not material that, as defendant alleges, no profit is derived from the construction work and inspection service; that would be a relevant consideration only if the charge were based on net instead of gross receipts.

City of Philadelphia v. Holmes Electric Protective Co.,335 Pa. 273, 6 A.2d 884, 886-87(1939).

In State Tax Comm'n v. Quebedeaux Chevrolet,71 Ariz. 280, 226 P.2d 549(1951), a case involving the interpretation of a statute providing for a tax on "gross proceeds of sales" or "gross income from the business,"the court rejected a contention essentially identical to that being presented by the consumers in this case.As the following excerpts from the opinion demonstrate, the dispute between the plaintiff-taxpayer and the Tax Commission in that case was indistinguishable in principle from the present controversy.The court explained that

the principle upon which the parties differ may well be illustrated by the following
                example
                                             Plaintiff's contention
                Retail sales price of an automobile, being plaintiff's gross income therefrom
                       ......................................................................  $3,000
                2% sales tax collected by plaintiff on retail sale and tax due under the Act   $   60
                                             Commission's contention
                Retail sale of automobile ...................................................  $3,000
                2% tax passed on to purchaser ...............................................  $   60
                                                                                               ______
                Plaintiff's gross income ....................................................  $3,060
                Tax due under the Act (2% of $3060) .........................................  $   61.20
                Or an additional sum due of                                                    $    1.20
                

Id.71 Ariz. 280, P.2d at 550.The taxpayer argued that the state's inclusion of the tax as part of gross income resulted in a tax on a tax because, among other reasons, the taxpayer "is not engaged in the business of selling taxes and therefore any taxes collected by it are not a part of the gross income from the business...."Id.71 Ariz. 280, 226 P.2d at 551.The court held that such an effect was permissible:

As to plaintiff's not being in the business of selling taxes, it obviously is true that plaintiff is engaged only in the business of selling tangible personal property, and the commission does not contend otherwise.It likewise is true that the tax in question here is no different from rent, utilities, ad valorem taxes, or wages (which plaintiff likewise is not selling) in that it

...