Opinion
October 7, 1936.
November 23, 1936.
Taxation — Mercantile license tax — Transactions on bailment leases — Capital stock tax — Double taxation — Acts of May 2, 1899, P. L. 184, and April 25, 1929, P. L. 681.
1. Transactions on bailment leases are part of the whole volume of business of a retail dealer or vendor within the meaning of section 4 of the Act of May 2, 1899, P. L. 184, amended by section 4 of the Act of April 25, 1929, P. L. 681, which provides that the whole volume of business, including cash receipts and merchandise sold on credit, shall be the basis upon which the mercantile license is to be rated. [181-3]
2. The inclusion of cash received from bailment leases within the gross volume of the business of a retail dealer or vendor which pays a capital stock tax does not constitute double taxation. [183]
3. Double taxation exists only where the subject of both taxes is the same. [183]
4. The capital stock tax is a property tax; the mercantile license tax is a tax on the privilege of doing business in a certain manner. [183]
Before KEPHART, C. J., SCHAFFER, MAXEY, DREW, LINN, STERN and BARNES, JJ.
Appeal, No. 207, March T., 1936, by defendant, from judgment of C. P. Allegheny Co., Jan. T., 1936, No. 640, in case of Commonwealth v. Globe Furnishing Company. Judgment affirmed.
Appeal from assessment of mercantile license tax. Before GRAY, J.
The facts are stated in the opinion of the lower Court, by GRAY, J., as follows:
The Globe Furnishing Company has appealed to this Court from the assessment of a mercantile license tax against it for the year 1935 by the Board of Mercantile Appraisers of Allegheny County.
. . . . . . . . . . .
The position of the appellant is that its bailment lease business is not a part of the gross volume of its business within the meaning of the governing Act of Assembly, the contention being that transactions on bailment leases are not sales either for cash or on credit and, therefore, not to be included in the volume of business upon which the Mercantile License Tax is assessed under the law.
It is conceded that appellant is a retail vendor or retail dealer in goods, wares and merchandise and liable for the payment of a Mercantile License Tax under the Act of May 2, 1899, Section 1, P. L. 184, which provides that those within the terms of the Act shall pay a Mercantile License Tax "on each dollar or the whole volume, gross, of business transacted annually."
Section 4 of said Act of 1899, supplied by Section 4 of the Act of April 25, 1929, P. L. 681, . . . provides that "the whole volume of business, including cash receipts and merchandise sold on credit . . . shall be the basis upon which the license is to be rated." The position of counsel for the appellant is based upon their construction of the cases of the Commonwealth v. National Cash Register Company, 271 Pa. 406, and Commonwealth v. Motors Mortgage Corp., 297 Pa. 468, in each of which cases it was held that transactions on bailment leases are not sales and that as title to the bailed property remained in the bailor, a foreign corporation doing business in Pennsylvania, being bailor of property on bailment leases, is subject to a capital stock tax based upon the value of the bailed property within the State of Pennsylvania.
The argument is that since transactions on bailment leases are not sales that the bailment lease business is not a part of the whole volume of business of the appellant because such transactions are not either cash sales or sales on credit within the terms of the Act of 1929. We are of the opinion the construction of the Acts of 1899 and 1929 put upon them by appellant is too narrow and not sustainable either under the cases cited or under a reasonable view of the Acts of Assembly involved.
In our view of the matter the cases cited do not negative the conclusion that business on bailment leases is part of the whole volume of business of the retail dealer or vendor concerned but that the contrary view is suggested.
Under the statutes as we read them the Mercantile License Tax is to be assessed on the whole volume of business, including cash and credit sales, and any other kind of business transacted, including transactions on bailment leases.
Cash comes into the bailor on bailment leases and when realized certainly would constitute part of the volume of business. All of the rentals under the bailment leases come to the bailor in due season and should constitute one of the bases for the assessment of the Mercantile Tax, either as cash sales when received or as part of the volume of business when the bailment leases are made. As far as the taxpayer is concerned it would seem to be immaterial whether assessment is made one way or the other as the result would be the same in the end. We do not consider it to be reasonable to exclude the volume of business done on bailment leases from the license tax assessment and we do not think the Act of Assembly can reasonably be so construed. The appeal must be denied and the assessment confirmed.
Appeal dismissed. Taxpayer appealed.
Error assigned was order dismissing appeal.
Samuel Kaufman, with him Louis J. Bloch, S. Leo Ruslander and Louis Caplan, for appellant.
Francis P. Anton, Charles J. Margiotti, Attorney General, and E. Russell Shockley, Deputy Attorney General, for appellee, were not heard.
Argued October 7, 1936.
Appellant contends that if the cash received from bailment leases is included within the gross volume of its business for purposes of assessing the mercantile license tax, it will amount to double taxation because the value of the leased goods is also included within its property valuation for capital stock tax purposes. But it is established that double taxation exists only where the subject of both taxes is the same. The capital stock tax is a property tax; the mercantile license tax is a tax on the privilege of doing business in a certain manner. This distinction has been previously noted in Commonwealth v. Bailey, Banks Biddle Co., 20 Pa. Super. 210, where a similar contention was ruled upon adversely to appellant. See also Commonwealth v. Harrisburg L. P. Co., 284 Pa. 175, 179. Appellant's other contentions are all fully answered in the opinion of the court below.
Judgment affirmed.