The opinion of the court was delivered by: COOPER
This is a motion by the debtor to expunge two claims filed by the State Tax Commission under Section 186-a of the State Tax Law, one claim being for $241.26, covering taxes alleged to be due by the debtor from June 1, 1939, to August 31, 1940, inclusive, and the other for an undetermined amount for the period commencing Sept. 1, 1940, and ending Feb. 28th, 1941.
The taxes are claimed to be due by virtue of Chapter 137 of the Laws of 1941, which became law on March 20, 1941.
It will be seen that these tax claims all arose before the Passage of Chapter 137 of the Laws of 1941.
By Chapter 321 of the Laws of 1937, Section 186-a was added to the tax law of the State of New York, imposing a tax equal to 2% of its gross income beginning July 1, 1937, upon every utility doing business in the State which was subject to the jurisdiction of the Public Service Commission and a tax equal to 2% of its gross earnings upon every other utility doing business in the State.
The Act defined utility to include every person (whether or not subject to the Public Service Commission) who shall engage in the business of selling gas, electricity, steam, water, refrigeration, telephony or telegraphy.
The tax was imposed only in respect to sales "for ultimate consumption or use by the purchaser."
The State Tax Commission, acting under such statute, assessed taxes therein provided against the so-called submetering companies, such as hotels, office buildings, apartment houses, etc., and which purchased electricity, etc., and sold such services at a higher rate to their guests or tenants.
The Statute was challenged as to hotels, apartment houses, etc., on the ground that they were not utilities within the meaning of the statute.
On July 2, 1940, the Appellate Division of the Third Department in a case entitled "Matter of Application of 339 Central Part West, Inc., petitioner for an order against Mark Graves and others, constituting the State Tax Commission" 260 App.Div. 265, 21 N.Y.S.2d 93, held that appartment houses, hotels etc., were not utilities within the meaning of Section 186-a of the State Tax Law and directed a refund of the taxes collected.
The decision was affirmed by the Court of Appeals without opinion in 284 N.Y. 691, 30 N.E.2d 727.
The debtor corporation came in this Court on November 27, 1940, at a time when there was no law making it taxable as a utility under Section 186-a of the State tax law or otherwise.
The Legislature of 1941, by Chapter 137 of the Laws of 1941, declared its intent that Section 186-a as enacted in 1937 should cover hotels, apartment houses, etc., and amended 186-a to cover them and made the act retroactive to the date of the passage of the Act passed in 1937 adding 186-a to the State Tax Law.
The State Tax Commission now demands taxes of the debtor hotel from a time long before it came into this Court by virtue of the retroactive ...