BOARD OF ASSESSORS OF HOLYOKE vs. STATE TAX COMMISSION & another.

CUTTER, J. This is an appeal (see G. L. c. 58, Section 2 [Note 1]) by the assessors of Holyoke from a decision of the Appellate Tax Board (the board). The case concerns the classification of Holyoke Water Power Company (the company) for purposes of local taxation.

By G. L. c. 59, Section 5, Sixteenth (3), [Note 2] a "domestic manufacturing corporation" [Note 3] is exempt from local taxation upon its property other than "real estate, poles and underground conduits, wires and pipes." By Section 5, Sixteenth (1), "machinery

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used in manufacture" is subject to local taxation if owned by a Massachusetts corporation subject to taxation under c. 63 other than a domestic business corporation (as that term is defined in G. L. c. 63, Section 30) or a domestic manufacturing corporation (fn. 3). See Section 5, Sixteenth (2), concerning the local taxation of the "machinery used in the conduct of the business" of a domestic business corporation as defined in c. 63, Section 30.

The company prior to 1964 had been classified as a "domestic manufacturing corporation." The assessors did not receive from the Commissioner prior to April 1, 1964, a list of the corporations subject to taxation, as required by G. L. c. 58, Section 2 (fn. 1). Accordingly, to protect their right to a review by the State Tax Commission under Section 2, the assessors applied on April 15, 1964, for such a review of the company's classification, and asked the commission to classify the company as a public utility corporation.

On May 2, 1964, the commission notified the assessors in writing that no change of classification would be made. On May 28, 1964, the assessors filed with the board a petition for review of this classification. [Note 4] The company was allowed to intervene as a party appellee before the board. It filed on June 22, 1965, a motion to dismiss the assessors' petition as moot. The board granted the motion on September 14, 1965, and by order dismissed the assessors' petition as moot. The assessors appealed. [Note 5]

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The company relies, as did the board, on a supposed analogy of this case to certain cases arising under G. L. c. 59, Section 39 (as it read when the cases were decided), dealing with the valuation of the property of telephone companies for taxation. See Commissioner of Corps. & Taxn. v. Assessors of Springfield, 329 Mass. 419; Assessors of Springfield v. New England Tel. & Tel. Co. 330 Mass. 198; Commissioner of Corps. & Taxn. v. Assessors of Springfield, 330 Mass. 433, 436 (which states that the statute, Section 39, regulating the tax valuation of telephone company property had been adopted largely "to avoid . . . difficulties . . . from the inconsistent local assessment of fragments of larger systems," a problem not present in cases under c. 58, Section 2). See also Commissioner of Corps. & Taxn. v. Assessors of Haverhill, 330 Mass. 553; State Tax Commn. v. Assessors of Haverhill, 331 Mass. 306, 309; State Tax Commn. v. Assessors of Springfield, 331 Mass. 677; State Tax Commn. v. Assessors of Haverhill, 331 Mass. 685; Assessors of Haverhill v. New England Tel. & Tel. Co. 332 Mass. 357. In reaching its decisions in the telephone cases, this court necessarily read together c. 59, Sections 39 and 73, as they then stood. [Note 6] Section 39, as theretofore amended, directed (a) the Commissioner to determine each year the valuation of specified tangible property of each telephone company and to certify that value to local assessors, and (b) the assessors to assess that property at the Commissioner's valuation as certified (or as modified, see c. 59, Section 39, by the board upon appeal). Section 73, as then amended, provided that any company aggrieved by the taxes assessed on it under Section 39 might apply to the Commissioner for an abatement "on or before" December 1 of the year to which the tax related. [Note 7]

This court held in the Springfield case reported in

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329 Mass. 419, 421-422, that it was contemplated that an aggrieved telephone company should be in a position to apply under Section 73 for an abatement not later than December 1 of the year to which the tax related and that the Commissioner should be in a position to act on that application when and if made. [Note 8] This, of course, presupposed that the assessors would make an assessment prior to December 1. It was pointed out that, to permit them to make a later assessment if the board had not acted by December 1 of the year to which the tax related, would in effect cause Section 73 and the Commissioner's function under it to "become a dead letter." The result of the decision was that, unless revision of the Commissioner's valuation became final prior to December 1, an assessment could be made only at the Commissioner's original valuation. Any later change in the valuation by the board or by this court would be totally ineffective. Thus after December 1, any pending proceedings under Section 39 before the board (or before this court on appeal) were determined to be moot. The later telephone cases supported in various respects, which need not here be stated in detail, (1) the requirement that the board valuation action be completed before December 1, if a valid assessment except at the Commissioner's original valuation figure was to be made, and (2) the view that (in the light of the relationship between Sections 39 and 73, as they then stood) an assessment (at a figure higher than the Commissioner's original valuation) made prior to December 1 of the tax year could not be retroactively validated by a board decision after December 1. See, e.g., the cases reported at 329 Mass. 419, 422; 330 Mass. 198, 204; 330 Mass. 433, 436; 331 Mass. 306, 309.

The telephone cases do not control the present case, which is governed by different statutory provisions. Under c. 58. Section 2, and c. 63, Section 38C, whether a corporation may be classified as a domestic manufacturing corporation depends upon whether it in fact (a) is engaged in manufacturing and

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(b) is incorporated under or subject to G. L. c. 156. If the corporation is not a domestic manufacturing corporation, the assessors (as already noted) have statutory authority to assess its machinery used in manufacture. Chapter 58, Section 2, provides a carefully stated method of reviewing (upon evidence of the actual facts concerning the taxpayer's incorporation and operations) the correctness of the Commissioner's and the assessors' views.

In the telephone tax cases, for reasons stated in those decisions, statutory provisions required this court to treat the completion, prior to December 1 of the tax year, of the board's review of the Commissioner's valuation as a condition precedent to any higher assessment by the assessors. In classification cases arising under c. 58, Section 2, no practical reasons and no statutory language compel us to treat completion of the appeal procedure as a condition precedent to an assessment. If the assessors disagree with the Commissioner and appeal from his classification, the assessors are not prohibited by statute from assessing the corporation (as was done in this case, see fn. 5), in accordance with their view of the correct classification, at least at any time prior to the last day (December 20 of the year to which the tax relates) for an "omitted" assessment under c. 59, Section 75. The assessed corporation may then seek an abatement under c. 59, Section 59, and have the assessors' action reviewed by the board. [Note 9] Whether the facts warrant the classification will be determined in an orderly manner in the appeal under c. 58, Section 2, by the board or upon appeal from the board to this court. Any tax incorrectly assessed, or assessed at an excessive valuation, may be abated in the abatement proceedings under c. 59, Section 59. The corporation may protect itself from any additional excise under c. 63 which may result from an adverse decision upon the classification issue,

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by seeking abatement under the appropriate provisions of c. 63.

There is thus no such necessary or practical interdependence between the commission's classification, the local assessment, and abatement relief therefrom, as was found in the telephone cases to exist between the Commissioner's (or the board's) valuation, the local assessment, and the telephone company's statutory right to seek abatement of that assessment. We do not regard c. 59, Section 5, Sixteenth (5), see fn. 2, as requiring that the classification be finally determined before an assessment, but merely as providing that its final determination shall govern the local taxation of corporate machinery used in manufacture. Cf. Assessors of Springfield v. New England Tel. & Tel. Co. 330 Mass. 198, 201; State Tax Commn. v. Assessors of Haverhill, 331 Mass. 306, 309.

Certain additional considerations support an interpretation of the classification procedure under c. 58, Section 2, and related taxing provisions in a manner which will permit completion of the procedure. (1) Completion of the procedure under Section 2 (which involves a petition to the board and possibly also an appeal to this court) may necessitate trial of complicated issues of fact and consume a considerable period of time. It would take clear statutory language to lead us to the conclusion that the Legislature intended to require dismissal of fair, carefully designed, remedial proceedings merely because the proceedings are not completed within the tax year. (2) Changes in the facts affecting a particular corporation's classification are not likely to take place from year to year. The completion of the classification procedure is thus likely to afford strongly persuasive guidance to the Commissioner and to assessors in later years. This practical consideration may shed light on the probable legislative purpose. (3) It is of some significance that, in three cases before this court, appeals under Section 2 were not treated as moot (although the decisions do not discuss the issue) after the close of the taxable year to which the classification related. Commissioner of Corps. & Taxn. v.

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Assessors of Boston, 321 Mass. 90 (1947 decision concerning 1945 classification). Assessors of Boston v. Commissioner of Corps. & Taxn. 323 Mass. 730. Commissioner of Corps. & Taxn. v. Assessors of Boston, 324 Mass. 32 (1949 decisions on 1947 classification).

We conclude that c. 58, Section 2, and related sections should not be narrowly interpreted by analogy to cases under different statutes (see fn. 6), long since changed and clarified, which relate to the very special problem of consistent local taxation of the tangible property of telephone systems. Any conclusion that classification proceedings necessarily become moot in the event that appeals under Section 2 are not completed by December 20 of the tax year would frustrate the legislative intention, revealed in Section 2 (and by its amendment by St. 1941, c. 726, Section 2; see 1941 House Doc. No. 3), to give to assessors, and any affected corporation, a fair chance to test before the board the correctness of the Commissioner's classification.

The decision of the Appellate Tax Board is reversed. The case is remanded to the board for consideration of the assessors' petition upon the merits and for further proceedings consistent with this opinion.

So ordered.