CITY OF TAUNTON & others vs. COMMISSIONER OF CORPORATIONS AND TAXATION & another.

SPIEGEL, J. This is a bill for declaratory relief brought by several municipalities in behalf of themselves and other municipalities under G. L. c. 231A, and c. 30A, Section 7. The operate electric light plants under the provisions of G. L. c. 164. The defendants are the Commissioner of Corporations and Taxation (Commissioner) and the State Tax Commission (Commission).

The basis of the dispute originates in the adoption of emergency regulation no. 13 on July 27, 1966, by the Commission. This regulation provides that "[s]ales of tangible personal property by the United States, the Commonwealth of Massachusetts, any political subdivision thereof, or any of their respective agencies shall . . . be subject to the sales or use tax to the extent that such property is . . . of a kind ordinarily sold by private persons . . . and the governmental agency is required, as the vendor, to collect and remit the tax to the Commonwealth."

On August 14, 1967, the Commissioner notified the Municipal Electric Association [Note 1] that the municipal electric "companies" of Massachusetts would have to collect the sales tax on poles sold to the telephone companies.

The plaintiffs then brought this suit seeking an injunction and a declaration that municipalities are not required to collect sales tax on poles and equipment which they sell to telephone companies. The case was heard in the Superior Court on an "Agreed Statement of Fact." The trial judge found in favor of the plaintiffs and ruled that emergency regulation no. 13 was "illegal and without force and effect because there is no statutory authority for its promulgation." From the entry of a final decree declaring that municipalities which operate electric light departments are

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not required to collect sales taxes "on poles sold to telephone companies" and enjoining the Commissioner from assessing a tax on municipalities or municipal electric departments for their failure to collect the said taxes, the defendants appealed.

The sole issue that we are called upon to decide is whether the defendants possessed the statutory authority under G. L. c. 64H (commonly called the Sales Tax Act) to promulgate emergency regulation no. 13.

Admittedly, there is no express statutory authority requiring municipal electric light departments to collect a sales tax on sales of tangible personal property. The defendants argue, however, that Section 2 of the Sales Tax Act requires a "vendor" to collect a sales tax; that Section 1 (18) of the Sales Tax Act defines "vendor" as a "Retailer or other person"; and finally that Section 1 (7) of the Sales Tax Act includes municipal electric light departments within the definition of "person" when it includes "corporations" and "any combination of individuals acting as a unit." [Note 2]

Since emergency regulation no. 13 proposes to make sales by government agencies subject to the provision of the Sales Tax Act, in order to sustain the validity of the regulation, we would have to conclude that the Sales Tax Act authorized the Commission to adopt it. G. L. c. 30A, Section 7. First Agricultural Natl. Bank v. State Tax Commn. 353 Mass. 172.

In seeking to ascertain whether the Legislature intended to include municipalities within the definition of "person," the following reasons lead us to conclude that the Legislature did not so intend: (1) nowhere in the act are the United States, the Commonwealth or any political subdivision thereof, or their respective agencies defined as a "person";

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(2) Section 6 of the Sales Tax Act sets forth a series of exemptions for the United States, the Commonwealth and its subdivisions and agencies and also enumerates a series of exemptions of services generally performed by municipal corporations (e.g. the furnishing of water or electricity); (3) this court, prior to the enactment of the Sales Tax Act, stated that the word "person, which . . . may be held to include `corporations, societies, associations and partnerships,' is not apt to describe a municipality," New Bedford v. New Bedford, Woods Hole, Martha's Vineyard & Nantucket S.S. Authy. 329 Mass. 243, 250, citing Howard v. Chicopee, 299 Mass. 115, 121; and finally, (4) "[w]hen the Legislature has intended to include both municipal and business corporations within the scope of a statute, generally it has used plain words to that effect." Donohue v. Newburyport, 211 Mass. 561, 567. See Linehan v. Cambridge, 109 Mass. 212, 213.

In view of the foregoing, we are of opinion that the Legislature did not intend to include municipalities within the definition of "person" as that term is defined under the Sales Tax Act.

Decree affirmed.