            IN THE COMMONWEALTH COURT OF PENNSYLVANIA


American Electric Power Service :
Corporation,                    :
                        Petitioner
                                :
                                :
         v.                     : No. 861 F.R. 2013
                                : Argued: April 6, 2017
Commonwealth of Pennsylvania,   :
                     Respondent :



BEFORE:        HONORABLE ROBERT SIMPSON, Judge
               HONORABLE JULIA K. HEARTHWAY, Judge
               HONORABLE DAN PELLEGRINI, Senior Judge


OPINION BY
SENIOR JUDGE PELLEGRINI                                     FILED: May 4, 2017


               American Electric Power Service Corporation (AEPSC) seeks review
of the Board of Finance and Revenue (Board) order finding that under the Tax
Reform Code of 1971 (Tax Code),1 it was subject to the utilities gross receipts tax
(GRT) and that its sales of electricity to the Letterkenny Industrial Development
Authority (LIDA) did not qualify for the resale exemption because LIDA was not a
political subdivision.


               The provision of the Tax Code that imposes a tax on gross receipts
received from the sale of electric energy within the Commonwealth is Section


      1
          Act of March 4, 1971, P.L. 6, as amended, 72 P.S. §§ 7101-10004.
1101(b), 72 P.S. § 8101(b). That provision also specifies what entities are subject
to the tax and what transactions are excluded from the gross receipt calculation. It
provides:

            (b) Electric Light, Waterpower and Hydro-electric
            Utilities.--Every electric light company, waterpower
            company and hydro-electric company now or hereafter
            incorporated or organized by or under any law of this
            Commonwealth, or now or hereafter organized or
            incorporated by any other state or by the United States or
            any foreign government and doing business in this
            Commonwealth, and every limited partnership,
            association, joint-stock association, copartnership,
            person or persons, engaged in electric light and power
            business, waterpower business and hydro-electric
            business in this Commonwealth, shall pay to the State
            Treasurer, through the Department of Revenue, a tax of
            forty-four mills upon each dollar of the gross receipts of
            the corporation, company or association, limited
            partnership, joint-stock association, copartnership, person
            or persons, received from:

                   (1) the sales of electric energy within this State,
            except gross receipts derived from the sales for resale
            of electric energy to persons, partnerships, associations,
            corporations or political subdivisions subject to the tax
            imposed by this subsection upon gross receipts derived
            from such resale. . . .


72 P.S. § 8101(b). (Emphasis added.)


            Under this provision, “electric light companies” and any person
“engaged in [the] electric light and power business” are subject to the tax. It also
takes out of gross receipts sales for resale made to, among others, political
subdivisions. The Tax Code does not define the terms “electric light company,”


                                         2
“electric light and power business” or “political subdivision.”             Now to the
underlying facts as stipulated by the parties.


                                            I.
             AEPSC, a New York corporation having its principal office in
Columbus, Ohio, makes wholesale sales of electricity to customers located in
Pennsylvania. It is not a public utility and does not hold a license from the Public
Utility Commission (PUC), but AEPSC is regulated by the Federal Energy
Regulatory Commission (FERC) as a wholesale seller of electricity. AEPSC first
began making wholesale sales to LIDA in 2009.


             LIDA was formed in 1997 under Pennsylvania’s Economic
Development Financing Law (EDFL)2 when the Letterkenny Army Depot (Depot)
was closed by Franklin County. An industrial development authority created under
the EDFL is described as “a public instrumentality of the Commonwealth and a
public body corporate and politic. . . .” Section 6(a) of the EDFL, 73 P.S. § 376(a).
LIDA is governed by a 15-member board of directors appointed by the Franklin
County Commissioners.


             After LIDA was created, it assumed control of the Depot’s Electrical
Distribution System (EDS). It purchases power as a wholesale customer from a
third-party wholesale supplier and then sells that electricity to the customers in the


      2
        Act of August 23, 1967, P.L. 251, as amended, 73 P.S. §§ 371-386, retitled the
Economic Development Financing Law by Section 1 of the Act of December 17, 1993, P.L. 490.




                                            3
Cumberland Valley Business Park (Business Park), which LIDA developed, as
well as to the Army for use in its retained industrial area.3 LIDA contracts with
Allegheny Power to operate and maintain the EDS and bill LIDA’s customers.


              Two years before AEPSC began making wholesale sales to LIDA,
Sandra Keller, AEPSC’s Tax Counsel, had a telephone conversation with Gary
Meredith of the Department of Revenue’s Corporate Tax Division concerning the
resale exemption to GRT and AEPSC’s sales to municipalities. Mr. Meredith told
Ms. Keller that all sales made to municipalities should be reported on AEPSC’s
GRT Report as exempt unless the municipality itself consumes the electricity. See
1101(b)(1) of the Tax Code, 72 P.S. § 8101(b)(1). AEPSC then filed a GRT
Report for 2010 reflecting its sales to LIDA and the Borough of Pitcairn (Pitcairn),
another of its customers,4 but claimed the gross receipts from those sales were non-
taxable because they were sales for resale. However, neither LIDA nor Pitcairn
filed, reported or paid GRT on the electric energy they purchased from AEPSC in
2010.5




       3
        Because LIDA purchases wholesale power, retail choice is not normally available to its
customers.

       4
          AEPSC reported gross receipts for resale in the amount of $640,705.90 from its sales to
Pitcairn, and gross receipts for resale in the amount of $5,804,219.77 from sales to LIDA. It is
undisputed that 99.83% of the electric energy AEPSC sold to LIDA was resold to the Army and
Business Park customers.

       5
         LIDA and Pitcairn also did not file Corporate Net Income Tax returns or Capital Stock
Tax returns for 2010.




                                               4
                The Department of Revenue (Revenue) found the resale exemption
did not apply and assessed GRT on AEPSC’s receipts from sales to LIDA,
increasing AEPSC’s 2010 GRT liability from $0 to $380,546.6 AEPSC appealed
the assessment to the Board of Appeals, and when it denied relief, appealed to the
Board. AEPSC argued that it was not subject to GRT because it was not an
electric light company as it did not sell electricity at retail, i.e., to end-use
purchasers. In the alternative, AEPSC argued that it was entitled to the resale
exemption for the sales for resale to Pitcairn and LIDA.


                The Board found that AEPSC was subject to GRT, but found that it
should have received the resale exemption for receipts from sales to the Borough
of Pitcairn because Pitcairn is a municipality. However, the Board found AEPSC
was correctly denied a resale exemption for sales to LIDA because LIDA was not a
political subdivision and there was no evidence that LIDA reported GRT to the
Commonwealth for the relevant time period.                   The Board then recalculated
AEPSC’s total GRT liability to $342,744. This appeal followed.7


                                                II.
                AEPSC acknowledges that it would have been subject to GRT under
Section 1101(b) of the Tax Code, 72 P.S. § 8101(b), if it had been allowed to sell

       6
           AEPSC’s total taxable gross receipts for 2010 was $6,449,926.

       7
          In appeals from decisions of the Board, our review is de novo because we function as a
trial court even though such cases are heard in our appellate jurisdiction. Glatfelter Pulpwood
Company v. Commonwealth, 19 A.3d 572, 576 n.3 (Pa. Cmwlth. 2011) (en banc), aff’d, 61 A.3d
993 (Pa. 2013).




                                                5
electricity prior to deregulation. It contends, however, that modifications to that
provision by the Electricity Generation Customer Choice and Competition Act
(Competition Act)8 made it not subject to the tax.


               By way of background, prior to 1996, only public utilities were
allowed to sell electricity in Pennsylvania. In that year, the Competition Act was
passed to encourage a more competitive marketplace for electricity sales and to
provide cost savings to consumers.       Spectrum Arena Limited Partnership v.
Commonwealth (Spectrum I), 921 A.2d 585, 586 (Pa. Cmwlth. 2007), aff’d, 983
A.2d 641 (Pa. 2009) (Spectrum II). It allowed consumers to purchase electricity
from any supplier and have that electricity delivered by the local utility in their
area. Spectrum I, 921 A.2d at 586. Companies that were not public utilities, like
AEPSC, were now allowed to make sales of electricity.


               Because this unbundling of the purchase of electricity from the
distribution of electricity had tax revenue consequences, the Competition Act
modified the Tax Code in several ways. To ensure that deregulation of electric
utilities did not adversely affect overall tax revenues, the General Assembly also
adopted the revenue-neutral reconciliation (RNR) formula as part of the
Competition Act to recoup any losses caused by the restructuring of the electric
industry. Spectrum I, 921 A.2d at 587 (citing 66 Pa. C.S. § 2810(a)). “By utilizing
the RNR formula, the General Assembly ensured that the Commonwealth could



      8
          66 Pa. C.S. §§ 2801-2812.




                                         6
collect the same level of revenue that was collected prior to the passage of the
Competition Act.” Spectrum II, 983 A.2d at 646.


                                                III.
                                                 A.
               One of the reasons AEPSC contends that it is not subject to GRT is
that it is not an “electric light company” within the meaning of Section 1101(b) of
the Tax Code because Section 2810(i) of the Competition Act provides that an
“electric light company . . . shall be deemed to include electric distribution
companies and electric generation suppliers.”9 66 Pa. C.S. § 2810(i) (emphasis
added). Because it is a wholesale seller of electricity and does not sell electricity
or related services to end-users, i.e., retail customers, AEPSC contends that it does



       9
         The Competition Act defines an “electric distribution company” as a “public utility
providing facilities for the jurisdictional transmission and distribution of electricity to retail
customers. . . .” 66 Pa. C.S. § 2803; see also Delmarva Power & Light Company v.
Commonwealth, 870 A.2d 901, 902 n.4 (Pa. 2005). The term “electric generation supplier” is
defined as:

               A person or corporation, including municipal corporations which
               choose to provide service outside their municipal limits except to
               the extent provided prior to the effective date of this chapter,
               brokers and marketers, aggregators or any other entities, that sells
               to end-use customers electricity or related services utilizing the
               jurisdictional transmission or distribution facilities of an electric
               distribution company or that purchases, brokers, arranges or
               markets electricity or related services for sale to end-use customers
               utilizing the jurisdictional transmission and distribution facilities of
               an electric distribution company. . . .

66 Pa. C.S. § 2803.




                                                  7
not fall within the definition of an “electric distribution company” or an “electric
generation supplier,” making it not subject to GRT.


             However, by including electric distribution companies and electric
generation suppliers as being subject to the tax, Section 2810(i) of the Competition
Act expanded GRT to those kinds of electric businesses to insure that Section
1101(b) of the Tax Code applied to them, as well as the other entities engaged in
the electric light business already subject to the tax. As our Supreme Court has
explained:

             [I]t is widely accepted that general expressions such as
             ‘including,’ or ‘including but not limited to,’ that precede
             a specific list of included items are to be considered as
             words of enlargement and not limitation. Indeed, such a
             list of specific items is not meant to be exclusive of all
             items other than those specifically named. . . . In sum,
             the presence of such a term as ‘including’ in a definition
             exhibits a legislative intent that the list that follows is not
             an exhaustive list of items that fall within the definition;
             yet, any additional matters purportedly falling within the
             definition, but that are not express, must be similar to
             those listed by the legislature and of the same general
             class or nature.


Department of Environmental Protection v. Cumberland Coal Resources, LP, 102
A.3d 962, 976 (Pa. 2014). The use of the word “include” then is meant to illustrate
that those types of entities were also included within the term “electric light
company,” not the only two types of entities subject to the tax.




                                           8
                                        B.
            AEPSC also contends that it is not subject to GRT because it is not
engaged in the electric light and power business. While Section 1101(b) of the Tax
Code imposes GRT on sales of electric energy by electric light companies that are
“engaged in electric light and power business,” AEPSC argues that Section 2810(j)
of the Competition Act modifies who is subject to GRT to only those entities
engaged in the retail sale of electricity. That provision provides:

            Retail sales of electric generation, transmission,
            distribution or supply of electric energy, dispatching
            services, customer services, competitive transition
            charges, intangible transition charges and universal
            service and energy conservation charges and such other
            retail sales in this Commonwealth the receipts of which,
            if bundled, would have been deemed to be sales of
            electric energy prior to the effective date of this chapter
            shall be deemed sales of electric energy for purposes of
            section 1101 of the Tax Reform Code of 1971. The
            phrases “doing business in this Commonwealth” and
            “engaged in electric light and power business,
            waterpower business and hydroelectric business in this
            Commonwealth,” as such terms are used in section
            1101(b) of the Tax Reform Code of 1971 and in this
            chapter, shall be construed to include the direct or
            indirect engaging in, transacting or conducting of
            activity in this Commonwealth for the purpose of
            establishing or maintaining a market for the sales of
            electric energy and include obtaining a license or
            certification from the commission to supply electric
            energy. Retail sales of generation shall be deemed to
            occur at the meter of the retail consumer.


66 Pa. C.S. § 2810(j) (emphases added). AEPSC argues that to “engage in electric
light and power business” so as to be subject to GRT, an entity must have a license



                                         9
or certification from the PUC to supply energy as a competitive retail electric
supplier.   Because it has never engaged in the retail sale of electricity in
Pennsylvania and it does not have a license from the PUC, AEPSC contends that it
cannot be said to be “engaged in [the] electric light and power business” within the
meaning of the Tax Code, making its receipts not subject to GRT.


             However, whether or not AEPSC is licensed by the PUC as a public
utility is not determinative as to whether it is engaged in the electric light business.
In Solar Turbines, Inc. v. Commonwealth, 816 A.2d 362 (Pa. Cmwlth. 2003), we
noted that the Tax Code “identifies taxpayers by the function they perform, without
regard to whether they are a public utility,” and that Section 1101(b) of the Tax
Code by its plain language “imposes [GRT] upon all entities that are ‘engaged in
electric light and power business’ and receive revenue from ‘the sale of electric
energy.’”    Id. at 365 (emphasis in original) (citing to Hanley and Bird v.
Commonwealth, 590 A.2d 1382 (Pa. Cmwlth. 1991)). Moreover, through sales to
its customers, including LIDA, AEPSC directly conducts activities in the
Commonwealth for the purpose of both establishing and maintaining a market for
the sale of electricity. See 66 Pa. C.S. § 2810(j).


             The Competition Act also did not limit the term “sales of electric
energy” to only “retail sales of electric generation” because it goes on in the first
sentence of Section 2810(j) to expand what is the sale of electricity to include the
transmission, distribution and supply of electricity. Not only is it clear from that
language that the GRT is not limited to just retail sales, if we were to hold
otherwise, then the resale exemption set forth in Section 1101(b)(1) of the Tax



                                          10
Code would be unnecessary because wholesale sales would already be exempt.
Finally, Section 2810(j) of the Competition Act specifically provides that if, prior
to deregulation, electric sales if bundled would have been deemed sales of electric
energy subject to GRT, then those sales, even unbundled, are now deemed sales of
electric energy for purposes of Section 1101 of the Tax Reform Code of 1971. See
66 Pa.C.S. § 2810(j). For all of these reasons, AEPSC is an electric light company
engaged in the electric light and power business and, therefore, subject to GRT.


                                        IV.
                                         A.
             AEPSC argues that even if it is subject to GRT, its gross receipts from
sales to LIDA are exempt. It points to the broadness of Section 1101(b) of the Tax
Code, providing that the resale exemption applies to “gross receipts derived from
the sales for resale of electric energy to persons, partnerships, associations,
corporations or political subdivisions subject to the tax imposed by this subsection
upon gross receipts derived from such resale.” 72 P.S. § 8101(b)(1). By so doing,
AEPSC argues that the General Assembly intended that all sales for resale be
exempt from the GRT. But by its very terms, Section 1101(b)(1) of the Tax Code
did not include all sales for resale as exempt from being included in gross receipts,
only those sales to one of the denominated entities.




                                         11
                                             B.
                If all sales for resale are not exempt, AEPSC then argues that its sales
to LIDA qualify for the resale exemption10 because LIDA is a political subdivision.
In making that argument, AEPSC acknowledges that Section 1991 of the Statutory
Construction Act11 provides definitions of terms that should be used in all statutes,
unless “the context clearly indicates otherwise.” 1 Pa. C.S. § 1991. That provision
defines a political subdivision as “[a]ny county, city, borough, incorporated town,
township, school district, vocational school district and county institution district.”
Id. AEPSC also acknowledges that LIDA does not fall within this definition.12


                However, AEPSC argues, without saying why, that using the
Statutory Construction Act’s definition of the term “political subdivision” would
lead to an illogical result. AEPSC then argues that the term must be defined
according to its common meaning and usage and reasons that, as an industrial
development authority formed under the EDFL, LIDA is “a public instrumentality
of the Commonwealth and a public body corporate and politic” created by a county
“for the purpose of acquiring, holding, constructing, improving, maintaining,
owning, financing and leasing, either in the capacity of lessor or lessee, projects.”


       10
         “[C]laims for exemption from taxation are to be strictly construed.” Commonwealth v.
Erie Metropolitan Transit Authority, 281 A.2d 882, 884 (Pa. 1971) (citations omitted).

       11
            1 Pa. C.S. §§ 1501-1991.

       12
          1 Pa. C.S. § 1991 provides that “[t]he following words and phrases, when used in any
statute finally enacted on or after September 1, 1937, unless the context clearly indicates
otherwise, shall have the meanings given to them in this section:” Both the Tax Code and the
Competition Act were enacted after 1937.




                                             12
Section 6(a) of the EDFL, 73 P.S. § 376(a). Because it carries out those functions,
AEPSC argues that LIDA is a political subdivision as it is “[a] division of a state
that exists primarily to discharge some function of local government.” Black’s
Law Dictionary 1197 (8th ed. 2004). We disagree for several reasons.


             First, it is not illogical to use the Statutory Construction Act definition
of “political subdivision.” It is the definition to be used in all statutes “unless the
context clearly indicates otherwise.” 1 Pa. C.S. § 1991. Nothing in the context of
the Tax Code or Competition Act “clearly indicates otherwise,” so for this reason
alone, the definition of political subdivision contained in the Statutory
Construction Act applies.


             Second, while authorities owe their existence to various units of
government, and their governing boards are appointed by those entities, they are
not considered to be part of the political subdivisions that created them. Nor are
they acting on their creators’ behalf, but carrying out the purpose of the General
Assembly when it authorized the creation of these types of authorities. As a
development authority incorporated under the EDFL, LIDA is “a public
instrumentality of the Commonwealth.” Section 6 of the EDFL, 73 P.S. § 376.
This means that a development authority is a separate and distinct entity from the
entity that created it, and its function is to carry out the purpose set forth in its
enabling act. The EDFL throughout provides that these types of authorities were
created to meet the needs of the people of the Commonwealth. For example,
Section 15 of the EDFL, 73 P.S. § 385, states that:




                                          13
               The effectuation of the authorized purpose of authorities
               …. shall and will be in all respects for the benefit of the
               people of the Commonwealth of Pennsylvania, for the
               increase of their commerce and prosperity, and for the
               improvement of their health and living conditions. . . .


See also Section 2 of the EDFL, 73 P.S. § 372. Because LIDA is not a political
subdivision, AEPSC’s sales for resale to LIDA do not qualify for the resale
exemption.


                                               C.
               AEPSC also argues that the resale exemption only requires that LIDA
be “subject to the tax,” 72 P.S. § 8101(b)(1) (emphasis added), that the Tax Code
does not actually require a reseller to pay GRT in order for the sale to fall within
the exemption. The implication of this argument is that just because an exempt
entity is subject to the tax means that the wholesaler is not required to pay tax on
the receipts from that entity. What this interpretation would mean is that no entity
would pay GRT on that particular sale of electricity. The plain language of this
provision of the Tax Code demonstrates that it was the General Assembly’s
intention that GRT must be paid by the appropriate party, and in no case are both
the seller and reseller excused from payment.13

       13
          As the Commonwealth points out in its brief, section 15 of the EDFL provides that
industrial development authorities shall be free from assessments or taxation on property
acquired or used by them in performing their government functions. 73 P.S. § 385. LIDA has
taken the position that it is not subject to GRT and, therefore, it did not file a 2010 GRT Report
or pay GRT for 2010. It seems evident that taxes should not be imposed on an essential aspect of
LIDA’s governmental duties as an industrial development authority, e.g., providing electricity to
residents of the Business Park. See Erie Metropolitan, 281 A.2d at 884 (holding authority was
exempt from the fuel tax).




                                               14
                                          D.
             Finally, AEPSC contends that in passing the RNR formula as part of
the Competition Act, the General Assembly intended that the restructuring of the
electric industry neither increase nor decrease the revenue created by GRT. Prior
to deregulation, only electric generation was subject to GRT, not delivery of
electricity by a service company such as AEPSC.             AEPSC argues that the
Revenue’s determination that AEPSC is now subject to GRT would result in a
windfall for the Commonwealth, which is expressly prohibited by the RNR.


             This argument demonstrates a fundamental misapprehension of the
RNR and deregulation. The purpose and intent of the RNR formula was to avoid
state revenue losses that would result from the restructuring of the electric industry,
as the Competition Act states:

             (a) General intent of revenue-neutral reconciliation.--It is
             the intention of the General Assembly that the
             restructuring of the electric industry be accomplished in a
             manner that allows Pennsylvania to enjoy the benefits of
             competition, promotes the competitiveness of
             Pennsylvania’s electric utilities and maintains revenue
             neutrality to the Commonwealth. This section is not
             intended to cause a shift in proportional tax obligations
             among customer classes or individual electric distribution
             companies. It is the intention of the General Assembly to
             establish this revenue replacement at a level necessary to
             recoup losses that may result from the restructuring of the
             electric industry and the transition thereto.


66 Pa. C.S. § 2810(a).       See also Spectrum II, 983 A.2d at 646.           Prior to
deregulation, the services that AEPSC now provides to its customers would have



                                          15
been provided by public utilities. Those public utilities were subject to GRT and
paid tax on revenue from those sales. Excusing AEPSC from GRT on its sales to
LIDA then would result in a loss of revenue for the Commonwealth, the exact
situation the RNR intended to prevent. Moreover, as explained above, it is the type
of service and not the provider that determines taxability.


                                              V.
              If it is subject to payment of the GRT, AEPSC then argues that the
Commonwealth is precluded from collecting interest and penalties under the
doctrine of equitable estoppel because AEPSC specifically contacted Revenue for
an opinion on the GRT resale exemption, Mr. Meredith either intentionally or
negligently misrepresented the law, and AEPSC relied upon Mr. Meredith’s
opinion to its detriment. Citing to Transcontinental Gas Pipe Line Corporation v.
Commonwealth, 620 A.2d 614 (Pa. Cmwlth. 1993), AEPSC also argues that the
Commonwealth should not be permitted to collect GRT, penalties14 and interest for
the 2010 fiscal year because AEPSC did not have notice that its sales to LIDA
might not qualify for the resale exemption until 2012, and a change in tax liability
should only be prospectively applied. At the outset, the Commonwealth indicated
that it has already agreed to waive penalty on the unpaid taxes, so only the issue of
payment of interest remains.




       14
        In its brief to this Court, the Commonwealth notes that the Assessment Notice issued to
AEPSC did not assess any penalty against AEPSC on its 2010 GRT liability. The Board’s
September 24, 2013 Order incorrectly noted that penalties were to be recalculated.



                                              16
            We note that “[u]nder Pa. R.A.P. 1571, any issue raised at any level of
the administrative proceedings, and thereafter preserved, is properly before this
Court if set forth in the petition for review.”      Southern Pines Trucking v.
Commonwealth, 42 A.3d 1222, 1228 (Pa. Cmwlth. 2012). While a petition for
review to this Court need only contain a general statement of objections to the
order appealed, we have held a general objection to the tax assessed does not place
the Commonwealth on sufficient notice of specific issues raised. Id. (citing House
of Lloyd v. Commonwealth, 684 A.2d 213 (Pa. Cmwlth. 1996)). Here, AEPSC’s
petition for review does not include the issues of equitable estoppel, interest
abatement or prospective application of the tax. Because these issues were not
properly preserved, they have been waived.


            In any event, even if it had raised the issue of equitable estoppel,
AEPSC cannot prevail on the merits because it did not rely upon Mr. Meredith’s
advice or upon its purportedly exempt status. This was the first year AEPSC’s
sales for resale to LIDA were at issue and Revenue never accepted its resale
exemption claim.     There was no misrepresentation because Mr. Meredith’s
comments specifically concerned AEPSC’s receipts from sales to a municipality,
not sales to an authority created pursuant to the EDFL such as LIDA. Even if his
comments could somehow be construed as misleading, it is a “fundamental legal
principle that a State or other sovereignty cannot be estopped by any acts or
conduct of its officers or agents in the performance of a governmental function.
No errors or misinformation of officers or agents can estop the government from
collecting taxes legally due.” DS Waters of America, Inc. v. Commonwealth, 150




                                        17
A.3d 583, 592 (Pa. Cmwlth. 2016) (quoting Commonwealth v. Western Maryland
Rail Road Company, 105 A.2d 336, 340 (Pa. 1954)).


             Finally, AEPSC misinterprets the holding in Transcontinental Gas
and what is meant by the prospective application of tax liability. In that case, the
taxpayer relied upon the resale exemption to the utilities GRT for several years and
Revenue accepted its returns. Revenue then conducted an audit of taxpayer’s 1984
report and disallowed the resale exemption to certain gross receipts resulting in an
assessment of tax. On appeal, taxpayer argued that any change in its tax liability
should apply only on a prospective basis. We agreed, holding “the gross receipts
tax liability w[ould] be applied only from 1984 onward, the date [taxpayer] had
notice of the possibility that it was not exempt from the utilities gross receipts tax.”
Transcontinental Gas, 620 A.2d at 621 (emphasis in original). This is similar to
what occurred in the present case, as AEPSC first had notice of potential tax
liability when Revenue disallowed the exemption based on AEPSC’s 2010 GRT
Report and assessed GRT on AEPSC’s receipts from sales to LIDA. Revenue is
not attempting to impose GRT on AEPSC’s sales for previous tax years and it does
not matter that the assessment was not issued until 2012. See Valentine Company
v. Commonwealth, 973 A.2d 1101 (Pa. Cmwlth. 2009). Because the assessment
gave AEPSC notice that it might not qualify for the resale exemption for the
contested year only, the assessment is not retroactive. See Abbotts Dairies, Inc. v.
Philadelphia, 258 A.2d 634 (Pa. 1969); Valentine Company; Transcontinental
Gas.




                                          18
             Accordingly, the order of the Board is affirmed with the exception of
the portion of the order regarding penalties.




                                                DAN PELLEGRINI, Senior Judge




                                         19
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA


American Electric Power Service :
Corporation,                    :
                        Petitioner
                                :
                                :
         v.                     : No. 861 F.R. 2013
                                :
Commonwealth of Pennsylvania,   :
                     Respondent :




                                     ORDER


            AND NOW, this 4th day of May, 2017, the order of the Board of
Finance and Revenue (Board) in the above-captioned matter is affirmed with the
exception that the portion of the Board’s order regarding penalties is vacated. The
parties have 30 days from the entry of this order in which to file exceptions. Pa.
R.A.P. 1571(i).




                                            DAN PELLEGRINI, Senior Judge
