[J-99-2018]

IN THE SUPREME COURT OF PENNSYLVANIA

MIDDLE DISTRICT

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

S & H TRANSPORT, INC.,

Appellant

v.

CITY OF YORK,

Appellee

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No. 8 MAP 2018

Appeal from the Order of the 

Commonwealth Court entered October 

5, 2017 at No. 242 CD 2017 reversing 

the Order of the Court of Common 

Pleas of York County, Civil Division, 

dated February 7, 2017, entered 

February 9, 2017 at No. 2012-SU4143-54

ARGUED: December 5, 2018

OPINION

JUSTICE TODD DECIDED: July 17, 2019

In this appeal, we are asked to consider whether the Business Privilege and 

Mercantile Tax (“BPT”) imposed by Appellee the City of York (“City”), must be paid by 

Appellant, S & H Transport, Inc. (“S & H”), a freight broker, on the total yearly amount of 

money S & H receives from its customers for arranging shipping of commercial goods 

with freight carriers on their behalf, where, after deducting its commission, S & H remits 

the remaining money to the freight carriers as payment of their shipping fees. After careful 

review, we find that the amount of money S & H collects and passes on to freight carriers

for their fees is excluded from taxation under the City’s BPT. We therefore reverse the 

order of the Commonwealth Court. 
[J-99-2018] - 2

I. Background and Procedural History

S & H is a freight brokerage company which arranges freight delivery for sellers of 

commercial goods, via a common carrier.

1 Freight brokers do not directly ship or transport

freight; rather, they function as intermediaries which facilitate the shipment of goods. 

Reiter v. Cooper, 507 U.S. 258, 261 (1993); cf. 49 U.S.C. § 13102(2) (defining “[b]roker”

as “a person, other than a motor carrier or an employee or agent of a motor carrier, that 

as a principal or agent sells, offers for sale, negotiates for, or holds itself out by solicitation, 

advertisement, or otherwise as selling, providing, or arranging for, transportation by motor 

carrier for compensation.”). They are the “connecting link between shippers and carriers, 

uniting shippers who have cargo to deliver with carriers who have available motor 

transportation.” Jeffrey S. Kinsler, Motor Freight Brokers: A Tale of Federal Regulatory 

Pandemonium, 14 Northwestern Journal of International Law and Business 289 (1994).

As explained by the Commonwealth Court in its opinion in this matter, freight 

brokerage is a process in which a freight broker such as S & H receives an order from a 

customer (“seller”) who desires to ship commercial goods to a buyer. The broker then 

contracts with a common carrier to perform this task. Once the goods have been 

delivered to the buyer, the broker will invoice the seller for the amount of the shipping fee 

charged by the common carrier, as well as its broker’s commission. When the seller pays 

the amount of the invoice to the broker, the broker remits the shipping fee to the common 

carrier, while retaining its commission. S & H Transport, Inc. v. City of York, 174 A.3d 

679, 680 (Pa. Cmwlth. 2017).

 

1

 A common carrier is “[a] commercial enterprise that holds itself out to the public as 

offering to transport freight or passengers for a fee . . . [and] generally [is] required by law 

to transport freight or passengers without refusal if the approved fare or charge is paid.” 

Black's Law Dictionary 256 (10th ed. 2014). 
[J-99-2018] - 3

S & H is headquartered in York, Pennsylvania, and, thus, like all businesses within 

that City, it is obligated to pay that City’s BPT, which was created by an ordinance passed 

by York City Council, pursuant to the authorization of the Local Tax Enabling Act 

(“LTEA”).

2

Briefly, by way of background, the LTEA is the means by which the General 

Assembly has conferred on local municipalities the authority to impose a broad range of 

taxes other than just real estate taxes, which were, historically, the means by which their 

governments derived revenue to provide necessary public services to their residents. 

Joseph C. Bright, Summary of Pennsylvania Jurisprudence, Taxation § 17:1 (2018). As 

a general matter, the LTEA authorized local municipalities to enact taxes on tangible 

objects or activities which the Commonwealth does not itself tax, subject to certain 

legislatively specified restrictions. After the LTEA became law in 1966, various

municipalities utilized the authority granted to them by this enactment to levy taxes on the 

gross receipts of businesses within their jurisdiction for “the privilege of doing business.” 

53 P.S. § 6924.301.1(a.1)(1). As our Court has explained, the LTEA allowed such local 

taxation “as a quid pro quo for businesses advantaging themselves of local governmental 

benefits, including the availability of police, fire, and other services.” V.L. Rendina, 

Incorporated v. City of Harrisburg, 938 A.2d 988, 995 (Pa. 2007).3

 

2

 Act of December 31, 1965, P.L. 1257, No. 511, 53 P.S. §§ 6924.101 to 6924.901. 

3

 In 1988, as part of a broad initiative to fundamentally restructure the manner in which 

municipalities collect local taxes, the legislature enacted the “Local Tax Reform Act,” Act 

of December 13, 1988, P.L. 1121, No. 145. Section 533 of that Act, 72 P.S. § 4750.533, 

prohibited municipalities from enacting new ordinances levying business privilege taxes 

on the gross receipts of businesses after November 30, 1988; however, it preserved the 

business privilege taxes which municipalities had already enacted, but capped their rates 

to those which were in effect on that date. The majority of the provisions of the Local Tax 

Reform Act were set to take effect upon the passage of a constitutional amendment to 

implement it, but the voters of the Commonwealth rejected this amendment in the primary 

election of May 16, 1989. Subsequently, the General Assembly repealed the majority of 

the Local Tax Reform Act, except for Section 533 and a few other provisions.
[J-99-2018] - 4

Although municipalities were authorized to impose such “business privilege” taxes, 

the General Assembly also excluded from this taxing power certain enumerated objects 

or activities. See generally 53 P.S. § 6924.301.1. Pertinent to the issues we are 

considering in the case at bar, municipalities are forbidden “[t]o levy, assess and collect 

a mercantile or business privilege tax on gross receipts or part thereof which are: . . . (ii) 

charges advanced by a seller for freight, delivery or other transportation for the purchaser 

in accordance with the terms of a contract of sale.” Id. § 6924.301.1(f)(12)(ii).

As noted, York enacted its BPT via ordinance (“BPT Ordinance”), which provides, 

in pertinent part:

LEVY; RATE; EXEMPTIONS; BUSINESS VOLUME.

There is hereby levied . . . a tax for general revenue purposes 

on the privilege of doing business as herein defined in the 

City.

BPT Ordinance, § 343.02. The tax is imposed on “the whole or gross volume of business 

transacted within the territorial limits of the City.” Id. § 343.02(a). The BPT Ordinance 

further defines these terms in the following fashion: 

(a) “Business” means any activity carried on or exercised for 

gain or profit in the City, including but not limited to, the sale 

of merchandise or other tangible personalty or the 

performance of services. As to those taxpayers having a 

place of business within the City, “business” includes all 

activities carried on within the City and those carried on 

outside the City attributable to the place of business within the 

City.

* * *

(f) “Gross volume of business” means the money or money’s 

worth received by any vendor in, or by reason of, the sale of 

goods, wares, merchandise, or services rendered. 

(g) “Service” means any act or instance of helping or 

benefitting another for consideration.

Id. § 343.01. 
[J-99-2018] - 5

In 2004, pursuant to the BPT Ordinance, the City promulgated an interpretative 

regulation (“BPT Regulation”) to “provide a formal interpretation” of the BPT Ordinance, 

and to establish criteria for its administration. See BPT Ordinance, Introduction. The 

section of the BPT Regulation applicable to the instant matter defines the “gross receipts”

of a business subject to taxation as:

Cash, credits or property of any kind received in exchange for 

merchandise sold or services performed or other business 

activity conducted within or attributable to the City, without 

deduction there from [sic] on account for costs of property or 

merchandise sold; materials, labor or services furnished or 

used; interest or discount paid; or any other business related 

expense, as permitted by regulation.

BPT Regulation § 201. The Regulation further describes “sale” as: “[t]he passing of 

ownership from a seller to a buyer for a price, or for a consideration,” and “service” to 

mean “any act or instance of helping or benefiting another for consideration.” Id. Of 

particular relevance here, the Regulation also excludes from taxation of a business’s 

gross receipts any “[f]reight delivery or transportation charges paid by the seller for the 

purchaser.” Id. § 206(j)(2).4

In 2011, an audit of S & H’s business privilege tax returns conducted by the City 

revealed that, for the tax years 2007-2011, S & H claimed that, under the “public utility 

service” exemption of the LTEA,

5

it was entitled to deduct from its gross receipts the 

shipping fees it collected. The City took the position that S & H was not entitled to claim 

this exemption and, consequently, issued a tax assessment against S & H in the amount 

of $118,346.88, plus interest and penalties. S & H appealed to the Court of Common 

Pleas of York County, arguing that it was entitled to claim this exemption, and raising 

 

4 Although the BPT Ordinance contains the same definition of “service” as does the BPT 

Regulation, it does not define “sale”.

5

 53 P.S. § 6924.301.1(f)(2).
[J-99-2018] - 6

other arguments as to why it was not subject to the BPT. The trial court concluded that 

S & H qualified for the “public utility service” exemption of the LTEA, and vacated the

assessment order on that basis.

6

 

The City next appealed to the Commonwealth Court, which reversed the trial court 

based on its finding that S & H was ineligible for the exemption because it was not 

rendering a public utility service through its business activities. S & H Transport, Inc. v. 

City of York, 102 A.3d 599 (Pa. Cmwlth. 2014). S & H further appealed that decision to 

our Court, and we unanimously upheld the Commonwealth Court’s decision. S & H 

Transport, Inc. v. City of York, 140 A.3d 1 (Pa. 2016). However, we remanded the matter 

to the trial court for it to rule on S & H’s other challenges to the imposition of the BPT,

which it had not previously addressed.

One of these challenges, which is the subject of the present appeal, was S & H’s 

claim that the City improperly included in its calculation of S & H’s gross receipts the 

amount of shipping fees it was paid by sellers utilizing its services, which it then remitted 

to the carriers it hired to deliver the sellers’ products, in addition to the commissions it 

earned for arranging the transactions. S & H maintained that it was only responsible for 

paying the gross receipts tax on the portion of the total sum paid to it by the seller of the 

products that S & H retained as its commission. The City, by contrast, contended that S 

& H was a middleman which arranged transportation for sellers of goods and, as such, 

all money it received as a result of performing this service was taxable as gross receipts,

regardless of the fact that S & H passed the shipping fees it collected on to the carrier. 

 

6

 The Honorable John W. Thompson adjudicated this matter before his retirement from 

the Court of Common Pleas of York County. 
[J-99-2018] - 7

The trial court ruled in favor of S & H.7 It interpreted the BPT Ordinance as applying 

solely to the gross revenue earned by S & H for acting as an agent of the seller — its 

commissions. The court viewed S & H as merely a “conduit” of the shipping fees charged 

by the carrier and paid by the seller. Trial Court Opinion, 2/9/17, at 6. The court 

analogized this arrangement to one where a real estate closing company acts as a conduit

of monies related to the sale of the property, like mortgage proceeds and down payment 

funds, which it merely passes through to other parties to the sale, but does not itself retain. 

The court considered it “patently unfair” to impose the BPT on such monies which merely 

passed through S & H’s accounts. Id.

The trial court also noted that the BPT Regulation “specifically provides for delivery 

or transportation charges paid by a seller for a buyer to be excluded.” Id. In the court’s 

view, it was immaterial for purposes of this exclusion whether the seller paid the charges 

directly or “by an agent of the seller, i.e., S & H, acting as a conduit for the seller.” Id. 

The City appealed to the Commonwealth Court, which reversed in a unanimous 

published opinion authored by Senior Judge Dante Pellegrini.8 S & H Transport, Inc. v. 

City of York, 174 A.3d 679 (Pa. Cmwlth. 2017). First, the Commonwealth Court 

emphasized that it has repeatedly held that fairness is not the standard utilized in 

interpreting tax statutes; rather, only the legislative intent to include or exclude the 

proceeds of particular business activities from a BPT is relevant. Thus, the 

Commonwealth Court found that the trial court erred in evaluating the tax for fairness or

reasonableness. 

 

7

 Due to Judge Thompson’s retirement, the matter was reassigned to Judge Stephen P. 

Linebaugh. 

8

 Judge Pellegrini was joined by Judges Kevin Brobson and Patricia McCullough. 
[J-99-2018] - 8

In order to ascertain the legislative intent regarding the taxability of the monies at 

issue under the BPT, the Commonwealth Court examined what it considered to be the 

governing provisions of the Ordinance and the Regulation. The court observed that,

under the BPT Ordinance, the tax is levied on all “business” occurring within the City, 

including “any activity carried on, or exercised for gain or profit, in the City, including . . . 

the provision of services,” and, thus, encompassed S & H’s freight brokerage services. 

Id. at 682 (quoting BPT Ordinance § 343.01(a)). 

Next, the Commonwealth Court noted that the BPT is assessed on the “gross 

volume of business,” which is further defined by the BPT Ordinance as “the money or 

money’s worth received by any vendor in, or by reason of, the sale of goods, wares, 

merchandise, or services rendered.” Id. (quoting BPT Ordinance § 343.01(f)). The court 

found that “[t]his broad language indicates that the City intended to impose the BPT on 

all gross receipts attributable to corporations such as S & H conducting business within 

the City, not just to gross profits as was held by the trial court.” Id. (emphasis original).

The Commonwealth Court further determined that the shipping fees received by 

S & H were not excludable under the BPT Regulation’s exclusion for “[f]reight delivery or 

transportation charges paid by the seller for the purchaser.” BPT Regulation § 206(j)(2).

Likewise, the court concluded that the shipping fees were not barred from taxation under 

Section 6924.301.1(f)(12) of the LTEA, which, as noted above, prohibits local 

municipalities like the City from taxing gross receipts comprised of “charges advanced by 

a seller for freight, delivery or other transportation for the purchaser in accordance with 

the terms of a contract of sale.” S & H Transport, 174 A.3d at 683 (quoting 53 P.S. 

§ 6924.301.1(f)(12)). 

With respect to both the BPT Regulation and the LTEA, the court observed that, in 

the transactions at issue, S & H, acting in its capacity as a broker, was neither the seller 
[J-99-2018] - 9

nor purchaser of the goods which were the subject of the transactions, nor did it transport 

those goods; hence, the court reasoned that neither the plain text of the LTEA, nor the 

BPT Regulation, permitted S & H to exclude the shipping fees it received. Additionally, 

the court found no legal authority to support the trial court’s treatment of an agent of the 

seller as if it were the seller, in order to allow the agent to claim the seller’s tax exemption. 

Lastly, the court observed that it had previously rejected a similar argument that 

money which merely passed through a business entity was exempt from a business 

privilege tax because the business received no profit on it. Id. at 683 (citing Wightman v. 

City of Pittsburgh, 430 A.2d 717, 718 (Pa. Cmwlth 1981) (rejecting nursing home’s 

argument that it was exempt from paying Pittsburgh’s business privilege tax on Medicaid

and Medicare monies, which it passed through in the form of payment to private 

contractors that the nursing home hired to perform services, on the basis that the BPT is 

imposed “on gross receipts without regard to related expenses or the ultimate profitability 

of the taxpayer’s enterprise”)). 

S & H filed a petition for allowance of appeal, which our Court granted as to the 

following issues, as set forth by S & H:

1. Whether a freight broker is permitted to exclude freight 

delivery charges, to which the broker has no right to retain but 

rather utilizes solely for the purposes of purchasing 

transportation services for its customers, from its taxable 

gross receipts under the City of York’s Business Privilege and 

Mercantile Tax Ordinance?

2. Whether a municipality may rely on more narrowly tailored

exclusionary language contained in the Local Tax Enabling 

Act, 53 P.S. 5924.101 et seq., to interpret and enforce a more 

broadly worded exclusion contained in the municipalit[y’s]

ordinances.

S & H Transport, Inc. v. City of York, 182 A.3d 994 (Pa. 2018) (order).

II. Arguments of the Parties
[J-99-2018] - 10

S & H first claims that the LTEA and the BPT Regulation create what it refers to as 

“freight delivery exclusions,” and, as tax exclusions, they must be construed against York

as the taxing body. Accordingly, S & H argues that the Commonwealth Court erred in 

construing these provisions against it as the taxpayer. 

In this regard, S & H notes that, under federal laws which govern the interstate 

shipping of goods, no transportation charges may be levied until delivery of the goods is 

confirmed through issuance of a bill of lading9 by the carrier. S & H asserts that, as a 

broker, it is required by federal law to retain the bill of lading, and document that it 

collected the shipping charges from the shipper and paid them to the carrier. According 

to S & H, the Pennsylvania Public Utility Commission also requires that charges collected 

by a broker for shipping be paid in full to the carrier without deduction for its fees, and that 

it must post a bond to ensure such payment. Thus, in S & H’s view, these laws and 

regulations establish that it has no legal right to possess money paid by a shipper to it for 

the delivery of the shipper’s goods, so these monies do not qualify as a “receipt” under 

either the LTEA or the BPT Ordinance. 

With respect to the BPT Regulation, S & H argues that the freight delivery 

exclusion, as set forth in the Regulation, applies broadly to all “freight delivery or 

transportation charges paid by the seller for the purchaser,” and it does not limit the class 

of individuals who can be considered sellers to only those who are sellers of goods, as 

the Commonwealth Court found. S & H Brief at 11 (quoting BPT Regulation § 206(j)(2)). 

Indeed, S & H points out that the Federal Motor Carrier Act defines a “freight broker,”

such as itself, as a person who “sells, offers for sale, negotiates for, or holds itself out . . 

. as selling . . . transportation by motor carrier for compensation,” id. (quoting 49 U.S.C. 

 

9 A bill of lading is “the receipt a common carrier gives to a shipper for goods given to the 

carrier for transportation.” Jack P. Friedman, Barron’s Dictionary of Business Terms 52 

(2d ed. 1994).
[J-99-2018] - 11

§ 13102), so it, as a broker, can be considered a seller for purposes of this exclusion. 

S & H asserts that the BPT Ordinance itself indicates that the tax can be levied on the 

monetary value of services rendered, so, from its perspective, it is engaged in the type of 

activity — furnishing a service — which makes it subject to the tax, but also eligible for 

this exclusion. Id. at 12 (quoting BPT Ordinance § 343.02(a)(1)).10

S & H contends that, because the plain language of the BPT Regulation does not 

limit the class of sales covered by the exclusion to only the sale of goods, in order to 

justify its interpretation of the Regulation, the Commonwealth Court improperly relied on

the narrower exclusionary language in Section 6924.301.1(12) of the LTEA, which refers 

only to contracts for the sale of goods. Such a construction, S & H argues, is at odds with 

the principle that these types of enactments should be construed against the taxing 

authority. 

The City responds by arguing that, in order for the freight delivery exclusion 

contained in the BPT Regulation to apply, “[a]s is the case with the LTEA . . . the entity 

claiming the exclusion must be a seller who is paying the transportation charges for the 

purchaser.” City Brief at 3. The City offers as an example a situation where a 

manufacturer/seller of a product agrees to pay the upfront shipping costs to a purchaser

in order for the product to be delivered. Thereafter, once delivery of the product is 

complete, the seller bills the purchaser for the product plus the shipping costs. In the 

City’s view, the purpose of the exclusion is to ensure that the shipping costs reimbursed

to the seller are not included in the seller’s gross receipts since they essentially represent 

a loan. The City asserts that S & H is not similarly situated. 

 

10 S & H contends that, if the Commonwealth Court’s interpretation is left to stand, it would 

have federal constitutional ramifications. However, as S & H acknowledges, we did not 

accept for review any issue concerning whether the City’s BPT tax is unfairly apportioned 

such that it violates the United States Constitution. Consequently, we will not further 

address this portion of S & H’s argument. 
[J-99-2018] - 12

In furtherance of its argument that the BPT Regulation does not permit the 

exclusion of these shipping fees, in that they were not sales of commercial goods, the 

City notes that the terms “sales” and “services” are both uniquely defined in the BPT 

Ordinance as two different types of activities which are each individually subject to 

taxation — i.e., sales of tangible things, and services performed. Id. at 5 (citing BPT

Ordinance § 343.01(a), (g)). It notes that the BPT Ordinance maintains this dichotomy 

between “sales” and “services” in the definition of “gross volume of business,” which the 

BPT Ordinance defines as “the money or money’s worth received by any vendor in, or by 

reason of, the sale of goods, wares, merchandise, or services rendered.” Id. (quoting 

BPT Ordinance § 343.01(f)). According to the City, this distinct treatment shows that 

whenever “sale” is referred to elsewhere in the Regulation, it must be understood to mean

the transfer of goods for consideration. The City adds that, had it wished to treat sales 

as encompassing the sale of services as well as goods, it could easily have said so and 

would not have gone through the bother of defining the two terms separately. 

Moreover, the City asserts that S & H cannot be considered a “seller” under the 

BPT Regulation, given that its brokerage business procures services, but sells no goods. 

As the City highlights, the term “sale” is specifically defined in the Regulation as “the 

passing of ownership from a seller to a buyer for a price,” which contemplates the idea 

that there must be transfer of title to a tangible object in order for the transferor to be 

deemed a “seller” under the freight delivery exclusion. Id. at 8 (quoting BPT Regulation

§ 201). The City proffers that this is also consistent with how Black’s Law Dictionary 

defines the term “seller,” as “someone who sells or contracts to sell goods; a vendor, UCC 

§2-103(1)(d),” or “the transferor of property in a contract of sale.” Id. (quoting Black’s Law 

Dictionary (10th ed. 2014)). By contrast, the term “[s]ervice” is defined in the Regulation
[J-99-2018] - 13

as “any act or instance of helping or benefiting another for consideration,” id. (quoting 

BPT Regulation § 201), which describes S & H’s business activity. 

Additionally, and in answer to S & H’s assertions, the City argues the definition of 

“freight broker” as that term is used in the Federal Motor Carrier Act has no applicability 

here, as the term “seller” is not ambiguous, nor is it a “term of art” which has acquired 

unique meaning, and, thus, resorting to technical definitions from unrelated statutes is 

unnecessary and unhelpful. Moreover, the City points out, even if the term “seller” could 

include the sale of services, here, it is the common carrier that actually sells the shipping 

services, not a broker like S & H.

To S & H’s broader argument, the City notes that there is no express provision in 

the BPT Ordinance excluding so-called “conduit payments” received by a business and 

forwarded to a third party from the tax. City Brief at 11. The City reminds that this tax is 

a tax on the privilege of doing business in a particular community and is imposed on 

“every dollar of the whole or gross volume of business transacted within the territorial 

limits of the city.” Id. (quoting BPT Ordinance § 343.02(a)) (emphasis original). 

Consequently, the City maintains that the only relevant and dispositive inquiry is whether 

a business receives money from a particular activity, not whether it profits from doing so. 

Lastly, the City denies that the Commonwealth Court improperly rested its

interpretation of the freight delivery exclusion afforded by the Regulation on Section 

6924.301.1(f)(12) of the LTEA, inasmuch as that tribunal never discussed the contract of 

sale language contained in that section in arriving at its conclusion that, under the BPT 

Regulation, a business must be a seller of goods to qualify for this exclusion. Rather, the 
[J-99-2018] - 14

City contends, the Commonwealth Court interpreted the BPT Regulation according to the 

plain and common meaning of its words.11

III. Analysis

The issues presented for our consideration involve the interpretation of statutes 

and ordinances, which are legislative enactments, and the interpretation of an 

administrative regulation promulgated to implement a municipal ordinance. These are all 

questions of law of which our standard of review is de novo and our scope of review is 

plenary. Verizon v. Commonwealth, 127 A.3d 745, 753 n.12 (Pa. 2015); Popowsky v.

Public Utility Commission, 910 A.2d 38, 48 (Pa. 2006). In interpreting both statutes and 

ordinances, we follow the principles set forth in the Statutory Construction Act (“SCA”), 1 

Pa.C.S. §§ 1921-39. Williams v. City of Philadelphia, 188 A.3d 421, 428 (Pa. 2018); 

Council of Middletown Twp., Delaware County v. Benham, 523 A.2d 311, 315 (Pa. 1987). 

 

11

 The City of Allentown has filed an amicus brief in support of the City of York, noting 

that it has a similar ordinance, and that multiple business entities located in Allentown are 

seeking to utilize the exclusions furnished by the LTEA; hence, it seeks clarity from our 

Court regarding this question. Contrary to the City’s position, it concludes the 

Commonwealth Court’s decision relied on Section 6924.301.1(f)(12) of the LTEA. 

Allentown contends that the Commonwealth Court properly looked to the LTEA because 

the Regulation was at odds with the LTEA, and, under the doctrine that an administrative 

rule cannot contravene a legislative enactment, the LTEA takes precedence. Thus, 

Allentown reasons that, because the term “contract of sale,” as used in Section 

6924.301.19(f)(12) of the LTEA, refers to purchased goods or merchandise, shipping 

costs should be viewed as only “incidental” costs attendant to a retail transaction involving 

goods or merchandise which must be shipped, akin to the collection of sales taxes. 

Amicus Brief at 7-8. Allentown notes, however, that S & H does not actually sell anything 

which requires shipping, nor is it a common carrier. Allentown points out that the fact that 

S & H is required to collect the shipping fees under federal law establishes that doing so

is part of its normal business activities, and, hence, like all other business activities it is 

subject to the tax. 

Allentown also proffers a novel argument that the freight delivery exclusion renders 

the LTEA violative of the Uniformity Clause of our state charter. That argument, however,

is beyond the scope of our allocatur grant. 
[J-99-2018] - 15

Likewise, as a general matter, we employ the interpretative principles of the SCA to 

construe a regulation implementing a legislative enactment. Freedom Medical Supply v. 

State Farm Fire and Casualty Company, 131 A.3d 977, 984 (Pa. 2016); Slippery Rock 

Area School District v. Pennsylvania Cyber Charter School, 31 A.3d 657, 667 (Pa. 2011).

The primary goal of this interpretive process is “to ascertain and effectuate the 

intention” of the governmental body enacting a statute or ordinance, or promulgating a 

regulation. 1 Pa.C.S. § 1921; Snyder Brothers, Inc. v. PUC, 198 A.3d 1056, 1071 (Pa. 

2018); Council of Middletown Township, 523 A.2d at 315; Slippery Rock Area School 

District, 31 A.3d 663. Thus, we will interpret the terms of a statute, ordinance, or 

regulation in accordance with their plain meaning, unless those enactments are 

ambiguous. Williams, 188 A.3d at 429; Council of Middletown Township, 523 A.2d at 

315; Pelton v. Commonwealth Department of Welfare, 523 A.2d 1104, 1108 n.3 (Pa.

1987). In situations where the language of the statute, ordinance, or regulation is 

ambiguous, the additional factors enumerated in Section 1921(c) of the SCA may be 

employed to ascertain the meaning of its provisions. 

Whenever a tax enactment is found to be ambiguous, the SCA provides special 

rules of construction. See 1 Pa.C.S. § 1928(b)(3) (requiring strict construction of 

“[p]rovisions imposing taxes”); id. § 1928(b)(5) (mandating strict construction of

“provisions exempting persons and property from taxation”). However, these rules of 

strict construction will be employed only if all other efforts at interpreting the enactment

using the tools of statutory construction enumerated in Section 1921(c) “yield no definitive 

conclusion.” Snyder Brothers Inc., 198 A.3d at 1073 n.20 (quoting Dechert L.L.P. v. 

Commonwealth, 998 A.2d 575, 584 n.8 (Pa. 2010)). 

As a general matter, an enactment which imposes a tax is strictly construed in 

favor of the taxpayer against the taxing body. Greenwood Gaming v. Commonwealth 
[J-99-2018] - 16

Department of Revenue, 90 A.3d 699, 711 (Pa. 2014). Likewise, a provision of a tax 

enactment that excludes certain property, income, or activities from being subject to the 

tax is also to be strictly construed in favor of the taxpayer and against the taxing body. 

AMP Incorporated v. Commonwealth, 852 A.2d 1161, 1167 (Pa. 2004). 

In our Commonwealth, the foundation of a municipality’s authority to levy a tax,

and the permissible scope of that tax, is based on the grant of such power by the General 

Assembly:

Absent a grant or a delegation of the power to tax from the 

General Assembly, no municipality . . . has [a]ny power or 

authority to levy, assess or collect taxes. To determine 

whether a municipality possesses the power to tax and, if so, 

the extent of such power, recourse must be had to the acts of 

the General Assembly.

Mastrangelo v. Buckley, 250 A.2d 447, 452–53 (Pa. 1969). Hence, because the City’s

authority to subject particular business activities to its BPT is conferred by the LTEA, and 

concomitantly circumscribed by any restrictions contained therein, our analysis 

necessarily begins with a consideration of whether the controlling provision of the LTEA, 

Section 6924.301.1(f)(12), prohibits the City from imposing the BPT on the shipping fees 

S & H collects. The City’s authority to impose its BPT on these monies cannot, as the 

City has argued, be determined by solely examining its own BPT Ordinance or

Regulation, inasmuch as they are subordinate to the LTEA.

As set forth above, Section 6924.301.1(f)(12)(ii) of the LTEA explicitly forbids a 

municipality such as the City from taxing “charges advanced by a seller for freight, delivery 

or other transportation for the purchaser in accordance with the terms of a contract of 

sale.” 53 P.S. § 6924.301.1(f)(12)(ii). Rejecting S & H’s argument to the contrary, the 

Commonwealth Court found that this prohibition did not apply, inasmuch as S & H was 

“neither the seller nor the purchaser in the transactions at issue but merely a broker.” 

S & H Transport, 174 A.3d at 683. We discern no error in this conclusion, given that there 
[J-99-2018] - 17

was no “contract of sale” between S & H and a buyer of goods under which S & H 

advanced the costs of shipping such commodities to the buyer. Although the term 

“contract of sale” is not defined in the LTEA, it is well understood in the context of 

commercial transactions to mean a contract for the sale of goods. See, e.g., 13 Pa.C.S.

§ 2106 (defining “[c]ontract for sale,” for purposes of the Pennsylvania Uniform 

Commercial Code, as including “both a present sale of goods and a contract to sell goods 

at a future time.”). As the Commonwealth Court found, and as S & H admits, it is not a 

seller of goods, nor does it ship any goods itself; rather, it contracts with common carriers 

to perform that task, and there is no record evidence to show that it, at any time, advanced 

monies as part of these transactions. Consequently, Section 6924.301.1(f)(12)(ii) of the 

LTEA did not bar the City from imposing its BPT on the monies S & H received from its 

brokered shipping arrangements.

This does not, however, end our inquiry. While all local taxing ordinances must 

comport with the restrictions imposed by the LTEA, there are no provisions in the LTEA 

which mandate that a local municipality adopt a specific kind of tax, nor does the LTEA

limit the exclusions a municipality may afford taxpayers if it elects to adopt such a tax. 

Thus, we must consider, as did the Commonwealth Court, whether the terms of the City’s 

BPT Regulation excluded the shipping fees S & H collected from the gross receipts tax. 

First, we reject S & H’s argument that the shipping fees it collected and then 

remitted to the carrier were not “gross receipts” within the meaning of that term as it is 

used in the Regulation. Section 201 of the BPT Regulation defines “gross receipts” in 

relevant part to mean “[c]ash . . . received in exchange for . . . services performed or other 

business activity conducted within or attributable to the City, without deduction there from 

[sic] on account for costs of property or merchandise sold; materials, labor or services 

furnished or used; interest or discount paid; or any other business related expense, as 
[J-99-2018] - 18

permitted by regulation.” BPT Regulation § 201. The BPT Regulation further defines 

“business” as “any activity carried on or exercised for gain or profit in the City, including 

but not limited to, the sale of merchandise or other tangible personalty or the performance 

of services.” Id. Finally, “service” is defined in the BPT Regulation as “any act or instance 

of helping or benefitting another for consideration.” Id. 

The record in this matter supports the Commonwealth Court’s conclusion that 

S & H was carrying on a business activity within the City, whereby it provided a service 

to its customers of arranging shipping of their goods, and that it did so for consideration 

— namely, payment in exchange for the performance of those services, albeit those 

payments included both the cost of shipping and its commission. Therefore, the monies 

paid to S & H by its customers constituted taxable gross receipts within the meaning of 

Section 201 of the BPT Regulation and was subject to assessment of the tax.

However, with respect to the applicability of the “freight delivery exclusion” afforded 

by Section 206(j)(2) of the BPT Regulation, we conclude S & H must prevail. This section 

excludes from the BPT “gross receipts which constitute . . . [f]reight delivery or 

transportation charges paid by the seller for the purchaser.” BPT Regulation § 206(j)(2)

(emphasis added). A comparison of the plain terms of BPT Regulation § 206(j)(2) and 

Section 6924.301.1(f)(12)(ii) of the LTEA, indicates that the class of gross receipts 

excluded from taxation by the BPT Regulation is broader than that excluded by the LTEA. 

The BPT Regulation excludes all freight delivery charges “paid” by a seller for the 

purchaser, whereas the LTEA specifically restricts the application of the exclusion to only 

those shipping costs “advanced” by a seller to a purchaser pursuant to the terms of a 

contract of sale. Thus, the BPT Regulation allows exclusion of all shipping costs paid by 

a seller for a purchaser at any time, while the LTEA exclusion requires that a seller 
[J-99-2018] - 19

advance the costs of shipping to a purchaser according to the provisions of a contract of 

sale, which means that those costs be paid prior to the shipping taking place.12

We acknowledge the credibility of the City’s argument, which is endorsed by the 

dissent, see Dissenting Opinion (Dougherty, J.), that the BPT Regulation’s separate 

definition of sales and services, and its treatment of the two activities disjunctively in its 

definition of “gross volume of business,” see BPT Regulation § 201, indicates that, for 

purposes of the BPT Regulation, the two terms were intended to describe separate 

activities — the selling of goods and the provision of services. Thus, it is plausible that 

the term “seller” in Section 206(j)(2) of the BPT Regulation could be read as referring only 

to a seller of goods; however, critically, this restrictive definition is not the only reasonable

interpretation of this exclusion.

S & H’s argument that the term “seller” as used in Section 206(j)(2) could be read 

broadly enough to encompass its core business activities — the selling of shipping 

services — is equally reasonable. Significantly, though the BPT Regulation initially

defines sales and services separately, nothing in the plain language of the exclusion 

created by Section 206(j) limits the class of sellers entitled to claim the exclusion to only 

those businesses which sell physical goods or merchandise. As S & H has contended, 

because the nature of its brokerage business is the selling of transportation services to

shippers of goods, it is reasonable for it to be considered a “seller” for purposes of Section 

206(j). Cf. 49 U.S.C. § 13102(2) (defining broker as “a person, other than a motor carrier 

or an employee or agent of a motor carrier, that as a principal or agent sells . . .

 

12

 It is for these reasons we cannot agree with our colleagues that the exclusion created 

by the BPT Regulation merely mirrors the exclusion established by the LTEA. See 

Concurring Opinion (Saylor, C.J.) at 1 (this exclusion “merely effectuates the parallel 

requirement for exclusion of the LTEA”); Concurring and Dissenting Opinion (Baer, J.) at 

2 (the analysis of this exclusion is “[s]imilar to the analysis of the parallel provision of the 

LTEA”). 
[J-99-2018] - 20

transportation by motor carrier for compensation”). Consequently, because S & H pays 

the delivery or transportation costs for the purchaser of its services — the shipper of 

goods or commodities — to the common carrier who transported those items to the 

shipper’s designated recipient; accordingly, for purposes of Section 206(j), S & H may be 

deemed to have paid the shipping costs “for the purchaser.” BPT Regulation § 206(j).

Given that both suggested interpretations of Section 206(j) offered by the parties 

are reasonable under the circumstances, we find this provision to be ambiguous. See

Snyder Brothers, 198 A.3d at 1073. Notably, the City, which drafted and adopted this 

exclusionary regulation, has not presented us with any legislative history to support its 

suggested construction, nor has the City argued the applicability of any of the other factors 

in Section 1921(c) of the SCA which would favor one interpretation over the other. Hence, 

because the BPT Regulation uses the ambiguous term “seller,” which we conclude is 

broad enough to be read as to include both a seller of physical merchandise and a seller 

of services, and due to the fact the BPT Regulation’s “freight delivery exclusion” is an 

exclusion of income from taxation, the principles of construction set forth in Section 1928 

of the SCA control. We therefore construe this regulation in favor of S & H, as the 

taxpayer, and against the City, inasmuch as the General Assembly has directed that the 

taxpayer is entitled to the benefit of any ambiguity in such situations. Accordingly, we 

conclude that S & H was entitled to exclude from its gross receipts the amount of the 

delivery costs it was paid by shippers who purchased its services. 

For all of the aforementioned reasons, we reverse the order of the Commonwealth 

Court. Jurisdiction relinquished.

Justice Donohue, Wecht and Mundy join the opinion.

Chief Justice Saylor files a concurring opinion.

Justice Baer files a concurring and dissenting opinion.
[J-99-2018] - 21

Justice Dougherty files a dissenting opinion.