Opinion ID: 1293123
Heading Depth: 1
Heading Rank: 3

Heading: the commission's administrative power to construe tax statutes

Text: Nothing in § 58-603 permits, or requires, the assessment of only a portion of the gross receipts derived from distributive sales. . . . [or] purports to limit the tax to revenue from sales for a specific use. To the contrary, . . . § 58-603 imposed the tax upon the corporation's gross receipts from all sources. Com. Nat. Res. v. Commonwealth, 219 Va. 529, 536, 248 S.E.2d 791, 795 (1978). Section 58-661 imposes a Valuation Fund tax upon gross receipts from business done within the State. The only limitation upon the taxable base defined in these tax statutes is that the receipts be derived from business conducted in Virginia.
The emergency power statutes invoked by the Commission do not authorize it to construe and apply the tax statutes otherwise. Section 56-249.1 merely authorizes the Commission to require a public utility to make emergency spot sales at prices fixed by the Commission. Section 56-250, upon which the Commission placed primary reliance, gives the Commission the discretion to authorize a public utility with a gas deficit to take such action as [the Commission believes] will minimize adverse impact on the public health and safety and facilitate restoration of normal service; it has no relevance whatever to the Commission's authority over a public utility with a gas surplus.
Further in support of the first ground of its opinion, the Commission reasoned that emergency spot sales are unrelated to the exercise of franchise rights and that revenues from those sales are distinguishable from gross receipts expected to be taxed under §§ 58-603 and 58-661. Defending this reasoning on brief, the Commission contends that the question is whether it may lawfully interpret the phrase, `business done in this State', which appears in both Code §§ 58-603 and 58-661, so as to exclude emergency spot sales. The Commission argues that [t]he term `business' . . . means `public service business' for which the company is certificated. We reject that argument. Indeed, in our view § 58-607 reinforces our conclusion that the taxable revenues contemplated by the tax statutes are gross receipts from all sources, for it provides that [t]he gross receipts . . . subject to taxation shall include those received from incidental operations as well as those derived from the sale of water or heat, light and power. Even if revenues from sales made by one Virginia gas distributor to another are not derived directly from business for which the seller is certificated, they are clearly receipts from operations incidental to business conducted in this State.
On appeal, WGL also relies on Code § 12.1-15 [3] (which was never invoked in the Commission's opinion) as the Commission's authority to order refund of its payment. The first paragraph of that statute enables the Commission in any matter . . . within its jurisdiction, under any provision of law . . . to compromise or settle any matter . . . in a formal proceeding or informally. Pointing to that language and the authority granted by § 56-249.1 to fix prices on spot sales, the Commission insists that the taxing statutes in issue are indeed subject to judicial interpretation by the Commission. But the power to compromise and settle is not the power to waive and exempt. Moreover, the broad authority granted in the first paragraph of § 12.1-15 must be construed in light of the statute's provisions defining the Commission's power in tax disputes. The fourth paragraph authorizes the Commission to waive the assessment of any penalty or interest upon any tax . . assessed by the Commission (emphasis added). And, under the fifth paragraph, the Commission can charge off delinquent taxes, but only when the claims therefor are worthless or cannot be economically collected. While § 12.1-15 may authorize the Commission to compromise or settle a dispute over the amount of tax due under an assessment, it does not empower the Commission to exempt particular receipts from gross receipts taxes. We find nothing in any of the several statutes cited or elsewhere which supports the Commission's view that it has the authority to waive gross receipts taxes on emergency spot sales. Had the General Assembly intended to grant such authority, it could have done so expressly. It did not, and we cannot accept the strained conclusion that it did so implicitly. In summary, we hold that the first ground underlying the Commission's opinion is without merit.