Court Opinion

ID: 5855532
Source: CourtListenerOpinion
Date Created: 2022-01-13 01:02:17.586771+00
Date Added: 2024-06-11T08:44:15.375558
License: Public Domain

Kupferman, J. P.,
dissents .on the opinion of Taylor, J. [108 Misc 2d 641.] Milonas, J., dissents in a memorandum as follows: I would affirm the order denying the motion to dismiss the complaint for failure to exhaust administrative remedies. In its declaratory judgment action, the plaintiff is not directly challenging the sales tax assessed against it. Rather, it is seeking to clarify the scope and construction of section 1115 (subd [b], par [i]) of the Tax Law. The plaintiff contends that since the statute does not define such terms as “toll charge”, “mileage services” and “associated station terminal equipment”, there is an ambiguity in the law which may appropriately be resolved through a declaratory judgment action. The majority assert that a declaratory judgment action is not an acceptable method for challenging tax assessment determinations where taxpayers have failed to exhaust their administrative remedies. However, there is considerable authority for the proposition that where no material issue of fact is involved and the only question is a legal one concerning the applicability or interpretation of a statute, a declaratory judgment action is the proper means of contesting an agency’s ruling. (See Dun *827& Bradstreet v City of New York, 276 NY 198; Matter of Building Contrs. Assn. v Tully, 65 AD2d 199; Namro Holding Corp. v City of New York, 17 AD2d 431; Bunis v Conway, 17 AD2d 207.) Nonetheless, the majority, citing Slater v Gallman (38 NY2d 1), have concluded that because the plaintiff herein previously requested administrative review of the State Tax Commission determination, it has, in effect, commenced a premature CPLR article 78 proceeding. Yet Slater holds only that a taxpayer may not bring a declaratory judgment action contesting a tax assessment unless he has first pursued the administrative remedies prescribed by law. The Court of Appeals expressly recognized that, under certain circumstances, administrative remedies need not be exhausted. According to the court, “a tax assessment may be reviewed in a manner other than that provided by statute where the constitutionality of the statute is challenged or a claim is made that the statute by its own terms does not apply” (Slater v Gallman, supra, at p 4; see, also, Matter of First Nat. City Bank v City of New York Fin. Admin., 36 NY2d 87). In Matter of Building Contrs. Assn. v Tully (supra, p 201), the court, relying upon Slater, stated that the declaratory relief which the petitioners were seeking was appropriate “because it is their basic contention that the taxing statute, by its very terms, does not apply to the services they perform and, under these circumstances, it is unnecessary for petitioners to first exhaust their administrative remedies”. It is the plaintiff’s position that the statute in question does not apply in this instance. Since the declaratory judgment action here does not directly challenge the tax assessed against the plaintiff, but instead asks for a judicial interpretation of section 1115 (subd [b], par [i]) of the Tax Law, it fits within the exceptions to the exhaustion of remedies requirement enunciated in Slater v Gallman (supra). The order below, therefore being in all respects correct, should be affirmed.