Court Opinion

ID: 6360547
Source: CourtListenerOpinion
Date Created: 2022-06-24 23:35:23.747998+00
Date Added: 2024-06-11T15:49:40.338984
License: Public Domain

Dissenting Opinion by
Judge Cbumlish, Je. :
I concur in the initial conclusion reached by the majority that “the picture-taking activity in Pennsylvania literally falls within the ‘use ... of tangible personal property including . . . equipment . . . and supplies ... in any of the operations of — (i) The manufacture of personal property . . .’, Section 2(n) (4) (c) (i), 72 P.S. §3403-2” and Commonwealth v. Sitkin’s Junk Co., 412 Pa. 132, 194 A. 2d 199 (1963). How*238ever, I believe that this compliance with the legislative requisites for the manufacturing exclusion entitles Olan Mills to its benefits.
The majority has expanded the requirements set forth in the statute by holding that at least a substantial portion if not all of the total manufacturing operation must be situated in Pennsylvania to “deserve the exclusion reward” on any of the manufacturing operations. There is no doubt that if Olan Mills had completed all production phases of its operations in Pennsylvania, the majority would have held the very steps in question to be the proper subjects of the manufacturing exclusion. However, in the case before us, we have found that all the “production stages” of the operation are completed outside of Pennsylvania. The majority has, therefore, held that absent some or all of these “production stages” none of the nonproduction stages of the manufacturing operation qualify for the manufacturing exclusion normally accorded them.
In reaching this conclusion, the majority relies heavily on their interpretation of the legislative intent in enacting the exclusion. I agree that “the reason for providing a manufacturing exclusion was undoubtedly to promote manufacturing within the Commonwealth of Pennsylvania and, as a reward, to give those engaged in manufacturing in the Commonwealth a competitive advantage.” I must also agree that this “reward” was extended to manufacturers both in gratitude for and in the promotion of benefits for the Commonwealth in the form of jobs and revenue. However, I cannot agree with the conclusion that these goals only apply when the “production stages” are located within the state. Nor can I agree with the conclusion that the nonpro-duction stage manufacturing operations of Olan Mills situated in this state have not provided the benefits to the Commonwealth.
*239To the contrary, Olan Mills has set up one permanent studio in Pennsylvania which necessarily provides employment and revenue for that immediate area. In addition, it employs traveling photographers to work within Pennsylvania. Finally, by performing the stage in question within the state, Olan Mills has made the sale of its finished product to its Pennsylvania customers subject to the Pennsylvania sales tax. It seems clear to me that the Olan Mills operation is positive proof that any manufacturing operation, regardless of size, benefits the Commonwealth. I believe that the Legislature, for this reason, intended the manufacturing exemption to be an inducement for the location of any manufacturing operation, whether in whole or in part, in this state.
This Court must realize that when it requires that the total operation which locates in Pennsylvania must he of some substantial magnitude in order to benefit from the exclusion, it jeopardizes the Commonwealth’s efforts to induce the development of smaller business operations. The net result is to contradict the very purposes which gave birth to the exclusion.
In addition to holding that Olan Mills does not provide the Commonwealth with jobs or revenue, the majority has also erred in relying upon the authority of Commonwealth v. Weldon Pajamas, Inc., 132 Pa. 481, 248 A. 2d 204 (1968). In that case, a foreign company retained ownership of certain materials while a subsidiary Pennsylvania company used them in manufacturing. The Court held that the foreign company did not use the goods in manufacturing since it did not itself conduct the operation. This case in no way reflects upon the question of whether a foreign manufacturer is entitled to an exclusion for the portion of his manufacturing operation he performs in Pennsylvania.
*240Since I agree with the majority that the literal answer to this question is that the exclusion does apply, and since in my view this interpretation of the statute agrees with the purpose for its enactment, I would sustain the appeal.
Judge Manderino joins in the dissent.