Grand Trunk Western Railroad v. Department of Treasury , 170 Mich. App. 384 ( 1988 )

170 Mich. App. 384 (1988) 427 N.W.2d 580

GRAND TRUNK WESTERN RAILROAD COMPANY
v.
DEPARTMENT OF TREASURY
CHESAPEAKE & OHIO RAILROAD COMPANY
v.
DEPARTMENT OF TREASURY

Docket Nos. 97847, 102239.

Michigan Court of Appeals.

Decided May 24, 1988.

Dickinson, Wright, Moon, Van Dusen & Freeman (by Ernest Getz), for Grand Trunk Western Railroad Company.

Dykema, Gossett, Spencer, Goodnow & Trigg (by Kathleen McCree Lewis, Stewart L. Mandell and Kenneth W. Kingma), for Chesapeake & Ohio Railroad Company.

Frank J. Kelley, Attorney General, Louis J. Caruso, Solicitor General, and Richard R. Roesch and Russell E. Prins, Assistant Attorneys General, for the Department of Treasury.

Before: CYNAR, P.J., and GRIBBS and T. GILLESPIE,^[*] JJ.

PER CURIAM.

Defendant appeals as of right from a Court of Claims order granting plaintiff Grand Trunk Western Railroad (GTW) summary disposition and from a Tax Tribunal order granting summary disposition to plaintiff Chesapeake & Ohio Railroad (C&O). The cases have been consolidated on appeal. We affirm.

Both the C&O and the GTW were originally liable for certain public utility taxes pursuant to the public utility tax act (PUTA), MCL 207.1 et seq.; MSA 7.251 et seq. The C&O and the GTW were entitled to, and received, a credit against these taxes pursuant to PUTA § 13(2), MCL 207.13; MSA 7.263, which provides:

A railroad company shall be allowed a credit against the tax imposed by this act for the taxable year in an amount equal to 25% of the amount expended for the maintenance or improvement of rights of way, including those items, except depreciation, in the official maintenance-of-way and capital track accounts of the railroad company, in this state during the calendar year preceding the tax year but not to exceed the total liability for the tax under this act.

As a result of this credit, neither railroad paid any of the utility taxes for which they would otherwise have been liable during the tax years in question.

Both the C&O and the GTW filed their Michigan tax returns for the years in question under the Single Business Tax Act (SBTA), MCL 208.1 et seq.; MSA 7.558(1) et seq. Both railroads claimed a credit under SBTA § 39(2), MCL 208.39(a); MSA 7.558(39)(2), which provided:

A person eligible to file under section 57 who has a net operating loss for 2 or more years or has had a net operating loss for each year of operation immediately preceding the current tax year, shall be allowed a credit against the tax imposed by this act in an amount equal to the following percentage of the tax imposed under Act. No. 282 of the Public Acts of 1905, as amended: 5% for the 1977 and 1978 tax year; 4% for the 1979 tax year; 3% for the 1980 tax year, 2% for the 1981 tax year, and 1% for the 1982 tax year. The credit allowed by this subsection shall not be in excess of the tax liability of the taxpayer under this act. This subsection shall expire December 31, 1982.

Pursuant to SBTA § 39, the C&O subtracted the appropriate percentage of PUTA tax imposed, but not paid, against its single business tax liability. The GTW requested a refund based on application of the SBTA § 39 credit.

Defendant disallowed the SBTA § 39 credit in both cases because the railroads had never actually had to pay the public utility taxes. The C&O'S tax liability was reassessed to exclude the credit and the GTW'S refund request was denied.

The GTW filed a complaint in the Court of Claims and moved for summary disposition under MCR 2.116(C)(10). Defendant filed a cross-motion for summary disposition under MCR 2.116(C)(10). The C&O petitioned the Tax Tribunal, contesting defendant's assessment, and moved for summary disposition under MCR 2.116(C)(10). Again, defendant filed a cross-motion for summary disposition under MCR 2.116(C)(10). In both cases, the railroads' motions were granted and defendant's motions were denied.

The principal issue before us is the proper construction of SBTA § 39(2), which allowed the taxpayer an SBT credit in the amount equal to a percentage of "the tax imposed" on the taxpayer under PUTA. Defendant has stipulated (in the C&O case) or admitted (in the GTW case) that the public utilities taxes were in fact imposed on the railroads.

When construing a statute, our primary objective is to ascertain and give effect to the Legislature's intent. The language of the statute itself is the best source for ascertaining intent. In re Condemnation of Lands, 133 Mich App 207, 210-211; 349 NW2d 261 (1984), lv den 421 Mich 856 (1985). An act must be read in its entirety, and meaning given to one section after consideration of the other sections so as to produce a harmonious and consistent act as a whole. If an act is clear and unambiguous, then judicial construction or interpretation is unwarranted. Stratton-Cheeseman Management Co v Dep't of Treasury, 159 Mich App 719, 724-725; 407 NW2d 398 (1987). In doubtful cases, statutes must be construed against the taxing authority. Ecorse Screw Machine Products Co v Corp & Securities Comm, 378 Mich 415, 418; 145 NW2d 46 (1966).

We do not find the language of SBTA § 39(2) to be ambiguous. When statutory language is clear and unambiguous, the Legislature must have intended the meaning it plainly expressed and the statute must be enforced as written. Nerat v Swacker, 150 Mich App 61, 64; 388 NW2d 305 (1986), lv den 426 Mich 857 (1986). The wording of § 39 explains the credit as being "against the tax imposed by" the single business tax act. Tax "imposed" is an entirely different concept from tax paid. Indeed, in the immediately preceding sections, MCL 208.38a, 208.38b; MSA 17.558 (38a), 17.558(38b), the Legislature has demonstrated that if it wants a credit to be based on amounts paid, it specifically so states. We are persuaded that the taxes imposed on, but not paid by plaintiffs were allowable as credits against SBTA § 39.

Affirmed.

NOTES

[*] Circuit judge, sitting on the Court of Appeals by assignment.