For the prosecutor, William H. Speer.
For the respondent, David T. Wilentz, attorney-general.
Before Justices Heher and Perskie.
The opinion of the court was delivered by
HEHER, J. Prosecutor challenges an assessment of a gasoline sales tax levied against it by the state tax commissioner
under the provisions of the Motor Vehicle Fuel Sales Tax act, for gasoline claimed to have been used by it in the operation, during the month of May, 1934, of auto buses through the town of Nutley, on its Newark-Clifton bus route. Pamph. L. 1927, p. 782, as amended by chapter 357 of the laws of 1931, page 875. The state board of tax appeals sustained the assessment. The sole question presented for determination is the applicability of this Fuel Sales Tax act.
The bus line in question is wholly intrastate in character, and is operated under the provisions of chapter 144 of the laws of 1926, known as the "Kates Auto Bus act." Pamph. L. 1926, p. 219. This statute provides (section 2) that:
"Whenever the route of any auto bus extends through more than two municipalities and one or more municipalities have granted consent for such operation and the board of public utility commissioners has approved such consent and one or more municipalities have refused or failed to grant the necessary consent, in such case the board of public utility commissioners may permit the holder of such consent so granted and approved to run his auto bus through the municipality or municipalities which have refused or failed to grant the necessary consent; provided, that no passengers be either taken on or discharged from said auto bus anywhere within the boundaries of the municipality or municipalities so refusing or failing to grant such consent; and provided, further, that nothing herein contained shall be held to entitle any such municipality which has refused or failed to grant such consent, to any proportion of the five per centum franchise tax herein imposed."
The town of Nutley withheld its consent to the operation of buses on this route within its corporate limits. The board of public utility commissioners approved the consents given by the other affected municipalities; and it also granted permission for the operation of the line through Nutley. In obedience to the command of the statute, no passengers were received or discharged within the confines of that municipality; and no part of the franchise tax imposed by section 3 of the act was paid to it. This section obliges the bus
operator to pay, in such a situation, to the consenting municipality a franchise tax of "five (5) per centum of such proportion of the gross receipts as the length of the route in the municipality bears to the whole length of such route." Prosecutor paid to each assenting municipality along the route its proportionate share of the gross receipts; but, as found by the board of tax appeals, "no tax was paid upon its gross receipts apportioned to the length of the route extending through "Nutley, and, therefore, the total municipal franchise tax paid did not equal five per cent. of its total gross receipts. The board found as a fact that one thousand twenty-five gallons of gasoline were consumed in the operation of prosecutor's buses through Nutley; and it is conceded that no motor fuel tax was paid upon the gasoline thus used. The board held that "the Auto Bus act applies to vehicles which indiscriminately accept and discharge passengers at the termini or points along the route," and that, inasmuch as the ...