# Graham Packaging Co. v. Commonwealth

> Commonwealth Court of Pennsylvania · September 15, 2005 · 882 A.2d 1076

URL: https://www.frixlaw.com/law-library/cases/9713145

## Case

- **Full name:** GRAHAM PACKAGING COMPANY, LP, Petitioner v. COMMONWEALTH of Pennsylvania, Respondent
- **Court:** Commonwealth Court of Pennsylvania
- **Decided:** September 15, 2005
- **Citations:** 882 A.2d 1076; 2005 Pa. Commw. LEXIS 518
- **Precedential status:** Published
- **Opinion:** Dissent by Colins
- **Judges:** Colins, Leadbetter, Kelley
- **Cited by:** 11 later opinions in the Frix Law Library

## Citator (automated)

- **Yellow flag:** Criticized by Dechert LLP v. Commonwealth, 2007 Pa. Commw. LEXIS 185 (2007).
- Negative treatments: 1
- Distinguished by: 0
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9713145

## How later opinions describe it (automated extraction)

- explaining that "the test focuses on whether the essence or true object of the sale is tangible personal property or intangible property or a service with tangible property serving only as the medium of transmission"
- holding that tangible personal property includes canned computer software delivered electronically
- applying the essence of the transaction test to hold that commercially sold prepackaged standardized computer software was subject to the imposition of sales tax
- discussing and comparing taxability of canned and custom software

## Opinion text

DISSENTING OPINION BY
President Judge COLINS.
I dissent. The renewal of a license to use canned computer software is not subject to sales tax under the explicit terms of the Tax Reform Code of 1971 (Code). 1
Sales tax is imposed on the sale at retail of tangible personal property or services. Section 202(a), 72 P.S. § 7202(a). “Sale at retail” encompasses the transfer for consideration of the ownership, custody or possession of tangible personal property, including the grant of a license to use or consume tangible personal property. Section 20100(1), 72 P.S. § 720100(1). “Tangible personal property” is
corporeal personal property including, but not limited to, goods, merchandise, steam and natural and manufactured and bottled gas for non-residential use, electricity for non-residential use, prepaid telecommunications, premium cable or premium video programming service, spirituous or vinous liquor and malt or brewed beverages and soft drinks, interstate telecommunications service ... and charged to a service address in this Commonwealth, intrastate telecommunications service....
Section 201(m), 72 P.S. § 7201(m). Exclusions from imposition of the sales tax include the sale at retail of personal computers and single-user licensed software purchased with a personal computer; the exclusion does not include the sale at retail of multiple-user licensed software.
The multiple-user license renewals at issue in the present case fall outside the statutory definition of tangible personal property, and absent a change in the statutory definition of tangible personal property, the Commonwealth may not by regulation, or policy statement, impose the sales on the renewal of multiple-user software licenses. I see no reason to consult the tax practice and policy of other states. By the statute’s explicit terms, the renewal of multiple-user licenses to use canned computer software is not a transfer of tangible personal property or a license to use tangible personal property.
. Act of March 4, 1971, P.L. 6, as amended, 72 P.S. §§ 7101-8297. P.L. 6, as amended, 72 P.S. §§ 7101-8297.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9713145. Public record. Not legal advice.