Article 28 of the New York State Tax Law, imposing sales and use taxes, became effective in its present form in 1965. Subdivision (b) of section 1105 thereof imposes the tax upon "[t]he receipts from every sale, other than sales for resale * * * of telephony and telegraphy and telephone and telegraph service of whatever nature except interstate and international telephony and telegraphy and telephone and telegraph service.”
In that same year, in response to an inquiry by the New York State Cable Association, the Department of Taxation and Finance issued an opinion letter stating that the sales tax imposed under article 28 (and article 29, which permits governmental subdivisions to also impose a sales tax) was inapplicable to receipts in the form of charges to subscribers of cable television service, upon the ground that such service did not constitute telephone or telegraph services. From the effective date of the sales tax until July, 1976 no sales taxes were paid, collected or required to be collected upon such receipts.
On April 6, 1976, an opinion of counsel was issued by the Deputy Commissioner and Counsel of the Department of Taxation and Finance stating that cable television companies are "engaged in the activities of telephony and telegraphy” and concluding that receipts from the sale of cable televison service to subscribers are subject to the sales tax under subdivision (b) of section 1105. With reference to the prior opinion letter it was stated that "any prior opinion or ruling [which] is inconsistent with this opinion * * * is hereby rescinded and revoked as of May 1, 1976”. The Tax Commission, appellant herein, subsequently approved and adopted the opinion of counsel. Appellant does not contend that any tax is due for any period prior to July, 1976.
Respondents commenced the present action for declaratory judgment declaring that the receipts from the sale of cable televison service are not subject to sales tax under articles 28 and 29. Regulations issued by the commission implementing the tax, which were adopted subsequent to the commencement of the action, are also challenged here pursuant to an amendment of the pleadings. Respondents’ motion for summary judgment declaring the tax to be inapplicable to sales of cable service and declaring the regulations null and void was granted. Appellant appeals therefrom.
We agree with the court at Special Term that there is no such clear manifestation of contrary legislative intent in the present case. " 'A tax law should be interpreted as the ordinary person reading it would interpret it’ ” (Matter of Holmes Elec. Protective Co. v McGoldrick, 262 App Div 514, 518, affd 288 NY 635). In our view, the ordinary person reading the language in subdivision (b) of section 1105 referring to telephone and telegraph service would not ordinarily conclude that cable television service was intended to be included therein. While both telephony and telegraphy on the one hand, and cable television service on the other, involve dissemination by electronic means of communications as the latter term is used in its broadest sense, we do not believe it is commonly understood that the former includes the latter. In the construction of tax laws, a clearer manifestation of legislative intent should be required before the administrative agency can be allowed to encompass within one category of communication a different category of communication which to the mind of the ordinary individual would not be included therein. We do not rest, however, upon what is commonly understood to reach the present decision, for we are of the view that authoritative precedent requires this conclusion.
In Matter of Holmes Elec. Protective Co. v McGoldrick (supra), New York City sought to impose a retail sales tax on what was claimed to be the sale of telegraphic service. The taxpayer there was engaged in the business of protecting its customers’ premises against burglary or unauthorized entry.
Appellant argues that the vitality of the Holmes Elec. Protective Co. case has been minimized by more recent decisions involving what are said to be similar questions in Matter of New York Quotation Co. v Bragalini (7 AD2d 586, mot for lv to app den 7 NY2d 706), and Matter of Teleregister Corp. v Beame (18 AD2d 631, affd 13 NY2d 834). We need not dwell upon this contention for we are satisfied that any actual conflict has been resolved by the recent decision of the Court of Appeals in Quotron Systems v Gallman (39 NY2d 428). The taxpayer in that case furnished equipment for the instantaneous transmission of stock market information to its customers most of whom were brokerage houses, banks and commodity exchanges. Customer requests for information and replies thereto were transmitted over telegraph and telephone lines leased from Western Union and the American Telephone and Telegraph Company. While the tax sought to be imposed in that case was a tax upon businesses furnishing utility services under section 186-a of the Tax Law rather than sales tax under section 1105, the determinative issue as defined by the court was whether the taxpayer was engaged in the sale of telegraphy or the furnishing of telegraph service. The court concluded that the tax was not applicable, and further went on to state that to the extent there remained any conflict between its decision and the prior holdings in Matter of N. Y. Quotation Co. v Bragalini (supra) and Matter of Teleregister Corp. v Beame (supra), the Quotron Systems (supra) decision was to be controlling.
In our view, this holding mandates the conclusion that in the present case it cannot be said that cable television companies are engaged in the sale of telephone or telegraph services.
We have examined the remainder of appellant’s contentions and find them to be without merit.
The judgment should be affirmed, without costs.
Koreman, P. J., Sweeney, Mahoney, and Main, JJ., concur.
Judgment affirmed, without costs.