Summary
holding that a declaratory judgment action may be maintained if the taxpayer's claims "involve an issue of pure statutory analysis as to whether the tax is applicable"
Summary of this case from MLB Enters., Corp. v. N.Y. State Dep't of Taxation & Fin.Opinion
November 7, 1994
Appeal from the Supreme Court, Kings County (Hurowitz, J.).
Ordered that the order is affirmed, with costs.
The plaintiff commenced the instant action, inter alia, seeking a judgment declaring invalid the imposition of commercial rent tax by the defendant Commissioner of the Department of Finance of the City of New York and vacating the warrant issued therefor, on the ground that the statute which authorizes the imposition of a commercial rent tax does not apply where, as here, the payments sought to be taxed are made to the entity which manages an association of meat dealers and not to or for the benefit of the commercial landlord (see, Administrative Code of City of NY, tit 11, ch 7). The Supreme Court granted the defendant's motion to dismiss the complaint, finding that the plaintiff's failure to timely follow the exclusive administrative review process was fatal to its claim. On appeal, the plaintiff concedes that it has failed to exhaust its administrative remedies, but nevertheless argues that a declaratory judgment is proper, since the statute which provides for the imposition of the tax at issue is wholly inapplicable to it. We disagree.
"It is well settled that a party seeking review of tax assessments must exhaust statutory or administrative remedies before requesting judicial intervention for declaratory relief (see, e.g., Reader's Digest Assn. v. Friedlander, 100 A.D.2d 871)" (Keslow v. State Tax Commn., 125 A.D.2d 294, 295). However, where, as here, a tax statute is attacked as wholly inapplicable, it may be challenged in judicial proceedings other than those prescribed by the statute as "exclusive" (see, Matter of First Natl. City Bank v. City of N.Y. Fin. Admin., 36 N.Y.2d 87, 92; GTE Spacenet Corp. v. New York State Dept. of Taxation Fin., 201 A.D.2d 429; Banfi Prods. Corp. v. O'Cleireacain, 182 A.D.2d 465, 467). This exception to the rule is limited to those cases where no factual issue is raised (see, e.g., Westwood Pharms. v. Chu, 164 A.D.2d 462, 467; Allstate Ins. Co. v. Tax Commn., 115 A.D.2d 831, 834, affd 67 N.Y.2d 999).
We agree with the Supreme Court's determination that the instant case "does not involve an issue of pure statutory analysis as to whether the tax is applicable * * * but turns on applying statutory language to unresolved issues of fact concerning the relationship between the plaintiff and [the managing entity] and between [the managing entity] and the City". Thus, under the circumstances, the plaintiff's failure to exhaust its administrative remedies warranted the dismissal of the complaint. Lawrence, J.P., O'Brien, Joy and Altman, JJ., concur.