* Corpus Juris-Cyc. References: Licenses, 37CJ, p. 171, n. 57; p. 174, n. 95; Taxation, 37Cyc, p. 879, n. 43. The suit is by the attorney-general, for the state, to recover about five thousand dollars from the appellee, Panhandle Oil Company, as taxes due by the oil company for the sale of gasoline, under chapter 115 of the Laws of 1924 and chapter 119 of the Laws of 1926, the verbiage of which is the same, and provides, in part, as follows:
"An act to amend section 2 of chapter 115 of the Laws of 1924 so as to increase the tax on the privilege of distributing gasoline in this state; imposing an excise tax *Page 669 upon the use of gasoline by persons in motor driven vehicles upon the public roads and streets of the state where no tax on the distribution thereof has been, or is required to be paid by the distributor, retailer, or importer; providing for the payment thereof; and to amend section 3 of chapter 115 of the Laws of 1924 so as to provide for the disposition thereof.
"Section 1. Be it enacted by the legislature of the state of Mississippi, that section 2 of chapter 115 of the Laws of 1924, be and the same is hereby amended so as to read as follows:
"Privilege tax on gasoline.
"Sec. 2. Any person engaged in the business of distributor of gasoline, or retail dealer of gasoline, shall pay for the privilege of engaging in such business an excise tax of four cents (4¢) per gallon upon the sale of gasoline by such dealer in this state. No retail dealer shall be required to pay said excise tax when such tax may be paid by the distributor of gasoline, which may be sold at retail by such retailer, nor shall the distributor pay such tax when the same is paid by the retailer."
The declaration contains several counts, and the oil company filed several special pleas to the different counts; but, as the counts of the declaration and the special pleas thereto present the same legal question, we shall consider the declaration as containing but one count, and the pleas as but one plea to the declaration.
The appellee oil company pleaded that the gasoline sold by it upon which the tax is sought to be collected by the state, was sold by the oil company to the United States government for use in the operation of the United States Coast Guard, and to the United States Veterans' Hospital, and that no tax was charged and collected upon the gasoline sold to these government agencies, because the state statute taxing the sale of gasoline was not intended to, and does not, impose a tax upon sales and distribution of gasoline to government instrumentalities; *Page 670 that the legislature did not intend to tax each gallon of gasoline sold to the United States government to be used in the operation of its instrumentalities, but that, if such was the intent of the legislature, the tax is a property tax, or direct tax, assessed against each gallon of the gasoline sold to the United States government, and that this would be taxing an instrumentality of the Federal Government, which is not permissible. The attorney-general demurred to the special plea of the appellee oil company, and the demurrer was overruled, from which ruling this appeal was prosecuted.
As we understand the record the question before us is simply this: Is the Federal Government entitled to the privilege of buying its gasoline in this state, with which to operate its instrumentalities, at a price less the amount of the state tax charged gasoline dealers on each gallon of gasoline sold, under the taxing act, supra? We think not.
It will be observed that the statute fixing the tax on the sale of gasoline, taxes the dealer for the privilege of engaging in the business of selling gasoline. It is therefore a privilege tax against the dealer for the right to carry on the business, and it is not a property tax; but the gallonage sold by the dealer is merely the measure of the tax to be charged the dealer for the privilege of carrying on the business of selling gasoline. This construction of the act seems to be manifest from the language. The tax being a privilege tax, the amount of which is measured by the number of gallons sold by the dealer, it cannot, in any view, be said to be a direct tax against an instrumentality of the Federal Government.
Furthermore, we do not think the contention of the appellee oil company is maintainable, even if the tax here involved was a property tax upon the gasoline used in the operation of an instrumentality of the government, because no tax is here imposed upon the gasoline while it is the property of the government, but the tax is imposed *Page 671 (assuming that it is a direct tax upon the gasoline) upon gasoline while it is the property of the dealer; and therefore we cannot see that it would be, upon any theory, a tax on an instrumentality of the government.
Of course a tax of four cents per gallon against the gasoline while it is the property of the government would not be permissible, but the tax here, as we have said, in the first place, is a privilege tax on the dealer. But, assuming it to be a direct tax burden on the gasoline, still the tax is not attempted to be put upon the gasoline while in the hands of the government, but it is charged against the dealer on each gallon of gasoline sold before the government purchases the gasoline; consequently it is not a tax on the property or instrumentality of the government.
To hold otherwise than the above would possibly bring about absurd consequences. For instance, government employees would claim exemption from state privilege taxes on any commodity that they might purchase with which to operate any instrumentality of the government or might even go so far as to claim this privilege for the food and clothing of the employees operating such instrumentality.
This is not a tax upon the persons to whom the dealer sells the gasoline, but it is upon the dealer, which he includes in his selling price, and is measured by the amount of gasoline sold.
The supreme court of the United States has held that the states are within their rights in taxing the privilege of carrying on businesses, and that the Federal Government is not entitled to have such tax annulled upon its purchases with which to operate its instrumentalities. Metcalf v. Mitchell, 269 U.S. 514, 46 S.Ct. 172, 70 L.Ed. 384; Fidelity Deposit Co. v.Commonwealth of Pennsylvania, 240 U.S. 319, 36 S.Ct. 298, 60 L.Ed. 664.
That the tax here in question is a privilege tax on the dealer and not a tax on the thing sold or a tax on the person *Page 672 who buys the commodity, was clearly decided by this court inBarataria Canning Co. v. State, 101 Miss. 890, 58 So. 769. In that case the court held that the tax was not imposed on the thing sold, but was a tax to be paid by the person engaged in the business of packing or canning oysters in this state, or upon the local dealer selling or shipping the oysters, and that the tax was imposed as a privilege tax for conducting the business in this state, and that the amount of the tax was measured and fixed by the number of barrels of oysters sold by the dealer. We think the case is in point, and is decisive of the case at bar.
Something is said in the brief of the attorney-general suggesting the idea that, if this court holds the gasoline tax to be a property tax, it will be void as violative of section 112 of our Constitution, and that such decision would be disastrous to our privilege tax laws. We do not think the tax here involved is a property tax, but if it is a property tax, and the tax is imposed upon the gasoline before it becomes the property of the government to be used in the operation of one of its instrumentalities, the tax will not be against an instrumentality of the government, because the tax is imposed before the government acquires the property, and therefore it is not a tax on an instrumentality of the government.
The legislature may possibly exempt the dealers from the tax on gasoline sold and used in the operation of the instrumentalities of the United States government, but so far this has not been done.
In view of these conclusions, we think the lower court erred in overruling the demurrer filed by the state, and for this reason the judgment of the lower court is reversed, and judgment entered here for the appellant.
Reversed, and judgment here for the appellant.
Reversed. *Page 673