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T~EAYTORNEY GENERAL
OFTEXAS ~--."".l..-L
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January 20, 1953.
Hon. Robert S. Calvert Opinion No. S-02
Comptroller of Public Accounts
Austin, Texas Re: Legality of refunding
mo-
tor fuel tan payments to
persons supplying sand,
gravel, and ready mixed
concrete to highway con-
struction contractors, in
reconsideration of Opinion
Dear Mr. Calvert: No. V-1496.
Your request for .a reconsideration of Opinion No.
V-1496 (1952) reads in part as follows:
“On August 7, 1952, you rendered the above
numbered opinion in response to our request re-
garding the legality of refunding motor fuel taxes
to,, persons supplying sand, gravel and ready mixed
concrete to highway construction contractors who
are paid for such construction and maintenance
work from State funds to which motor fuel tax col-
lections are allocated. ‘,
“For ready reference we quoted from Section
13(b), Article 7065b, Vernon’s Annotated Civil’Stat-
utes, as follows:
‘Provided, however, no tax refund shall
be paid to any person on motor fuel used in
any construction or maintenance work which
is paid for from any State funds to which mo-
tor fuel tan collectionsare .allocated or which
is paid jointly from any such State funds and
Federal funds.’
“After a rather comprehensive survey and analy-
sis of the business operations of persons engaged in
the business of processing sand and gravel and ready
mixed concrete, we are forced to the conclusion that
the facts submitted to you in our original request were
somewhat inconsistent with the factual conditions that
actually exist.
Hon. Robert S. Calvert, page 2 (S-02)
“We shall, therefore, appreciate it if you
till reconsider the opinion request in connection
with the following fact conditions which we have
now found to exist generally.
“--1. Persons engaged in sand and gravel
and in ready mired concrete business usually
process large stock piles of crushed rock, gravel
and sand as their stock in trade, which materials
ares thereafter sold and offered for sale in their
natural state or mixed according to specifications
in any quantities desired to the general public for
use in the construction of buildings, foundations,
dams, terraces,,floorings, sidewalks, streets,
roads and highways.
“The refund motor fuel consumed in machin-
ery and equipment used in crushing, screening,
mixing, moving and handling such materials off
the highway is generally consumed before the
materials are sold and as a rule refund claims
are filed before the materials are sold.
“The processors of such materials usually
sell a part of such materials ranging from small
quantities to a substantial part of their output, to
contractors who purchase and use the materials in
constructing and maintaining highway projects in
which the contractors are paid for such work from
State funds to which motor fuel tax collections are
allocated, but in our survey we were unable to find
any case in which the sand, gravel and concrete
suppliers participated in the actual construction
work, They merely sell and deliver the materials
and dump it at the places on the highway project :
designated by the contractors.
“Prior to your opinion this department had
paid tax refunds to sand, gravel and ready mixed
concrete suppliers on motor fuel used off’the high-
way in the processing, mixing and handling of such
materials on the premise that such suppliers are
merely sellers of the materials and that motor
~fuel used%r processing materials to be wereafter
sold or delivered to highway contractors for use
in construction-and maintenance work by said con-
tractors would not constitute use of motor fuel in
construction and maintenance work as contemplated
by the law.
.
Hon. Robert S. Calvert, page 3 (S-02)
“--2. The only exception to the methods of
supplying materials from stockpiles, as described
above is as follows:
“On some rare occasions a contractor en-
gaged in the construction of highway projects paid
for from State funds containing motor fuel tax col-
lections will lease gravel pits or deposits from
land owners, and will thereafter contract with a
rock and gravel processor to move his rock crush-
ing and loading machinery to the pit to crush and
load such products. In this case the rock and gravel
processor does not sell the product to the highway
contractor, he merely crushes and prepares the
rock and gravel for the contractor for which he is
paid a fixed price pvgquare yard of crushed rock
and gravel prepared. The only claim filed under
these circumstances is being held in suspense
pending your study of the question.
“Will you please advise this department whether
or not, under the new and corrected set of facts sub-
mitted herein, the Comptroller may pay tax refunds on
motor fuel used off the’highway in processing rock,
sand,and gravel and ready mixed concrete which is
thereafter sold and delivered by the processors to
highway contractors who pay them for the materials
so purchased out of funds received by the contractor
from State funds to which motor fuel tax collections
have been allocated?
“Will you likewise advise us whether the Comp-
troller is precluded by law from paying a tax refund
to a rock and gravel crusher who is paid by a high-
way contractor on a yardage basis for crushing rock
and gravel for him to be used by said contractor in
the construction of a highway project for which the
contractor is paid out of a state fund to which motor
fuel tax collections are allocated? ”
It is our opinion under the facts presented herein that
processors using motor fuel in processing and delivering rock,
gravel, sand and ready mixed concrete to highway contractors
and rock and gravel crushers paid on a yardage basis by highway
contractors are engaged in preparing. selling and furnishing
materials and are not engaged in construction or maintenance
1 .
Hon. Robert S. Calvert, page 4 (S-02)
work within the meaning of Section 13 (b) of Article 7065b. V.C.S.
You are therefore respectfully,advised,that such processors and
rock crushers are entitled to a refund of the tax on motor fuel
used or consumed in such operationsprovided that the require-
ments of the refund section are met.
It should be,pointed out that a claimant for a tax re-
fund has the burden of satisfactorily showing that the motorfuel
was not used by him in highway constr.uction or maintenance
work as a contractor or subcontractor while. fulfilling or carry-
ing out a highway construction contract within the provisions of
Section 13 (b) of Article 7065b. Att’y Gen. Op. V-1379 (1951).
Attorney General’s Opinion V-1496 (1952), is recon-
sidered in view of the additiondi facts submitted and is hereby
modified to conform to the holding in this opinion.
SUMMARY
Persons using motor fuel in processing and
furnishing sand, gravel and ready mixed concrete
to highway contractors and rock and gravel crushers
paid on a yardage basis’by highway contractors are
not engaged in construction or maintenance work
under the provisions of Section 13 (b) of Article
7065b. V.C.S., and are entitled to a refund oft the
motor fuel taxes. Att’y Gem Op. V-1496 (1952) re-
considered, and modified.
Yours,very truly,’ ~:
JOHN BEN SHKPPERD
APPROVED: Attorney General ‘,
C. K. Richards
Reviewing Assistant
By A?++-=+
Robert S. Trotti W. V. Geppert .:‘.
First Assistant Assistant
WVG: cm