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PRPCE UDANPEE
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August 7, 1952
Hon. Robert S, Calvert
Comptroller of Public Accotits
Austin. Texas Opinion No. V-1496
Re: Legality of refunding motor
fuel tax payments to persons
supplying sand, gravel, and
ready mixed concrete to
highway construction COP?
Dear Mr., Calvert: tractors.
Your requesr for an opinfon of this office reads as
follows:
“We desire your opinion regarding the legality of ~
paying motor fuel tax refund claims filed wder the .
two conditions explained begow.
“Section l3 (b), Article 7065b, Vernon Annotatec
~Civil Statutes, pxx3vide.s in part as follows:
‘Provided, however, no tax refund shail be
paid to any person on motor fuel used in
any constr,uction or maintenance work which
is paid for from any State funds to which
motor fuel tax collections are allocated or
which is paid jointly from any such State
funds and Federal funds, etc.’
“Persons engaged in the business of processing sand
and gravel, and ready mired concrete frequently sell and’
deliver such products to contractors engaged in the con-
struction and maintenance of State highways for which pay-
ment is made to such contractors from funds to which
motor fuel tar collections are allocated. The contractor
in turn pays for the sand, gravel and ready ..mix concrete
out of the payment received by him,. While the delivery
of the sand, gravel and concrete constitutes a sale of the
pr~oduct the sellers are usually required to deIiver their
products on and over the highway project unde~r conatruci
tion where it is thereafter spread, rolled or u?cd by the
contrac~tor.
l
Th& department has heretofore paid tax refunds to
the sand, gravel and concrete diatribntors on m&of fuel
use’d in the processing of such producto On the pre’mis~e
Hon. Robert S. Calvert. page 2 (V-1496)
that such persons are merely sellers of a product used
in the construction and maintenance of State highways
paid for from motor fuel tax collections distinguishing
them from the contractors who actually perform the
construction and maintenance work.
“In another claim filed by a person engaged in the
business of crushing and selling crushed rock and gravel,,
.a contractor engaged in the construction of s~ever.al state
highway projects paid for from motor fuel tax collections,
has contracted with the rock and gravel processor to
move his rock crushing equipment to gravel pits leased
by the highway contractor. In this case the rock and
gravel processor does not sell the crushed rockand gravel
to the highway contractor, he merely crushes and pre-
pares the rock and gravel for the contractor for which
he is paid a fixed price per square yard of ciushed rock
or gravel prepared.
“The only claim filed under the above circumstances
is befng held in suspense pending your opinion.
‘Will you please advise this department whether
the law precludes payme~nt of tax ref:unds to persons
,who sell and deliver sand, gravel and ready mured
concre’te under the conditions stated above tomhighway
contractors who pay them for such products out of funds
received by thencontractor from State funds to which
motor fuel tax collections are allocated?
‘Will you likewis’e advise us whether the Comptrol-
ler is,precludedby law from paying a tax refund to a rock
and gravel crusher who is paid by a highway 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 paid for out of a fund to which motor
fuel tax collections are allocated?”
It is thus seen that the highway contractors using the sand,
,gravel. concrete mix, and the processe~d or crushed stone, are
engaged in construction or maintenance work which is paid for
from State funds to which motor fuel tax collections are allocated.
.We assume for the purposes of this opinion that the use of the
motor fuel in question fully meets the requirements of Article
7065bAl3, Vernon’s Civil Statutes, for a tax refund, and that the
‘use~r of the motor fuel would be entitled to reimbursement of. the
tax paid except for the prohibition or exception provided for in
Article 7065byU(b), quoted above in your letter.
Hon. Robert SC Calvert, Rage’3 (V-1496)
It is clear that if the highway contractor had himself
furnfshed the sand, gravel, and ready mixed conc~rete. or had
crushed.the rock and gravel for use in construction or main-
tenance work which was paid for out of such State funds he .would
not be entitled~to any refund of motor fuel taxes. The fact that
the particular work was performed under a sub-contract, lease,
rental, or other arrangement with the highwaycontractor is imy
material in determining the ,legalityof the tax refund. In this
connection,.it, is stated inAttorney General’s Opinion’V-1379
(1951):
“r;he real test is that the highway construction
and maintenance work is performed and paid for from
motorfuel taxes allocated to l&e Highway Department
or the countie:s in connection with highway work. The
incidental fact that the prime contractor engages and
pays the subcontractor who performs a certain portion
of the work is nqf ‘m$terial. That the subcontractor
useu the motor.fuel in construction and maintenance
~work on the highwsrys must be conceded. We think
that Rortion of. the exception which reads, ‘ . . . which
is paidfor from.aiy State funds to which motor fuel
.ts.x collztions are allocated~.. . .’ does not have the
effect of excluding from the exception the subcontract- -
ors simply because they are ~paid by the prime con-
tractor. It is sufficient to bring them within the ex-
ception that they perform construction and mainten- ‘.
ante work which is paid for from allocated funds. The
work is actually done as a part of the work which the
prime contractor under his contract with the Highway
Department obligates himself to perform and which k
paid -for from allocated funds.”
It is our opinion that under the facts submitted, persons
using motor fuel in seIIing and delivering sand, gravel, and ready
mixed concr&e,:;or,,.crushing and processing rock and gravel for
a highway contractor engaged in highway construction or mainten-
ance work paid~ for,,from State funds to which motor fuel tax Cole
lections are allocated, are using such motor fuels in connection
with such constructio,a~ or mainte.nance work, .and therefore are
not entitled to a refitrid of motor fuel taxes paid by them:
I-&OIL
Robert Si Cakeit, page 4 (V-1496) i
SUMMARY .'
Pe~rsons selIing and delivering sand, gravel,
and concrete mix to, or processing or crnshing
gravel or rock for, highway contractors engaged
in construction or maintenance work paid for with
State funds to which motor fuel collections are
allocated are not entiled to a refund of motor fuel
taxes upon motor fuel purch&sed and used in con:
nection with such work. Art. 7065b-U(b), V.C.S.;
.Att”y Gen; Op:V-l379 (19%);
Yours very truly,
APPROVED: PRICE DANIEL
,Attorney ~General
: W; V,~Geppert
Taxation Division
.
E. Jacobson. ,. ~, .$$qgd!jg&&
R.eviewing Assist&
.?bsiq.t&t ,~
Charles D&&h&r
Fhst Assistant, ’