Untitled Texas Attorney General Opinion

i OFFICE OF THE ATTORNEY GErfRAL OF TEXAS AUSTIN GROVER SELLERS ATTORNEYGENER*L HpnorableDurwood Manford Chalrattn,COimSltteeon Highways and R&da Rousa of Repreaentativea .Porty-ninthLegislature Austin, Texas Dear Mr. MarUmd: We are in raaaipt cf February 13, 1945, reading as iollowa: memorandum cpirlion ed Statea and 1 Counaal of the of L3teaam with old to the F&era1 ~~~dtheR*dsC-ltteeTbthaRouse,it Fe ated If you would give this matter your advise this Committee if it would ba possible e of Texas to collect a tax on gasoline sold within the State of Texas to agenolas of the Federal 0 overnaent." Prior opinions oi this department have dealt with the question presented in your latter in ona fm or another, and from these ve think asg be gathered what ve aonaeive the law to be upon the right of'the Stete to levy and oollect the Honorable Durwood Hen?ord, page 2 motor fuel tax (Artlale 706513,V.A.C.3.) f'romthe Federal Gov- ernment or the instrumentalitiesthereo?. We stated in opinion lo. 0-5309-A, tha Sollowing: "Motor fuels sold to and used by federal agencies: Sea. 2(d) of the Notor Fuels Tax Aat (Art. 7??6$,V.A.C.S.) provides in part as follwat "Wo tax shall be lmpoaed upon the sale, uao, or distributiono? any motor fuel, the imposing of which vould oonstltutean uulaw?ul burden on interstate commerae and vhiah is not subjeot to be taxed under the Constitution of the State of Texas and the United Stated.1 "Althoughlarge inroads have been made on the doa- Wine of inter-govemmental tax 1maunltV as establishad by Chief Justice Narshall in the attao of NaCullooh v. Maryland, 4 Wheat 316, 4 U. 8. 579 (L. Ed.), the dootrine at111 persists at least to the extent o? affording Immunity from state taxation to the iederal government itrel? and to thore federal agenoiea and lnrrtruwntallties vhlah Congress haa ahoaen to dealam tax exempt, Pitt&an v. B. 0. L. C., 308:IJ.S. 21, 84 L. Ed. 11, 60 Sup. Ct 15. Typiaal of the latter type of agamy is the De?en& Plant Corporation, vhioh is Sea. 610 of Title 15, U.S.C.A., the Oongrair has dealared to be exempt fraa all sales, use,aterage and f~~haae taxes lmpeaod by any atits or politlorl 8ubdlvi- We are of tha opinion that this doatriw and the abovi quoted provision o? OUF tax statute preolude the lapositlon of our motor fwl8 tax upon aales or uaea by the fsderal gwernwnt and by federal lgemS.ea and lnstru- wntalltlea whlah Cowess has exemptad. ConaequentlV, you are reapeatfullyadvised that DO tax should be levied or aollsated upon such aalsa or usea.” Briefly stated, this opinion pronouwes the law to be: The tax cannot be assessed and aolleoted ?rom the Federal ffovern- wnt and the agemiss therao? if Congmsa has expreaslf exewted the Federal Government and Its agenoies from the tax. %?eVW, aa stated in opinion No. O-5995, in thoae instanaeawhere Congress has expressly aohssnted to the imposition o? the tax, a8 ia done by the Buok Amendment of the Hajden-CartwrightFederal Aid Aat with respeat to motor fuel sold "post exahange8, ship 8tore8, ship service stores, oomd.ssarles,filling atationa, licensed traders, and other similar agenalea, located on United States HonorableDurwood ?&n?ard, psge 3 mll%taFy or other rasemtions, vhm awh fuels ama not ?m $8 emlwlve use of the Dnlted 9totoa," the tax may ba ootlmt- . Then, ia thWe?are nodoubt oithe~lght ofthe State to impose this tax upon the F&e~l Ga*ewnt aa lta agemiea by aonsnaaiowl grant, but vhere this right baa km lx p r ~a a iy vithhald by Cmgreaa, or thr Lagialstw has emmrded en axsop- tion, ths tax aaunot be asaeaaad or ‘oolleatodby the Stata. There is a third pwslbilitjr,not covered by tha tvo amtlngewlaa noted above, that la, ubme tbre baa bean wit-p a awgmaaiowl grant OF the vlthholdiug theno? ampreaaly de- 0leFul by C00gna5, or an 8xpnaaed lxu8ptim In the at&a atat- utea, but the Wauuity Tram the tax, I? any, must nat upon the Carrtltutlm Itself, to vhlah vo next turn our attention. 3eatiw 2a of our motor fuel taxing atetute pr?aadea in part 58 follcarar *There ah811 be and I.8herrby levied mxl 4088d (eaooptae her8ina?terprovld8d) upaatha rlntulo, dfatr%butlen OF we a? motor fwl In this State an ououpatbnal ur exalao tax ef Four (4) oonta per mllaa or hvatlowl part thena? as rold, diatr)ikrkd,or wed in this Stak. . . tex levied herein et the SQUWUW a? aald Ilotm fwl in Texea or as sum theroaftep as the aaaa mw be aubdwt to bei& tax8 a. . . . #a!pbaals adaed) m pertlwnt ltxpay in thla aonwattota iar Whom does the legal lwldense s? the tax mat? It 18 ritbin tha exelwive prwinue of our supreme Court to detema&w t-his qwa- tien. Alabaw v. Klug & Booaer, Suprow Court o? the UnLted Stata, 86 L. Ed. 1. 0th suprom~ court ln the uaae of State v. City of El Paso, epwking through JwtLoe Ctita, WLd: @Fras the se-1 statutm prarialQW lt S.a evidsnt that the lagialativeintent, as expruaed ln ths ebo*e statutes, La to Lowe a wmtor ?wl tax of four abnta par gallon on the first ml.0 e? 8atOr fwl, where awh fwl la WetWllY sold in lka8. It 1s further evident that the La~lalatun intended to -we Honorable Durvood Manford, page 4 a four oenta par gallon wer tax on all motor fuel used oh the pub110 highvaya of this State in Inatanaea vhera tha user obtains auoh motor fuel under auah olr- aumstanaes that no aatual sale thereof trahaalrea in When the statute by its terms Imposed a tax upon the first sale, first distribution or first use in this 3tato, it was deeaaa naoeaaary to uka oora emlrort vho la to pay tha tax. To this end the Legislaturede&ad it expedient-todefine oertaln terms wed in the Aot, and to those deflnltiona ve must adhere. We aovered this in our opinionDo. O-5995, Tram vhlah va quote as ?ollwat "We deem It helpful as ve proceed to note oertaln de?lnitlonsoar&aimed in Art. 7065b-1, just aa the oourt did in the ocmalderatlono? tha oaae a? State v. City o? El Paso, (Sup. Ct.) 143 S.W. (26) 366, in aan- *truing our motor fwl tax statute 55 it then,ex&atad and before it van amended. Nuah said in this aaaa is not luspprapriatein aonaidering our pvaaent statute. Tha oourt deemed it helpful to note tha deflnltlanaaohta@ad in the aot, eapaolally the da?inltlon of the tax, vhZoh was the aaam as aontalwd in the present act, and is as ?ollwa: "'An oaaupationor exaiae tax o? 4+?per gallon o? motor fuel or fraationalpart themof.' “The tax, by the exprasa language of the rtatute, is upon the first sale, first distribution,or firat we of motor fw~thla St- Our present statu~flnea a first sale thus: H*FIrat sale' shall mean the first sale or dlatrlbu- tion in this State of motor tuel rafiwd, bleadad, imported into, or in any other manner, produced in, aaquired or brought into this State.' $onoraBa Durvood ManCord, page 5 "who under the statute InltOIteaa firat sale, .a diatr%bution or we o? motor fuel upon vhioh the tax ia levied? Tha statute anavera: (a) ldLatributort. Who is a idlstributorl? Again the atatute awwera aa ?011wsr "lDiatributorshall mean and inalude every person lnthia State vho raflwa, dlstllla, manu?aaturaa,prodwea, blends, or oompounda motor fuel or blended amteriala, or in any other manner aaquirea OS poaseaaea motor fuel or blended material for the purpose a? making a first sale, we, or distribution of the same in this State; and it shall also lnolude every pdrean La this State vho ships, transports, or Imports any motor fuel or blended material into this State and makes the ifrat sale, we, or dlatri- bution o? aap)bin this State3 the said term shall also lnalude every person in this State vho prodwea 01 oolleata the liquid realdwnt of natural'gaa, ooansonl~laaavnas drip gasoline, or vho la responsiblefor the praduatlon or foraiatlontof said drip gasoline, lntentionall~or otherw1ae, unless said produat is totally dostrayed or ran- dered neutral as motor fuel or as a prodwt aapable of we as motor fuel in this State.' ‘In order that there be no loophole fo r laoape in thoae lnatanaeavhere the tax falls upon the firat we or dlatrlbutlon o? motor fuel as dlatlngtiahad?8aa1a I1 t sale, ve again look to oertain defInitionaOOntai!&a&%tha a+ -8a are as follwar 'Ther term *user* shall be oonatrwd to mean any person who wea or aonaumea lllqw?iad gases’ and 'other llquld fuels* vithln this State in internal oombwion engines for the genarstlcm a? pover to prapel motor vehlalea upon the pub110 hlghvags of this State. *'*Matrlbutlon" shall mean and lnalude any tranaao- tiona, other than a sale, in vhiah amerahip ar title to motor fuel, or any derivative of arude oil or natural gas, passes from one parson to another.* "'"Person"shall mean and lnalude every indlvldwl, firm, aaaaalaticn,aoint atoak company, ayndioate,aopmtner- ship, oorporation (public,private or av.anioipal), trustee, agenay or reaelver. t "@Dealer' ahall mean and inoludeeveryperson other than a distributorvho engages in the bualnaaa in this State of dlatributingor selling motor fuel within this State." I honorable BUIWOOCINR~CIO~CI, page 6 Conalatent vith the opinion oi Judge Crltr in the came of State v. City of El Pam, aupm, the tax la Lapoaodupon the first uae in this State In the aame aenaethat it la imposed upon the first sale In this Stete. In other vorda, a firat une is a statutory Sirat aale. The legal lnaidsnos of the motor f&i01 tax iS UpOU the U~tdfiKBte WMW or 0OxMUmer Of IIIOfiOrfbel upon the highvaya of thla State, and that the atatutorllydeflnad "dlatrlbutor"oi mwh.fuel ¶.amwely au agenay of the State for the purpoee oi aUlng in the aolleotl0n of tha tex, except ln thoae iuatanoeawhere auOh dlatributoratightltaolf be a flrat uaer vithln the purview Of the rtatute, In lwh aaae a dlatrlbu- tor might itself be sub@t to th@ ax. Swtlon (d) of the aut prOvIdea in part: "In the event thla Artiole la in oontliot vith the Constitution or any 1~ of the United Strtea vlth reaped* to the tax levied upon the first aale, diatrlbutim, or uae o? a&or ?uel in this Stek, then it ia hemby deolared to be the Intention of thta Artlole to lmp08e the tax levied herein upon the Fiat aubaeqwnt aalo, dlafrlbutlen, or uae cd'raid notm fuelvhio~ may bo aubjeot to beiw texed." Therefore, in view of the p~rtl)n O? Seat&on (d) gqod, aupn, ve think It my k aafe1T aaid that thaugh the *ale" of moto;l?fuel to the Foderel O~rnmvnt Q 8erkin Of it8 agendea sight ba tax oxeapt, it van the fntodtiorroi thm Legialrtum to lev a tax on sly aubaequent "nale" or "uai" of auoh f-1 vhleh might o~natitutlomallPbe taxed. We thluk there vod.d be &o.eonrtltutlanalprohibition agalnat~the taxing 0.fa uunt~aale or use Of motor fuel If the Federal Owerment or ta 8genalea vere not the aubjaot of the laoldenae O? the tax "T- ma a dimat pwohaaer or vendee iOr it8 am Me. Swrlzlq brletly vhat ve have aomvh8t ted10ualP amid, the tax m@y be lmpoaed under lpeolflo ~ongr~aal~l gmnt UPOU a direat aale oc uae to tba Fedev814OvoX%EtentO? itcragen- alea, and amy not be impwod vhem Cangnea haa apeolfloal4 forbidden the lmpoaltiono? the tax, 0~ the State has made au eroeptlon. But if noue of these oontlugermlaaexist, tba tax may not ba lmpesed~upon dlreot aalea to the Federal ffOvernmentor lta agenalea if the lnoldmwe of!the tax rest8 upon the Federal Oovernawnt or its agenalea aa the lmned5.atOvmdcm and user of the motor fuel for It8 dlreat use and benefit. But be)raudthis, Bononblo IIurvoodHanford, page 7 when there la a flrat male or float use, not ao reatrloted,a tax may be lmpoaed upon such vendee or uaer. You aubmlt vlth your opinion request a oopy of the ruling of the ComptrollerGeneral of the United States upon the lav of North Dakota aa la ao ably diamaaed by the Supreme Court of that atate and alao oomenta from the general oounael of the SflghvarDepartment of the State of Lwlalana am appllaable to the aale of motor iuel ln thoae atatea, and ve take the liberty of pointing out the dlatlnotlonbetveen our lav and the law of lorth Dakota and Leulaiuu. Briefly at&ted, the dlatlnetion la thlar the legal incldenoe pt the tax uuder the North Bkota law la upon the vendor and Is lmpoaed prlmarlly em an oooupatlon tax, vlth the privilege of sddlng the tax to the price for vhloh the dealer aella the gas, whorear under our Icw the legal lnoldenoe of the tax la upon the flrat vendee or the first uaer a? the gas for uae upon the publla highwaya. To expreaa it another way, the tax la upon ~theflrat male or the ilrat use ln this State legally aubjeot to the tax. Am arid by Judge Crlta in the earnoof State v. City OS El Paao, aupra, for the purpose of our tax, ilrat male and firat uee mean the aune thing. In other vorda, am said by hlm, Slrat we is a statutory flrat arle. It la, therefore, apparent that the declalve faotor ln the lorth DPkot.8lav la that the lnoldenae of the tu la not upon the vendee but upon the vendor enqged in the oooupation of aelllng gas . It la man- lfeat that ii the North Dnkota law had plaoed the lnoldenoe of the tax upon the vendee and the Federal Oovernwnt should be the vendee 5~ the purabaae o? gas for lea uae. then oenatltu- tional dltflcuitlesvould have been emoountered,and no doubt the proneunoementof the law dlffeawmt. The general oeunael of the Highway Depmtaent of Louislana stated that the altuatlon in that atate warncllmllarto that in North Dakota; henoo the Law would be the ma&w. Polntlng eut the dlatlnotienbetveon the law In our State and Barth Dakota and Louisiana la an far am ve feel at liberty to go In attempting to lay down a rule for the Leglala- tun tb roliow in any prophmd leglrtstlonupen the subject. Very truly youra, ATTONNHY PlsBHIuLOF TZtAS LPL/JCP