THE ORNEY GENERAL
OF %%.CXAS
Opinion No. O-5235
The Senate Re: Effect of H, B. 10,
Austin, Texas 48th. Leg., as amended.
Dear Sir:
Your letter in regard to House Bi11110 was received,
The letter reads as follows:
"As Chairman of the Conference Committee on House
Bfll 10, I beg to submit to you the bill as the Confer-
ence Committee has amended the same9 after being returned
from the Governor's office on resolution of the House,
concurred in by the Senate,
"As Chairman of this Conference Committee I wfsh
to make the following fnqufries:
1. Does this bill in any wise repeal the chain
store tax, either as to lumber companies or as to utili-
ties.
2. In your opinibn, are the provisions of this bKU
sufficient to effect the purpose of the bill, towit: to
exempt wholesale and/or retail lumber and/or building
material places of business exempted under the chain
store tax law provided as much as 75%of the gross pro-
ceeds of the business done each preceding calendar year
at such place of business is derived from the sale of
lumber and/or building material; and, further, to exempt
gas and/or electrfc utilftfes operated in towns of 3000
population or less, according to the next preceding Fed-
eral census from the chafn store tax provided as much as
75%of the total gross.receipts in the preceding calendar
year in each such town where such a store or stores are
located, is derived from the sale therefn of gas and/or
electric service; and, further, do the provis%ons eon-
tafned therefn to the effect that gas and/or electric
utill,tfesshall pay & the fees imposed by Sections 2,
4 and 5 keep in the chain store tax such towns or is it
the effect of such provision to release them from under
the terms of the chain store tax.'"
Hon. Kyle Vick, Chairman, page 2 (O-5235)
The material parts of the bill about which you ask,
omitting the caption, read as follows:
"BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF
TEXAS :
lfSection1, That Section 5 of House Bill No. 18,
Chapter 400, Acts of theForty-fourth Legislature, First
Called Session, 1935, as amended by Section 1 of Article
XIX of House Bill No. 8 Chapter 184, Acts of the Forty-
seventh Legislature, Reiular Session, 1941, be and the
same is hereby amended so that said Section 5 shall here-
after read as follows:
"'Section 5. Every person, agent, receiver, trustee,
firm, corporation, association, or copartnership opening,
establishing, operating, or maintaining one or more stores
or mercantile establishments within this State, under the
same general management, or ownership, shall pay the li- :
tense fees hereinafter prescribed for the privilege of
opening, establishing, operating, or maintaining such
stores or mercantile establishments. The license fee
herein prescribed shall be paid annually and shall be in
addition to the filing fee prescribed in Sections 2 and
4 of this Act. Provided that the terms, 'store9 stores,
mercantile establishment or mercantile establishments'
wherever used in this Act shall not include: any whole-
sale and/or retail lumber and/or building material place
of business, provided as much as seventy-five (75) per
cent of the gross proceeds of the business done each pre-
ceding calendar year at such place of business is derived
from the sale of lumber and/or building material, provid-
ing that the term 'building material' as used herein shall
be construed to include any material which is used or usa-
ble in the construction of buildings, improvements or
structures, including materials consumed in and any arti-
cle to be built into and become a part of buildings, im-
provements or structures; also mechanics' hand tools used
in the construction of buildings, improvements or strUc-
tures; and/or oil and gas well supplies and equipment
/ dealers; and any place of business commonly known as a
gasoline filling station, service station, or gasoline
bulk station or plant, provided as much as seventy-five
(75)per cent of the gross proceeds of the business done
thereat is derived from the selling, storing, or distrib-
uting of petroleum products; or any business now paying
an occupation tax measured by gross receipts; or any
place or places of business used as bona fide wholesale
or retail distributing points by manufacturing concerns
for distribution of products of their own manufacture
Hon. Kyle VYck, Chairman, page 3 (0-523’4)
Only; or any place or places of business used by bona
fide processors of dairy products for the exclusive sale
at retafl of such products; or any place or places of
business commonly known as Religious Book Stores, oper-
ated for the purposes of selling Religious Publiea%,ioAs
of any nature, Including Bibles, Song Books, Books upon
Religious Subjects, Church Offering Envelopes, Church9
Sunday School aAd TraMrig Union Supplies, provided
that gas and/or electric utilities shall not hereafter
be required to pay any tax or fee under this Act for the
privilege of operating fn towns of three thousand (j83CC)
population or less, according to the next pre::edingFed-
eral Censusp a store or stores for the purpose of selling
gas and/or electric appliances and/or parts for the re-
pairs thereof, provided as much as seventy-,five(75)per
cent of the total gross receipts in the preceding calen-
dar year in each such town where such a store or stores
are located is derived from the sale therein of gas and/or
electric service, and provided further that for the privi-
lege of operating a store or stores in towns of m’orethan
three thousand (j900Q) population, accordiAg to ‘thenex%
preceding Federal Census, for the purpose of selling any
or all of the above-named commodities, gas and/or ele:-
trfc utilities shall pay only the fees imposed by See-
tions 2, 4 and 5 of this Act0
““The license fees herein prescribed shall.be as
follows :
VP‘1, Upon one (I) store the Xcense fee shall bje
On’eDollar ($1);
‘fI20 Upon each additional store PA excess of one
(I) but not to exceed two (2), the license fee shall be
Six Dollars ($6);
11I Upon each additional store fn excess of two
(2) but3not to exceed five (59, the license fee shali be
Twenty-five Dollars ($259;
” 04. Upon each additional store in excess of five
(59 but not to exceed ten (IO), the license fee shall be
Fifty Dollars ($50);
I1“5* Upon each additfonal store 5.negress of ten
(IO) but no% to exceed twenty (20) the lieeAse fee shall
be One Hundred and Fffty Dollars ($150);
sr06.Upon each additional store in excess of twenty
(20) but Aot to exceed thirty-five (35)$ the l%cense fee
shall be Two Hundred and Fff%y Dollars ($250);
Hon. Kyle Vick, Chairman9 page 4 (O-5235)
1117. Upon each additional store in excess of thirty-
five (35) but not to exceed fifty (SO), the license fee
shall be Five Hundred Dollars ($500);
"'8. Upon each additional store in excess of fifty
(50) the license fee shall be Seven Hundred and Fifty
Dollars ($750);
"'Such fees are for the period of twelve (12) months,
and upon the issuance of any license after the first day
of January of any one year, there shall be collected such
fractional part of the license fee hereinabove fixed as
the remaining months in the calendar year (including the
month in which such license is issued) bear to the twelve-
month period."
It is apparent that said House Bill 10 creates some
additional exemptions in the Texas Chain Store Tax Law, which
is codified as Article lllld of Vernon's Penal Code of Texas,
that is, the bill exempts certain types of stores from the op-
eration of the Texas Chain Store Tax Law in addition to the
stores already exempted in said law. The additional exemptions
created by said bill are the ones created by the following lan-
guage of the bill, towit:
First:
1,
D D 0 any wholesale and/or retail lumber and/or
building material place of business, provided as much as
seventy-five (75)per cent of the gross proceeds of the
business done each preceding calendar year at such place
of business is derived from the sale of lumber and/or
building material9 providing that the term !building ma-
terial' as used herein shall be construed to include any
material which is used or usable in the construction of
buildings, improvements or structures, including mater-
ials consumed in and any article to be built into and
become a part of buildings, improvements or structures;
also mechanics' hand tools used in the construction of
buildings, improvements or structures; (I0 0"
Second:
"0 0 0 provided that gas and/or electric utilities
shall not hereafter be required to pay any tax or fee
under this Act for the privilege of operating in towns of
three thousand (39000) population or less, according to
the next preceding Federal Census, a store or stores
for the purpose of selling gas and/or electric appliances
Han, Kyle Vick, page 5 (O-5235)
and/or parts for the repair thereof, provided as much
as seventy-five (75)per cent of the total gross receipts
in the preceding calendar year in each such town where
such a store or stores are located is derived from the
sale therein of gas and/or electric service, 0 0 0W1
Another clause added to the Texas Chain Store Tax Law by the
bill is that part reading as follows, towit:
"0 0 . provided further that for the privilege of
operating a store or stores in towns of more than three
thousand (3,000) population, according to the next preced-
ing Federal Census, for the purpose of selling any or all
of the above-named commodities, gas and/or electric utili-
ties shall pay only the fees imposed by Sections 2, 4 and
5 of this Act."
The other exemptions and provisions of said House
Bill are already in the Texas Chain Store Tax Law,
The validity of the exemptions in theoriginal Texas
Chain Store Tax Law (House Bill 18, Ch. 400, &th, Leg. 1st
1935) were upheld in the case of Hurt v. Cooper, i30 Tex,
~$"llO S W 2nd 896. The exemptions in House Bill 10, about
whi:h you isi, are similar to the exemptions in the original
Chain Store Tax Law, except that they apply to stores in which
a different kind of merchandise is sold.
Our answer to your question No, 1 is that House Bill
10 does not entirely repeal the chain store tax as to lumber
concerns or as to utilities, but it creates an exemption which
unquestionably applies to practically all lumber concerns
throughout the State, and to practically all stores operated
by utilities in towns of 3,000 population or less; and, there-
fore, the practical effect is the same as if the Chain Store
Tax Law was repealed insofar as the lumber concerns throughout
the State and the utilities in said towns are concerned,
We will now take up the various parts of your ques-
tion No. 2.
In our opinion the bill, by virtue of its specific
words, exempts from the chain store tax throughout the entire
State, regardless of the town in which located, wholesale
and/or retail lumber and/or building material places of busi-
ness, provided as much as seventy-five per cent of the gross
proceeds of the business done each preceding calendar year at
such a place of business is derived from the sale of lumber
and/or building material, as those terms are defined in the
bill o
Hon. Kyle Vick, page 6 (O-5235)
It is our opinion
- that
. the bill, by virtue of its
specific words, exempts
I from tne chain
. store tax stores op-
erated by gas and/or electric utilities in towns of 3,000
population or less, provided as much as seventy-five per cent
of the total gross receipts in the preceding calendar year
in each such town where such a .storeis located was derived
from the sale therein of gas and/or electric service,
Your last inquiry reads: ". 0 0 do the provisions
contained therein to the effect that gas and/or electric
utilities shall pay only the fees imposed by Sections 2, 4 and
5 keep in the chain store tax such towns or is it the effect
of such provision to release them from under the terms of the
chain store tax?" In the recent case of Central Power & Light
Co. v. State, 165 S.W. 2nd 920, decided by the Court of Civil
Appeals at Austin, in which the Supreme Court of Texas refused
writ of error, and which is now being appealed to the Supreme
Court of the United States by the utilities involved therein,
the Court of Civil Appeals held that stores operated by a gas
or electric utility were subject to the terms of the chain
store tax by virtue of the provisions of Section 5p and not
Section 5a, of the Texas Chain Store Tax Law, The only section
of the Chain Store Tax Law that imposes a tax other than Sec-
tions 2, 4 and 5 is Section 5a0 It is our opinion that this
last provision about which you ask provides that in the case
of stores operated by gas and electric utilities a chain store
tax can only be collected under the terms of Sections 2, 4 and
5, which means the provisions of Section 5a do not apply to
such stores. We see no reason why the tax prescribed in Sec-
tion 5 would not apply to such stores operated by utilities
except the multitude of stores operated by utilities which
this Bill specifically exempts in towns of 3,000 population or
less.
Yours very truly
APPROVED APR 26, 1943
/s/ Gerald C, Mann ATTORNEY GENERAL OF TEXAS
ATTORNEY GENERAL OF TEXAS By /s/ Cecil C. Rotsch
Cecil C. Rotsoh, Assistant
APPROVED: OPINION COMMITTEE
BY: BWB, CHAIRMAN
CCR:BT:wb