Untitled Texas Attorney General Opinion ( 1942 )

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E OFFICEOFTHEATTORNEY
AUSTIN
GENERALOFTEXAS
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fionorable
Oeorge II.Shemard
CmptrOlle~ of Publla AccOwit8
AllBtln,Texas
Dear Sirs OplnLon no. O-4731
!&other tax 1
tmr of!Augurt 4, 1942;
t the Cefanss PUnt
r to the cement manw
atlng by nnd through
xm.mSaot.urms in thla State
dlmct Bale to the Dnltsd
EIciuae
i&d Lagl8lnture,
47, seation 4la, aa tuaimlsdby &ticle
Bill 0, 47th reeds ln pact as follows:
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Eonorable Oeorge H. shoppard, page 2
“Cement Distributors. ticire Is hereby imposed
.a tai of tvo and one-half (&) cents on the one bun-
dred (100) pounds, or fractional part thereof, of
cement on every p.erson in this state manufaaturln.3 or
producing ti and/or lmportlry ceinent Into this state,
and vho thereafter distrlbutea, sella or USest pro-
id d hovever, no tax ahall,b id t on one sale,
&a~rlbutlon or une. The pefo?lla````or said tax
is hereby defined as a ldlstributor* + l l.* (Zt~phaals
~OtlrS)
The statute, on lta face, and In plak*tenns laya the-
tax upon the person vho manufacturers or produces in, or imports
cement into this atste aud thereafter diotrlbutes, sells or uses
it. The %EJIis measured by the mount of cement distributed, sold
or used, after euch marmfaature, production or importation and aa-
c~e8 ot the time of suoh dlatrlbutlon, sale or use. Ho person,
other than the “distributor,’ as defined in the etatute, ever be-
comes l~iableforthe payment of the tax. It 1s an occupation tax
statute, and.there is no doubt of the Leglslative.intenta “The
statute levies a te;X for eaoh100 pouikd; of cement on those manu-
facturing and Import Trinity Portl8nd Cement
Co. vs. State, 144 S“.g.Tci) ‘gy%; of error refused).
In our opinion lo. O-3079 ve held the diistrlbutor llable
for the tax and held tkbt the tax acorued upon salea of cement by
the distributor to a aost-plue aontraator who vas reimbursed for
the aoet of materiale by a govermnent instz%mentalltg. At the
date of that opinion, however , the 3nlted States Supreme Court had
not overruled, though It had linlted Its dealsions in the 0888s of ,
Panhandle 011 Co. vs. Statei.277 u. s, 218 72 L. Ed. 857, 48 Sup.
Ct. 451;.Indian Motorcycle Co. ``a. U. S., 263 U. 9. 70, 5 L. Ed.
1277, 51 sup. ct. 6011 and Graves vu. Texas Company, 29;5U. s. 393;
80 L. zd. 1236, 56 SUP. ct. 818, That oplnlon vae based on the
Principle 8nnounced in Trinityfaru Co.,va. Orosjenn, 291 U. 3. 466, .:
514 sup. ct. 469, 78 L. Ed. 918, that even though a stnte tax on an
independent oontraator inareased the ultimate ooet to the govermnent,
unless a direat burden vere placed on the goverxnwent, the tax vould
not be unaonstltutlonal as InfrIngIng the governmental lmmunlty iron,
taxation. Deaplte the Trlnltyfam oaee,Ihovaver,in viev of the
holdlng in the case of Psnhandle 011 Co. VLI. State, aupra, that an
oaoupatlon tax on gasoline distributore,,based on the amount of
gasoline mold, could not, oonstltutlonally, be oolleoted from a
Ronomble George H. Sheppard, page 3
gasoline distributor vho sold direotly to the Federal Governme&,
it beoame neaessary for us to deternine vhether or not the pur-
cbasor of cement vas ea independent oontraator or vhether he pur-
chssed as an &gent. of the govemment.
Jlnoe the date of our oplnlon Ho. O-3079, however, the
manhandle 011 Coqany cane and others of like import have been
defin1 tely ovemuled. state of Alabama vs. ~r%.ng8 Boozer, 62 sup.
Ct. 43; Curry vs. United States, 62 sup. Ct. 4% We think thtaae
cases are directly in Folnt. In the King & Soozsr case the oourt
had before It an Alabaam statute which levied a a&lea tax OS 2 p&r
cent of the gross retail sales prlae of tangible personal property
on the retailer, and made Zt his duty to add ouoh sales tax to the
salon price and collsat it fwzm the purchaser, 3alos vere made to
a "cost-plus contractor' vh6 was engaged In oonatructing an snay
camp under contract vith the United states Government. In holding
the tax constltutS.onal ati ool.leotlble as agaiaat such oontraotor
the court saldt
‘Congress has daollned to pass legialaticm lm-
munixlng: from state taxation oontraatom under *oost-
plus" oontraats SOP the oonstmotion or governmental
projects l Comequently the participants in the pres-
ent transaction enjoy< only such tax bmrunlty as Is
afforded by the Conetitutlon itself, and we are not
now concerned \iLth ~the extent and the epproprlate
exerolao of the power of' Congnsa to.free suoh tram-\/
sotlona fron state taxation of i.ndlvlduala La euoh
aimxtnstanaos that the soonomla bunlen of the tax la
paassed on to the nat.fonal goverment. The government,
rightly, ~8 think, disolalrms any oontentlon that the
Gonatltutlon, unaided by aongresslonal legislation,
prohibita a tax sxaated from the oonEroctor8 merely
beoauso it is passed on e~onomloally, by the terms of
the oontract or othervlse; 88 a pa%% of the aonatrua-
tion ooot to the Gorerxment. So far as suuh a non-
dlsoriminatory state tax upon the aontraotor enters
into the oost of the materials to the Government, that
is but a nomal tic&lent ot the organlsatlon within
the #ame territory of tvo lndeptmdent taxing sovere&n-
ties. l?!maasertkd right of the one to be free of tax-
ation the other doer not spell lmaunlt fron pa
%he adzd coets, attrlbutaixleto the texa~ion of t%i%
vbo furnlsn suppllea to the Qovernment and who Bnve
been granted EO tax Umnunity. So far as a different
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flonorable George Ii. Sheppard, Page 4
view ha8 prevuile~, 880 ;eaAhundle Oil co* ve. state
ex rel, KAOX, supra~ Waves vu. Texas Co., e me 3
think It Ao lcuww tenable." (pals oure"p
The aam of Curry vs. United States, eupra, involved the
mme question px'eaented IA the Kl~g 8 Boozer oaee. the only dif-
fore~ce be- thet the tax involved in the Cumy OmeWe a use tax
rather then a nales tax. The conrt made the follow pertinent
etStesleAt$
"For the reaeane stated at lmgth in out= oplnlon
in the siys h BoOZeI O&30 Y%thbk t&t the OOAtPfL0t-
om, I~purchaaI~gand brh.&n.g the bu?.ldIngmeterlal
into the state and 5~ zrppropriatIng%t to their aoA=
tract vith the ~VOPRBl~At, W0r0 AOt tP@At8 OF &8trU-
nentalltles of.the Ciovermmsntt ad they ace not ml&wed
of the tax. to vhloh they would othemriee be subjeot, q
remon or tm fact that they are eovezmwmt Contraotors.
xl- the 8 tate lau ‘lays the tax qtllem rather than the.
~lvldu.al vlth whom #my enter 0 a ooet-plus oantraot
mS the PrSSeAt OAe, then it ef'foOt0 the ~(;dVrBFAtWAt,
r?3rethe Ltxllvidual., OAly as the ec0~0Lulo burdd3A is shift-
ad to it through qml=atloA of the COAt,-nOt,” (Bq~lX~lfi
ours 1~
Our attentlon``hss been celled to the.caee of Pederal Lend
Bank 06. Blsmarclc Lumber CO,., 62 Sup. Ct.~l, where the ocurt had
under consldemtion a florth Dakotil statute levying 6 2 per cent tax
upon gross receipts from salos of property. The Federal Fam Loaa
Act exempted,tho bank from Federal, State snd loos1 taxation, vith
oertain exceptions. The Court held that the 86bS t8iViBa AOtpy-
able c~ property sold to the Beck, becmee th6 bmk v&i exempt, by
statute, fran the paymoAt of the tax. 32~1 tex there acmsldered wae
not upon the aoller, but upcm the pwohaaer. Though the stetuta, IA
tom, deolamd the vendor, to be the taxpayer, It a?equlred h3m to
add to the sale prlae the amount of the tpx and to oolleot the tex
frca the purcrhnwr. It fuothe~ made tho auwunt of the tu a debt of
the purohaser to the vendor amtl.1 paid, thereby plaoing the legal
inoidenoe Of the tax direatly OA tha p``?~haaelr. OIW Statute, OA the
contP0ry,maIkes no euoh CsqWwient. The tax ia, in tomis, laid on
the IS~dor. Bo alone is l&able for the ymont of the tax to the
State, end AO ore elae ever beoomee ll.ab r 8 for pqmnt of the tex
Mleee by virtue of oontreot vitb ?IkP. Our court.8 have deternine&
that the legal ¶.noide~oe of the tax iacm the vendor. Trinity Port-
la&d Ceglent co. vs. at&e, 1% 9. V. (2d) 329 (vrlt of error refuaed~,.
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gonorable Qeorge H. Sheppard, Pwze 5
This department so hsld in our opinion Eo. O-3079, and VO pressnt-
ly hold that th8 legal l~oi.deAce of the cemAt distributors' oocu-
pation tax is UpOA the pel’8CNIVhO Sk6lWfROtU.r%~ Or ~rod~c6S cesJ%Ikt
ln this state or vho ImpoFt it into this sltate an8 thereafter
sells, distributes or uses it; that the tax is measured by the
amount of oemept so sold, distributed or used, and that the tax
aCcrue5 at the time of suoh sale, distribution or use. Uhder the
Cuthority of the oases of Uabsma vs. ping & Boozer, 62 SUP. ct.
43 and q vs. msited States, 62 Sup. Ct. 48, ve hold that the
fast that the sele,may be made directly to the Uhlted States ffov-
WAUleAt OX' t0 89 iAStPUUbSAt.S~it~thblY!Of iS iSlfIlRtPi~ial, aAd that-
the PAX sooruea and the vendor boouses liable therefor upon the sale
of tile cemeAt.
SA thus holdlAg ve are not vm&ndSul of the faot that
S0CtiOA 610, Title 15, U.S&.A . , spealfloally exempts the Defense
31ant CorporatlLaa frOm the paymeAt OS sales or use taxes, We are
aonv%need, hovwer, that swh statute does not, and dws not under
take to emmpt free. taxation all pornoAs vho deal vlth DeSeAsa
?+a Corporutlon. The mlyw3yD~eaae PlaAt Corporatioaoould
ever become liable for the cement dlstrlbutors* 'tax levied by our
statute ~vould be through aantraot with the distributor. &ad vhlle
our holding here vouXd be the sameI IA any event, it 1s latereatIng
to note that the evtientie ruraished us Soreoloees Amy aontention
that in this pRrtfCU&W instZ+Aee the tRX vould 6~8~ b8001810a 8Wdexk
Oil the Federal C?OVe``t OF any Of It8 inBtl’USWXlt8litieS beCraUse
as pointed out in the excelleat brief subs&ted by Kefmni. A~dmvs,
Kelly, Z%rth & Cmapbedl, the aontmot vlth the distributor speoi-
fically provides that AO sales or use tax &all be Included In the
oement prioe quotatlans, and that no ruch tax will be paid by De-
fense Plant corporation. Thus, raeltjter by our statute ~0x9 by the
oontraat, ¶.A this 3mGaAae, does the tax ever beoome the llabillty
of nor payable by say person other~than the oament distributor,
Clearly he is not a~ %Astmssemtallty of the Federal Govemment aAd
clearly he is liable Sop the tax.
We return herewith the dOOI%aOAtU bended to us for cOnsid-
oration in oomectlon vlth this opinian. We expresm our appreola-
tioA for the brief, above referred to, as well as for the dooumeA-
tary evldenoe furnished, all OS vhtoh has been very bsnefiolal to us.
Trwting that ve have Sully ansvered your inquiry, we are
,Yours very truly
OvEI)SD 4, 1942 ‘-
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