Untitled Texas Attorney General Opinion ( 1960 )

Honorable Robert S. Calvert Opinion NO. ``-810
Comptrollerof Public Accounts
Capitol Station. Re: Appllcabllltyof then
Austin, Texas Gross Receipts Tax pro-
vided for by Art. 11.03, ii'.
Title 122A, R.C.S., to
:- certain operations of
the IndustrialGas Supply
Dear Sir: ,,, .Corporatlon.
Byletter dated,.J&nuary~5, 1960, you advise that the
Indus$rialGas Supp&9 Corporation 1s~a .dlatrlbutor of gas to
a n ber of customerstithin the Incorporatedarea of Houston, .
Texi?
8. and that one Of their customers is thenCity of Houston's
Epagnolla Park.GaiiDistributionSystem, tihelatter being the
final distributor of the gas It receives. In'referenoeto
these facts,-y&zask whether'the gross rebeipts tax.provided
for by Artlc,ge11.03, Title 122A, Taxation-General;Tex.Rev.
Clv.Stat.(~1925)(formerly codified as Art. 7060, V.A.C.S.)
Is due on the receipts from the sales by Industrialto the t
City df *uston.
l$? pertinent pr&lsSons of thenArticle .ln question are
as follows:
._
"(1)~ Each lndivlduil, company, corporation, *’ .:
or associationowning,.0peratlng;mana~lng
or con$rolllngany gas, eleotric Ught,
electric power, or water'uorkib.;'.or‘:.titer
and light plant, .locatedwithin atiyln-
corporatedtown or city lnthls State, Andy
useh for.local sale anh diitrlbution``in~
said townq$rmTcharglng for euch
gas, electric lights, ,electr.ic
power; or .'
water, shall .makequarterly,-onthe first
day of January, April,:July and October of
each year, a report to the Cwptroller under
oath ,of the Individual.,,
or'of the president,
treasureFor superlntendent~ofsuch company,
or corporation,or aasoolatlon showing the
gross amount recclvdd from auoh,b.uslnessdone
in each such incorporatedcity ort@vn within
thi8 State in.the payment pi char&a ~forsuch
gas, electric lights, electric power, or iZXr
Hoporable Robert S. Calvert, Page 2 OpiilionNO. W&810
I
:*
Sor the quarter next preceding . I-. Nothing .a-
herein shall apply to any such gas, el'ectrlc
.llght,power or water works, or water and
light plait, within this State, owned and
operated by any city or town, notito an&:
county or water lmprovem&ntor oonservatlon
district. . ."
"(2) Nothing herein shall'be co&wed izti
require payment of the tax on gross receipts
herein levied more than once on~the suae *
. commodity, and where the commodity lg produced
by one Individual, company, corporation,or
association,and distributedby another& the tax
shall be paid by the distributoralone;-
:
Note that the article Imposes the tax on gas works used
for,loctilsale and distribution,and 1s measured by 'the.
--.
amount received from such business "In the pajment"of charges
, for such as " The terms "local ,sale"and~.Rdi.@trlbutlqh" are
not -gc
alterna lve, but cumulative. See Utilities Natural Gas
Com``an~v. State, 133 Tex. 313, 128 S.W 2d.1153 (1939)' In
the case just mentioned, "dlstrlbution"*washeid ~tor&Ire
more than an Isolated 'salewithin the corporate limits-of a .I
c.lty
. In ao holding, the,Court stated at page 1155: *..
..!
\ ‘,
-.'"This term as utiehdoes not mean the
tr'ansferof the possession~ofgas, by means
of the pipe line, to a single purchaser .
.nhere,snchpurchaser Is th; only cust'omer~
.to whom.the gas cozn~anysells gas In the,."
'city. It means the ~transferof posses+?n _.:
of gas to various individualsor concern&
In the city. Any~*otherconstruct$onof
the term ~would,In our opinion,,lnvolve'a
departure from the~legl~l'atlve~lnte~t.~
The deflnltlqnof "dlstrlbutlbn"was added to b Eddins-Walcher
Butane Conipanyv. Robert S. ,CalveFt,'l56Tei.,&&~'.S.W;.2d~
93 (1957) In an opinion ~byJustice Walker,,'~the Texas~Supreme
Court hela that the'tew.*gas works", as uaed:.Zn~,Alrt~.'7060~*
V.A.C.S.;-meant(1) an es'ttabllshnient
In which-gas Id manufacturedi:
producedorprocessed, or (3).a~distrlbutlon````y~tem``,~nsi~tlng ~.'
*of plpes through whic&.the gas flows.,and~ls.$el$ver&dto the
premisesof consumer8. In lightof these'two cases, It Is
submittedthat~"dlstrib~tlob"means transfer or possesslon~of
gas to various consumer,ln&l@duals or concerns +an in-
corporatedcity or town...merefore; 'you.a~e~:advised that the
tern %harges'for such gas?k which modlfle~s."@?oss::,amount
re+dyhJ from such buelnesr.',which inturn refers:'to"local
s+le aid dlstrlbutlori,"-
does not Include the"ie&lpts from.the
sale of the gas.to the City of Houston's Magnolia Park:Gas
DistributionSystem.
i L
,-
.
.’
Honorable Robert S. Calvert, Page.3 Opinion No. WW-810
.~
...
This conclusion 16 rcllnforcedby an examinationof the .
mesklng and lntent.~ofsection (2) of Article 11.03. In
reference to the same provision in Art. 060 V.A.C.S., the.
Court in the Eddlns-Walchercase atated T p. 45):
“It ie expressly provided that the tax
shall be levied only once on the same
commodity,and that where the commodity :. ;,
Is produced by one.person and distributed
.
The City of Houston Is the actual dlstrlbutor'of~thegas in
question. The fact that the city Is expressly exempted by the
Act oannot operate to shift the legal Incidence of the tax.
SUMMARY
The IndustrialGas Supply Corporation
lb not,iequlred'toInclude receipts from the
sale oi gas to the.Clty of Houston for
distributionby the cl$y's Magnblla P-k
Gas DistributionSystem In calculatinggross
receipts taxable uwler ArtXcle 11.03, Title
122A, Tax&Ion-General, Tex.Rev.Clv.Stat.
(1925)*
‘.,’ Yours very trulg,~
i.
WILL WILSON _``
Bv..96
APPROVED:
OPINIblP.coHMITTsB: ~
Y. y: Geppt,r't,
C~lxmti
~Marlet
tr.,
McGre&r Payne
Howard.Slays
3era H; Roberta
RBBfEwBD FCR~THE AT’I’OEWRY GENERAL
By: &eona$dPawnore
.' ..
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