Honorable Robert S. Calvert Opinion No. C- 47

Comptroller of Public Accounts Capitol Station Re: Under the submitted Austin, Texaa facts, whether the Qross Receipts Tax provided for by Article 11.03, TaxatlonGeneral, Is due by the stated corporaDear Sir: tlons.

This Is In answer to your request for an opinion concerning the above subjectmatter and in connectiontherewith you have given us the followingfacts:

"QrossReceiptsTax audits have been made of the records of Caruth Corporation and Hillside Corporation,both of Dallas, Texas. Caruth Corporationowns and operates the Inwood ShoppingVillage, Dallas, Texas, and Hillside Corporation
owns and operatesHillside Shopping Center in Dallas, Texas.

"CaruthCorporation purchases electricity from Eellas Power and Light Company, gas from Lone Star Gas Company, and water from the Dallas City Water Works, and resells same to Its tenants in the shoppingcenter through lndlvldual meters and at a profit.
"HIllsideCorporation purchases electricity from Dallas Power and Light Company and resells same through individual meters to Its tenants In the shopping center at a profit.

"The Gross ReceiptsTax is paid by Lellas Power and Light Company,and by Lone Star Gas Company,based on their charge to the corporations.

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'The Dallas City Water Works, being munlclpally owned, Is not required to pay Qross ReceiptsTax."
"The 'Hillside

Corporation

"Sellselectricityonly (1) E,',';s

Power & Light owns Master
(2) Hillside Corporationowns transmission lines from master meter to tenant's store. (3) Hillside Corporationowns meter at tenant's store. (4) Hillside Corporationserves approxlmately 30 tenants.

"CaruthCorporation (Inwood Village)

"Sellsgas, electricity, and water to tenants. Lone Star Gas, Dallas Power & Light and Dallas City Water Works owns Master Meter at Caruth Corp. property line. (1) Caruth Corporationowns all laterals and lines which furnishutilities to tenants. (2) Caruth Corporationowns all meters at tenant's store. (3) Caruth Corporationservesapproximately 40 tenants or customers."
The questionto be determinedIs whether or not the business or operationconductedhere constitutes a gas, electric light, electricpower, or water works, located within any incorporated town or city In this State,and used for local sale and distributionIn said town or city,
as provided by Article~l1.03, Title 122A, Taxation-General, Vernon's Civil Statutes,the pertinentpart of which reads
as follows:
"(1) Each Individual,company, corporation, or associationowning, operating, managing or controllingany gas, electric light, electricpower, or water works, or water and light plant, locatedwithin any incorporated

town or city In this State, and used for local sale and distribution in said town or city, and charging for such gas, electric lights,electric

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power, or water, shall make quarterly,
on the first day of January,April, July, and Octoberof each year, a report to the ~Comptroller under oath of the individual, or of the president, treasurer or superintendent of such company, or corporation, or assoclatlon, showing the gross amount received from such businessdone In each such Incorporatedcity or town within this State In the payment of charges for such gas, electric lights,electric power,,orwater for the quarter next preceding. Said Individual,company, corporation,or association, at the time of making said report for any such incorporated

town or tit
more than one thousand (1,000 T ofinhabltants and less than two thousand, five hundred (2,500) inhabitants, according to the last Federal census next preceding the filing of said report, shall pay to the Treasurerof this State an occupationtax for the quarter beginningon said date equal to .581$ of said gross receipts,as shown by said report;and for any lncorporated town or city of more than two thousand, five hundred (2,500) lnhabltants and less than ten thousand (10,000) inhabitants,

accordingto the last Federal census next preceding the filing of said report, the said individual,company, corporation, or associationat the time of making said report shall pay to the heasurer of this State an occupationtax for the quarter beginning on said date an amount equal to 1.07% of said gross receipts,as shown by said report; and for any Incorporated town or city of ten thousand (10,000) Inhabitantsor more, according to the last Federal censusnext preceding the filing of said report, the said individual, company, corporation, or association,at the time of making said report, shall pay to the Treasurerof this State an occupationtax for the quarter beginning
on said date an amount equal to 1.997% of said gross receipts,as shown by said report. Nothingherein.shall apply to

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any such gas, electric light, power or water works, or water and light plant, within this State, owned and operated by any city or town, nor to any county or water ~lmprovement or conservation district.
"(2) Nothing herein shall be construed to requirepayment of the tax on gross receiptsherein levied more than once on the same commodity,and where the commodity Is produced by
one individual,company, corporation,
or association,and distributedby another, the tax shall be paid by the distributoralone,"

The Supreme Court In Eddlns-Walcher Butane Co. v. Calvert, 156 Tex. 587, 298 S.W.2d 93 (1957) Art. 7060 V.C.S. (now codifiedas Art. 11.03. Title 62A. Taxa&- General;V.C.S.),was held not to-apply to numerous sales of butane gas which was stored in two storage tanks within the town and was transferredby truck from the place of storage to the tanks of the consumers In and around town.

The Court in its opiniondefined "gasworks" In the followingwords:

We hold, therefore, that the

term'lgasworks' means either: (1) an establishmentIn which gas is manufactured, produced or processed,or (2) a dlstributlon system consistingof pipes through which the gas flows and is deliveredto the premises of consumers. This constructiongives effect to the leglslative Intent as revealedby the language of the entire statute."

In your opinion requestyou have stated that the Caruth Corporation, which owns and operates the Inwood Shopping Village located in the city limits of Dallas,purchases electricity from Dallas Power & Light Company,gas from Lone Star Gas Company,and water from the Eallas City Water Works, and resells same to Its tenants in the shoppingcenter through Individualmeters and at a profit. It Is further stated that Caruth Corporationowns the pipe lines and electricwires or cables used for deliveringelectricity,gas and water from the master meter where the utilitiesare receivedby Caruth Corporationto the premises of the tenantswhere the utllltles

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are dellvered.tothe-.:oonsumer. ThIsoperatIon seems to meet all the requirements necessary to c~onstltute gas, electric light, electricpower and water works ae definedby the Supreme Court of Texas In the case above cited.

Hillside Corporation purchases electricityfrom Dallas Power & Light Company and.resells same through Its individual electric,

cables and meters to Its tenants In the shopping center at a profit. This corporatlonts method of operation appears to constitutean electric light or electricpower works and It Is therefore cur opinion~that both of these corporationsare operating In a manner so as to be subjectto the gross receipts taxes levied by Chapter 11, Title 122A, Taxation-General, V.C.S.

It Is provided by Article ,11.03, above quoted, that It shall not be construed to require payment of the tax more than
once on the same commodity.

You have stated that electricityIs purchased from Lellas Power & Light Company and the gas Is purchased from Lone Star Gas Company,both of which pay the gross receipts tax provided above on the amount of money for which they sell the electricityand gas to the two corporations here Involved. In this case the two corporations which are reselling the utilities at a profit would owe the tax on the money received for sale of the products which is in excess of the purchase price paid by the two corporations. Caruth Corporationpurchases water from the Dallas City Water Works which Is munlclpally owned and no gross receipts tax is paid by the city
on water sold to Caruth Corporationbecause the statute provides that this tax shall not apply to city-owned water plants. When the private corporationpurchaseswater from the city and resells the water as in this case, then the water Is subject to the tax for the entire amount of the sale price received by Caruth Corporation.

SUMMARY

Under the stated facts the Caruth Corporationis operating gas, electric light, power and water works within the meaning of Chapter 11, Title 122A, Taxation-General, V.C.S., and is subject to the gross receipts taxes provided therein.

Under the facts stated the Hillside CorporationIs operatingan electric light

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works within the meaning of and is subjectto the gross therein levied. said Chapter 11 receipts taxes

Yours very truly,

WAGGONER CARR Attorney General of Texas

JRB:pw

APPROVED:

OPINION COMMITTEE W. V. Geppert, Chairman Cecil Rotsch Robert Lewis Joe Long Marietta Payne

APPROVED FORTHEATTORNEY GENERAL By: Stanton Stone

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