. *



### TRIE 

## ATTQIZNEY GENERAL QFTEXA~

March 18 , 1970

Honorable 0. N. Humphreys, Jr. Administrator Texas Liquor Control Board Sam Houston State Office Building Captiol Station Austin, Texas 78711 Opinion No.M-598

Dear Mr. Humphreys: Re: Airline-Beverage Permits under Article,I, Section 15 (21)Texas Liquor Con**trol** Act.
The 61st Legislature amended the Texas Liquor Control Act by providing for a new "Airline-BeveragePermit." [Article666-15(21),V.P.C., Acts 1969, 61st Leg., 2d C.S., ch. 1, Art. 6, sec. 3,p.5, 37-381. you have inquired as to the implicationsof this amendment as follows:

"QuestionNo. 1. Does an Airline-Beverage Permit authorize the holder to pur**chase** alcoholicbeverages outside of Texas, transport same into Texas, and store same at airports in Texas? "QuestionNo. 2. If the answer to QuestionNo. 1 is 'yes)'does an AirlineBeverage Permit further authorize the holder to supply its passenger aircraft departing **from** Texas airports to be served to the passengers aboard the flight,with the alcoholicbeverages previously purchased outside of Texas and stored at an airport in Texas? "QuestionNo. 3. Do alcoholicbeverages purchased outside of Texas become taxable under Article I, Section 21, T.L.C.A.; Article I, Section 21 l/8, T.L.C.A.; or Article II, Section 23, T.L.C.A., upon the occurrence of any of the events or **trans** actions described in QuestionsNo. 1 and **2 above?** **”**

**-2847-**. .

Honorable 0. N. Humphreya, Jr., Page 2, (M-588 )

Our answer to your questions are 88'follows: Question No. 1 "Yea";Question No. 2, 'Yes":Question No. 3;"Alcoholit beverages purchased, transported, stored and sold in accordancewith the procedures in question become taxable upon the first actual sale or consumptionwithin TBxas." The relevantprovisions of Article 666-15(21),Vernon's Penal Code, as amended,may be paraphrased as follows:

(1) The Legislature declares that nothing in the Texas Liquor Control Act prohibits selling or serving of alcoholic beverages in any size containers on commercial passenger airplanes even though "dry" areasmay be traversed during the course of flight;provided a special $1000 airline beverage permit is obtained annually from the Alcoholic Beverage Commission. (2) Permittees are exempted from Article I, Sections 15(a) 7 and 18 of the Act which relate respectively to the taxingpower of county commissioner's courts, and residence-ownership requirements for other permittees. (3) Permittees are authorized to store alcoholicbeverages at airports in any size sealed containers subject to rules and regulations. (4) Taxes imposed on alcoholic beverages on board aircraft departing this state are to be paid pursuant to rules and regulations. (5) Permittees are exempt from the Limited Sales, Excise and Use Tax Act, and in lieu thereof, a five cents per drink service fee is assessed for each serving of an alcoholicbeverage within this state which fee permittees may absorb and remit monthly pursuant to rules and regulations. (6) Retail package store permittees are granted exclusive rights to sell alcoholic beverages in any size containers to AirlineBeverage Permit holders. Such containers are allowed through the ordinary manufacturer-importer-wholesaler-retailerchannels for such sales. -2848-Honorable 0. N. Humphreys, Jr., Page 3, (W-598 )

Although the amendment does not deal expresslywith out-of-statepurchase, importation and storage of liquor, yet we think the Legislature enacted definite provisions which have no meaning unless it presumed such activity' would 

### occur. Wetherefore conclude that the Airline Beverage Permit impliedly authorizes the procedures outlined in question number one.
We do not think that subsection (f) of the amendment1 prohibits out-of-statepurchasing, importation an'storage in this state. This subsection simply requires that, among the various permittees authorized to sell liquor &I Texas, only retailers are allowed to sell toAirline Beverage Permittees.‘
The question thus becomes whether the subsection impliedlyprohibits transportation into the state of such liquor. To so conclude, one would have to reason that subsection (f)requires that all beverages on airliners in Texas be purchased from a Texas retailer. To comply, airliners entering this, state would either'have to jettison all out-of-state liquor or consider it subject to forfeiture as an illicit beverage. [cf.Art. 666~SS3a(4); 42(a); 17 (13)V.P.C.] Nothing in the amendment indicates legislative intent for such requirements.
On the other hand, there are affirmative indictions that the Legislature contemplated that permitteeswould import liquorpurchased out-of-state. Subsection (d)of the amendment reads as follows:

"As to all alcoholic beverages on board any commercialpassenger aircraft departing from any airport in this state, the taxes

'"Only the holder of a Package Store Permit shall be authorized to sell liquor to the holder of an AirlineBeverage Permit: and for the purposes of this Act, any sale of liquor to the holder of an Airline-Beverage Permit shall be considered a sale at retail to a consumer." [Art.666-15(21f),V.P.C.1 %y requiring all sales in Texas to be made at retail, payment of the retail sales tax is also assured.

-2849-. I

Honorable 0. N. Humphreys, Jr., Page 4, (M-598 )

imposedby the Texas Liquor ControlAct shall be paid as prescribedby rul~es and regulationsof the Board." (Emphasisadded).
If any beverages on departing aircraftwere purchased at retail, the taxeswould alreadyhave been paid atthe time of delivery from the wholesaler to the retailer. [cf. Art. 666-9921, 21 l/EA(l)b quoted infral. Thus, the qu6tCd provisionwould be unnecessaryand meaningless in that therewould be no occasion for a reporting system, rules and regulations forpayment of taxes alreadyp&id.' The Legislature is not presumed to have passed a meaningless statute. cf. 53 Tex.Jur.2d 272, Statutes, Sec. 182. Further,we conclude that the Legislature envisioned beverages on departing aircraft forwhich the appropriate taxesmight not have been paid, viz. out-of-state imported liquor. The legislature therefore directed the Commission to prescribe rules and regulations for reporting and paying taxes on such liquor.
Another 61st Legislature amendment,3while not part of the Airline Beverage Permit provisions, is pertinent; it provides as follows:

ion number three1 shall

obtaining exemption **from** or credit for such taxes and shallprovide by,rule and regulation for equitable and final.disposition of any tax credit brought aboutby such payment of any such unintended or excess." There is **heavy** traffic from Texas terminals to outof-state airports. To conclude that aircraftmust be supplied only with liquor purchased at retail in Texaswould inevitably require an inundating refund claimprocedure on liquor consumed out-of-state. Moreover, a complex adjudicative system for the "equitable and final disposition" of excess taxeswould have to be devised.

3Acts 1969, 61st Leg., R.S., ch. 38,p. 80, 96-98, Sec. 17, codified as Art. 666-21 1/8A,V.P.C.

-2850-- .

Honorable 0. N. Humphreys, Jr., Page 5, (M-598 )

The Alcoholic Beverage Commission is 

### atpresent totally ungeared for such procedures,and nothing in the'~recent amendments indicates legislative intent that the Commission's proceduresbe'so extensively revised.
To the contrary, the Legislature declared~that

### taxes on Liquor shipped out-of-state for consumptionnot be collected in the firstplace, thereby necessithtingonly nominal and incidental refund procedures. The only discernible conclusion again appears to be that the Legislature foresaw the possibility 

### of'beveragason board departing aircraft for which the tax had been unpaid, and specifically declared its policy only to 

### tax such liquor as might be consumedwithin this State. The act allows storage at airportspursuant to the. rules and regulationsof the Commission. We"deem.it evident that all liquor lawfullypurchased'and transported pursuant to the Airline Beverage Permit,whether from within or without Texas,may be stored 

### atTexas terminals. Our answer to your question number one is "yes."
You further ask whether beverages so puchased 

### and transportedmay be used to supply aircraft departing from Texas. We see nothing in the recent amendments to suggest that Airline Beverage Permittees cannot supply departing aircraftwith liquorwhich they have lawfully purchased and stored pursuant to an airlinebeverage permit. Accordingly, we answer your second question affirmatively. Assuming liquorhas been purchased out-of-state, transported to a 

### Texasterminal, stored, and supplied to an aircraft departing this state,your third question inquireswhich activity, if 

### any,makes the alcoholic beverages taxable under the followingprovisions of the Texas Liquor ControlAct: Article I, Section 21,4 Article I, Section 21 1/8,5 or Article II, Section 23.6

4Art. 666-21,V.P.C.
5Art. 666-21 l/8,V.P.C. 6Art. 667-23,V.P.C.

-2851-. - . . -

Honorable 0. N. Humphreys, Jr., Page 6, (M-598 1

These 

### sectionsrespectively imposed.gallonageand barrel 

### excisetaxeson the "firstsdle"'bfSli~tib~ or beer within this state. "Piret-sBli""is'~dBfidCB broadly to includepossession,distribution;'or lise'of 'alLliquor refined,blended,manufactured;'~imported'iiito,'or'~in~ any other manner produced; 'acqufred;~possessed,or brought~ into this state. However, under the

### ~general'scheme, the tax is not due and payable until the first actual sale within this state. Section 2L"l/EA,,1(b)p-s:

following~the 'fi kie'for the purpose'of"this'sectmha11-- mean the first actual sale by the holder" of anywholesaler's permit to.the~holder of any other permit authorizing the retail sale of the beverage to be taxed." (Emphasisadded).
The specialAirline Beverage Permit does not precisely fitwithin the general scheme since "first sale" is defined as the first actual sale by 

### a wholesaler to a retailer. However, Section 21 l/8 AZ, supra, seems toevince a legislative intent that the reporting system be synchronized for those who transport liquor through this State for out-of-state consumption. Since that section declares the legislativepolicy to tax only beverages sold or consumedwithin Texas, any system other than a reporting of taxes due on liquor actually sold or consumed in Texaswould seem unreasonabeiy cumbersome. Because we 

### areunable to see any appreciabledistinction as to the provisionspertaining to the barrel tax on beer in Article 2, Section 23,we conclude that the same standardswould apply. Excise taxes on beverages purchased out-of-state and transported through this state only 

### for service out-ofstate might further run afoul of the commerce clause of the United States Constitution. [UnitedStates Constitution,Article SE, ~13.1 This office has rendered an opinion discussing the interrelationof the Commerce Clause and the 2lst Amendment to the United States Constitution7 as to state regulation of interstate commerce

7 The 2lst amendment (ratifiedDecember 5, 1933) repealed the prohibition amendment and left regulation of alcoholicbeverages to the individual Stateswithin their boundaries.
-2852-,. - .

Honorable 0. N. Humphreys, Jr., Page 7, 04-598 1

where liquor is concerned. of. Attorney General Opinion No. M-227. The most exhaustive judicialdiscusaiohs'of' this matter are Hostetter vs. Idlewild Ban Voyage'Liquor ~~~~at~~~,~7:,y~;,'324~ '(1964~eM,"~~t"W~~~~ic P Y , I&. vs. P Beyrage **Control Fdr** **’ tik**  State of.Calffo~hih;"224"'F;Supp. 4 (1963). Thesecases held that'no state~can'completely prohibit **interstate** commercewhere liquor iscohaerned; - although reasonable regulationswill-be~constitutianally tolerated. Roth courts/however, used language strongly indicating that such regulationswould be those aimed at preventing unlawful diversion or use of alcoholic beverageswithin the state. We doubt seriously that a gallonage or barrel tax upon liquor or **beer** only transported through this state could reasonabelybegcalculated as measures preventing unlawful diversion into Texas. We therefore conclude that the gallonage and barrel taxes cannot lawfullybe collected on liquor and beer simply transported through Texas for consumption out-of-state because such taxee would be an unwarranted regulation of interstate commerce a field pre-empted from State regulation. 8
Our answer to question number 3 is that beverages purchased, transported, stored and sold, pursuant to the procedures discussed in this opinion become taxable upon the first actual sale or consumptionwithin Texas.
SUWWARY Article 666-15(21)V.P.C. authorizesholders of Airline Beverage Permits to purchase alcoholic beverages outside Texas, transport them into Texas, store same at Texas airports and supply departing aircraftwith such beverages. Assuming the foregoing activity, the taxable event, for purposes of Article I, T.L.C.A. SS 21, 21 l/8 and **Article** II, 623, (Art. 666-21, 666-21 l/8 and 667-23,V.P.C., respectively), is the first actual sale of alcoholic beverages within Texas airspace.

8It is probable, however, that beverages imparted into the state and transported through this state for consumption and servicewithout this state would have to **be** transported in conjunctionwith a **Carrier's** permit as defined in Article I, **Section** 15 tSl2).

-2853-. . -



### Honorable0.N. Rumphreys,Jr.,Page 8, (M-598 )

Generalof Texas Preparedby EarlS. Hines AssistantAttorneyGeneral
APPROVED: OPINIONCOMMITTEE
KernsTaylor, Chaixmm 

### W. E.Allen,ActingCo-Chairmaa Jay Floyd BaroldKennedy W.O. Shultz B&Owen GordonCam !4EXDE P. GRIFFIN StaffLegalAssistant

**ALFRED** itRtKER **Executive** 

### Assistant
NOLAWHITE First**Assistant**

-2854-