EATFORNEYGENERAI. 

OFTEXAS 

Honorable George Ii. Sheppard 

Comptroller of Publi~c Accounts 

Austin, Texas 

Dear Sir: Opinion No. O-6195 

Re: Whether~ or not a claim for refund 

of the tax on motor fuel exported 

or lost by fire or other accident 

is subject to a six months limitation period for filing; whether' 

such six months limitation period 

in fire or other accident losses 

runs from the time of the delivery 

of the motor fuel' or from the date 

of the accident; and whether the 

Comptroller would be authorized to 

deduct from a current claim filed 

by an exporter, the amountof a 

former claim filed after safd six 

months period and paid in error. 

~. 

In your letters of the 7th and 26th of September, 1944, 

you submit in substance the following questions: 

1. Is a claim for a refund of the tax on motor fuel 

exported or lost by fire or other accident subject to 'the six 

months limitation period for filing? 

2. If the answer is yes, does the six months llmitation period on fire or other accident losses run from the time 

of the delivery of the motor fuel or from the date of the 

accident. 

3., If the six months limitati,,on period apolies in export cases, would the Comptroller's Department be authorized to 

deduct from a current claim filed by an exporter the amount of 

a former claim filed after said six months period and paid in 

error by said Department? 

The motor fuel tax law is quite lengthy. Shorn of the 

verbiage unnecessary to a solution-of the problems here involved, 

Se'ction 13 of said Act (Art. 7065b, Vernon's Annotated Civil 

Statutes), being the section dealing with refunds, provides as 

follows: 
Hon. George Ii. Sheppard, page 2 o-6195 

"(a) Any person who'purchases motor fuel in 

the"State of Texas, and any distributor who appropriates motor fuel~'for use . . e for any purpose 

other than use in' a motor vehicle operated or intended to be operated in whole or in part upon any 

of'the public highways, roads, or streets of the 

State of Texas, on which'motor fuel tax has been 

paid, * . : shall be refunded the amount of such 

taxes o . m . . 0 

'"(b) . . s No refund of'the tax shall be 

granted on any motor fuel to any person . . . unless such motor fuel has been purchased from or 

used by a licensed refund dealer s . .; and the 

Comptroller is hereby prohibited from issuing .,, 

. . . . refund of the taxi on any motor fuel notpurchased from a licensed'refund dealer except refund ? 

on-'motor fuel exported,'lost by accident or purchased by the United States Government. 

"(c) An~invoice of exemption shall be demanded 

by the purchaser or recipient of motor fuelused for 

re’fund~ purposes, kid upon each delivery by a refund 

dealer, or upon each appropriation foruse of motor 

fuel . . *, an invoice of exemption shall be issued 

. . . . . . . 

"'(a) When a claimant purchases or acquires 

for use motor fuel upon which a refund of the tax 

may be due, he shall within six months from the 

date of delivery of the motor fuel . .;, and not 

thereafter, file with the Comptroller an affidavit. 

e . . . e 

"No refund shall be made where motor fuel is 

used later than six months from date of delivery 

01" appropriation, and no refund shall ever be made 

where it appears from the Invoice, or from the affidavits, or other'evidence submitted, that the 

sale or delivery was made more thank six (6) months 

prior to the date of filing of the application for 

refund. 

1, 

e . . If any person shall export or lose~by 

fire or other accident any motor fuel in quantities 

of one hundred (100) gallons OP more, '. o . or shall 

sell motor fuel 0 . . to the United States G'overnment, 

for the exclusive use of sa'id Government, claim for 

refund of the 'tax so"paid may be made in'the manner 

herein nrovided, or as the Comotroller may direct. 
- . 

Hon. George H. Sheppard, page 3 o-6195 

Providea,,further, that a bondea and licensed 

diitributor may, in lieu of filing claim for refund 

of the tax paid on motor fuel thereafter exported or 

sold to the united States Government for then exclusive use of said Government, take credit on any 

monthly r@p’tiet’ and tax ‘payment made to the’ COmptrOller withln six’(6) months of the~date of said sale or 

exportation, for the amount of tax so paid. 

The Motor Fuel Tax Law contains an elaborate record and 

reporting system designed,to.‘prevent tax evasion: Every person”’ 

engaged in the production, &WUfkctUre, refining, t??atiSPOrtatiDtI 

or’sale of motor fuel Ln Texas Is required to keep records as to 

motor fuel handled’ by theme and to make reports to the comptroller 

concerning its possession and disposition, the purpose of these 

requirements being to gLve the Comptroller information as to 

every gallon of motor’ fuel produced’ in or’ imported into the State 

of Texas. This elaborate record system greatly assists ‘the 

Comptroller in collectFng the’ tax, checking refund claims and 

preventing tax evasion and fraud. 

Obviously, ‘the passage of time makes the checking of, 

the motor fuel on a given date more difficult. Consequently, 

the Legislature saw fit in the~.above statutory provlsions to fFx 

the six months period of limitation, within which certain refund 

claims must be filed. 

The answer to ‘the first question turns upon a proper 

construction of the statutory provision that claim for refund 

incases of export accidental loss, or~‘sales to the United , 

States Government ‘may be made in the manner herein provided, 

or as the Comptroller may direct. I’ Section 23 of the Act’~‘in 

questYon gives the Compti?bller power to promulgate rules and 

regulations for the enforcement of the M-ctor Fuel Tax I&w ; We 

are” advised that no rule or regulation has been promulgated by 

your departmen? fixing. a time 1imLt within which.a claim’based 

on exports or accidental losses may be filed, if; indeed, you 

could Iawfully fix other than a six months limitation period’. 

Suffice it”to say that you havenot done so, and we. do not pass 

upon“your authorLty to do so, same not being necessary in reaching a decision In this opinion. 

I 

Refuhd claims on”exports and accidental losses, then, 

ai?& to “be made’ In the manner herein provided,“’ -We think this 

language shows a” legislative Intent that the balance of the’Act 

be looked to as’ ‘a pattern for filing requirements for such claims. 

We think the’ words “In’ the manner herein provided” imply a six 

months limitation ‘period 0 Section 13 (d) of the Act, wherein 

these’words appear, is replete with the Mea of a SJx months. 

limitation period, the words “sfx (6) months” appearing in said 
Hon. George K. Sheppard, page 4 Q -6195 

Section no less than five times. Our conclusion in the matter 

is further ~strengthened in that the"Act provides (fourth paragraph of Section 13 d) that bonded snd licensed distributors, 

oh motor fuel exported or sold to the Un‘ited States Government, 

may, 1n lieu offiling refund claims, take credit on their 

monthly report and tax payment "within s~ix (6) months-'of the 

date"of said~ sale or exportation ~. . .' for the tax paid. It 

appea~rs'unreasonable to assume that the Legislature'infended 

to impose a six months limitation PerLod during which a d'istributor could collect a refund by listing St on hls~'report asp an 

off&t against taxes he owed the State, and yet have'no such 

limitation on his direct application for'such refund. We'conelude, therefore, that the Legislature In Its use of'the words 

"in the manner herein provided" Intended that the refund claims 

there'in referred to should be subject to a six months limitation 

perlod for filing. 

The second question deals with the method of application of this rule In cases of motor fuel loss by fire or other 

accident. Again we must be guided by the pattern revealed in 

the remainder of the Act. 

A close analysis of~Sectlon 13 of the Act reveals that 

motor fuel tax refunds are authorized in five general situations 

as follows: 

(1) Sale by a licensed refund dealer to a purchaser for 

a non-highway use. 

(2) 'Yp;w;;a;;~;er for ,, non-highway use by a distributor 

licensed as a . 

(3) Exports. 

elusive 62: Sale to the United St a t es Government for its ex0 

(5) Loss by fire or other accident. 

In the first two cases mentloned, Section 13(c) of the 

Act requires that the refund dealer issue an invoice of'exemption at the time of delivery OP at the time of appropriation, 

respectively, As we construe,the Statute, the six months period 

In the first situation, supra, begins to run at the time of 

delivery of the motor fuel to the purchaser; and in the second, 

the period begins with the appropriation, at which time the 

claimant "acquires for use" the motor fuel in question, receiving, at the time he appropriates It, at least a constructive 

"delivery." 
Hon. George H. Sheppard, page 5 0 -6195 

" In the third and fourth situations, supra;the fourth 

paragraph of Sectlon 13'(d) Provides that a bonded and licensed 

di.strLbutor may obtaln a refund 'on motorfuel exported or sold 

to the Government by crediting same as an offset on his monthly 

report and tax payment "within six (6) months of the date of 

said sale or exportati'on."' We"have no difficulty in holding 

tha't an affirmative clalm'for refund on motor fuel exported or 

sold to the Government must be filed within the same'tlme limit 

as the credit on the monthly report above referred to. 

In reviewing the picture as thus far made, we find that 

in each of the four situations, the claimant has a'full six 

months between the time he knows he will have's claim and the 

deadline for filing. A person whose only basis for refund is 

loss of'motor fuel by accident obtains his first knowledge oft, 

the existence of a situation in which the law allows a refund, 

at the time of the loss. He is not In a position to exercise 

any diligence with reference to the filing of a claim prior to 

that time. Accordingly, in keeping with the pattern setby'the 

Statute in' other refund situations, it is our oplnionthat a 

claimant has six months from the date of the accidental loss In 

which to file h1.s claim rather than'from the date of'delivery. 

It is Immaterial under the statute as to when an exporter or a 

seller to the Government fir'st acqu'ired the motor fuel. We 

think It likewise follows that the date of purchase br acquisition by one who suffers loss by accrdent Is immaterial. '.A contrary holding would discriminate against the victims of adversity, and the statute reflects no such legislative intent. 

Question number three.presents a fact situation wherein 

a claim for refund, filed, by an exporter after the six months 

period, hasbeen paid." Our Opinlbn No. o-2765 discussed the 

payment of a refund claim which fafled~'to meet statutory'.'requirements'and'concluded that "asthe claimant has caused a warrant 

to Issue and be paid upon such claim, void by reason of his'own 

acts and omissions, he becomes indebted to the State of Texas 

for moneys improperly had and received from the Treasury of'the 

State', In the amount of such warrant . 0 . We think the same 

rule aDplies here and that said claimant becomes indebted to 

the State for the"amount of'such warrant. "Further, It is our 

opinion that in paying a current refund claim filed'by said 

exporter, your department may lawfully deduct the amount of this 

debt due the State, and Issue warrant for the difference. 

In so holding we~'are not, unmindful of Article 4350, Revised Statutes, which reads: 

"No warrant shall be issued'to any person in-, 

debted to the State,"or to his agent, or assignee, 

untL1 such debt is paid." 
Hon. George H. Sheppard, page 6 o-6195 

The rights of the State to offset a debt due.it from a 

payment by the State to ttie debtor, even after warrant for the 

full amount had issued, was upheld in the case of Citizens' 

State Rank v.~ AmerIcanSurety Co., 65 S.W. (2d) 778, error refused. In that case, a sheriff filed claim with the State for 

fees Andy received a deficlehc'y warrantwhich he endorsed to'the 

bank. Ttie'Comptroller refused to allow the warrant to be paid 

when It matured becau'se the sheriff had collected certain~fees 

from the State which were unlawful, and the Comptroller "offset 

and deducted therefrom the amount of unlawful items. " The 

bank sued the sheriff and his surety. The Court held'that the 

surety was not liable. The Court said,: 

"The obligatfon of appellee, as surety, on the 

bond to pay'the State the unlawful'fees collected, 

ceas'ed when the State collected such fees, which it 

was authorized to do, by deducting the amount thereof 

from the deficiency certifdcate theretofore issued to 

the sheriff." 

Judge S 

227 (Comm, App. P 

eer, in the case of Shannon'v. Ratcher, 299 S.W. 

states the purpose of Article 4350 as follows: 

"The Statute was evidently passed in order that a person.might 

not receive money from the State when indebted to the State, and 

then, If said persons were lnsolve,nt, prevent the State from 

recovering the amount due it." It~is obvious that a withholding 

of'the‘amount of the debt tothe State such is contemplated in 

this case affords ample protection to the State and satisfies 

the intent of the Statute. 

Judge Alexander in the case of Thompson v. Prince, 126 

S.W. (2d) 574, error'refiised, states: "In order' to authorize 

the offset of ohe claim against another, the demands must be." 

mutual. 0 . that is', they itiust be between the same parties and 

must be due in'the same capacity OP right;" We think the offset 

here involved complles"with these requirements, and with t'he 

further requirement that the demands in question be liquidated 

demands; Other authorities supporting out holding include; 

Rule 97, Texas Rules'of Civil Procedure; 57 C-J. 454; Wood 

v. N,Y,, 73 N.Y. 556; Price v. Lancaster CO., 24 Pa. Co. 225; 

24 R.C.L. 813; Johnson v. City of Aberdeen, 266 Pac. 707 (Wash.). 

In order to avoid .misunderstanding,'we think it appropriateto mention that the'rule here enunciated d,oes,not work 

both ways- A tax payer, on grounds of public policy, Is not 

permitted to offset a refund due him by the State agatnst his 

liability for taxes'owed to the State, in the absence of statu- 

;o";"(~~~;""c';"~:. 

State v, Humble Oil & Rfg. Co. 16g'S.W. (2d) 

The Act only gives such statutory authority to 

a limited group, to-wit, bonded and licensed distributors on 
Hon. George H. Sheppard, page 7 0 -6195 

claims based upon exports or sales to the United States Government. See fourth paragraph of Section 13(d). 

We trust this satisfactorily answers your inquiry. 

Yours very truly 

ATTORNEYGENERAL OF TEXAS 

By s/J. Arthur Siindlin 

J. Arthur Sandlin 

Assistant 

JAS:fo:wc 

BPPRUVED OCT 9, 1944 

s/Carlos C. Ashley 

FIRST ASSISTANT 

ATTORNEY GENERAL 

Approved Opinion Committee By s/BWB Chairman