PRPCE UDANPEE 

### 'Acmm~ ?a. ~~MXAB

A-mnIE1 nl.?nlCar\x. August 7, 1952



### Hon. Robert S, Calvert Comptroller of Public **Accotits Austin.**  **Texas** Opinion No. V-1496 Re: Legality of refunding motor fuel tax payments to persons supplying sand, gravel, and ready mixed concrete to highway construction COP? Dear Mr., **Calvert:** tractors.

Your requesr for an opinfon of this office **reads** as follows: “We desire **your** opinion regarding the legality 

### of~ paying motor fuel tax refund claims filed wder the

. two conditions explained begow.

“Section l3 (b), Article 7065b, Vernon Annotatec ~Civil Statutes, pxx3vide.s in part as follows:

‘Provided, however, no tax refund shail be paid to any person on motor fuel used in any constr,uction or maintenance work which is paid for from any State funds towhich motor fuel tax collections are allocated or which is paidjointly from any such State funds and Federal funds, etc.’ “Persons engaged in the business **of** processing sand and gravel, and ready mired concrete frequently sell and’ deliver such products to contractors engaged in the construction and maintenance of State highways for which payment is made to such contractors from funds towhich motor fuel tar collections are allocated. The contractor in turn pays for the sand, gravel and ready ..mix concrete out of the payment received by him,. While the delivery of the sand, gravel and concrete constitutes a sale of the pr~oductthe sellers are usually required to deIiver their products on and over the highway project unde~rconatruci tion where it is thereafter spread, rolled or u?cd by the contrac~tor. 

# l Th& department has heretofore paid tax refunds to the sand, gravel and concrete diatribntors on m&of fuel use’d in the processing of such producto On the pre’mis~eHon. Robert S. Calvert. page 2 (V-1496)

that such persons are merely sellers of a product used in the construction and maintenance of State highways paid for **from** motor fuel tax collections distinguishing them from the contractors who actually perform the construction and maintenance work.

“In another claim filed by a person engaged in the business of crushing and selling crushed rock and gravel,, .acontractor engaged in the construction of s~ever.al state highway projects paid for from motor fuel tax collections, has contracted with the rock and gravel processor to move his rock crushing equipment to gravel pits leased by the highway contractor. Inthis case the rock and gravel processor does not sell the crushed rockand gravel to the highway contractor, he merely crushes and prepares the rock and gravel for the contractor for which he is paid afixed price per square yard of ciushed **rock** or gravel prepared. “The only claim filed under the above circumstances is befng held in suspense pending your opinion.

‘Will you please advise this department whether the law precludes payme~ntof tax ref:unds to persons ,who sell and deliver sand, gravel and ready mured concre’te under the conditions stated above tom highway contractors who pay them for such products out offunds received by thencontractor from State funds towhich motor fuel tax collections are allocated?

‘Will you likewis’e advise us whether the Comptroller is,precludedby law from paying a tax refund to a rock and gravel crusher who is paid by ahighway contractor on ayardage basis for crushing rock and gravel for him to be used by said contractor in the construction of a highway project paid for out of afund towhich motor fuel tax collections **are** allocated?” Itis thus seen that the highway contractors using the sand, ,gravel. concrete mix, and the processe~d or crushed stone, are engaged in construction or maintenance work which is paid for from State funds towhich motor fuel tax collections are allocated. .We assume for the purposes of this opinion that the use of the motor fuel in question fully meets the requirements ofArticle 7065bAl3, Vernon’s Civil Statutes, for a tax refund, and that the

‘use~rof the motor fuel would be entitled to reimbursement **of.**the tax paid except for the prohibition or exception provided for in Article 7065byU(b), quoted above inyour letter.

### Hon. Robert SCCalvert, Rage’3 (V-1496)

It is clear that if the highway contractor had himself furnfshed the sand, gravel, and ready mixed conc~rete. or had crushed.the rock and gravel for use in construction **or** maintenance work which was paid for out of such State funds he.would not be entitled~to any refund of motor fuel taxes. The fact that the particular 

### work was performed under 

### asub-contract, lease, rental, or other arrangement 

### with the highwaycontractor is imy material in determining the,legalityof the tax refund. Inthis connection,.it, 

### is stated inAttorney General’s Opinion’V-1379 (1951):

“r;he real test is that the highway construction and maintenance work is performed and paid for from motorfuel taxes allocated to l&eHighway Department or the countie:s in connection with highway work. The incidental fact that the prime contractor engages and pays the subcontractor who performs a certain portion of the work 

### is nqf‘m$terial. That thesubcontractor **useu** the motor.fuel in construction and maintenance ~workon the highwsrys must be conceded. We think that Rortion of.the exception which reads, ‘

. . .which is paidfor from.aiy State funds towhich motor fuel .ts.xcollztions are allocated~..

. .’ does not have the effect of excluding from the exception the subcontract- - ors simply because they are ~paidby the prime contractor. It is sufficient tobring them within the exception that they perform construction and mainten- ‘

. ante work which is paid for from allocated funds. The work 

### is actually done as a part of the

### work which the prime contractor under his contract with the Highway Department obligates himself to perform andwhich k paid for from allocated funds.” - It is **our** opinion that under the facts submitted, persons using motor fuel in seIIing and delivering sand, gravel, and ready mixed concr&e,:;or,,.crushing and processing rock and gravel for ahighway contractor engaged in highway construction or maintenance work paid~for,,from State funds towhich motor fuel tax 

### Cole lections are allocated, are using such motor fuels in connection with such constructio,a~ or mainte.nance work, .and therefore are not entitled to arefitrid of motor fuel taxes paid by them:

### I-&OIL Robert SiCakeit, page4 (V-1496) i

SUMMARY .'

Pe~rsonsselIing anddelivering sand, gravel, andconcrete mix to, or processing orcrnshing gravel orrock for, highwaycontractors engaged inconstruction or maintenance work paidfor with State fundstowhichmotor fuel collections **are** 

### allocated are notentiled toa **refund** 

### ofmotorfuel taxes uponmotor fuel purch&sedandused incon: nectionwithsuchwork. Art. 7065b-U(b), V.C.S.; .Att”yGen; Op:V-l379 (19%);

APPROVED:

:W; V,~Geppert Taxation Division

. E. Jacobson. R.eviewingAssist& Charles D&&h&r Fhst Assistant, ’ Yours very truly, PRICE DANIEL ,Attorney ~General

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