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 to which 

motor fuel tax collections are allocated or 

which is paid jointly 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 to which 

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~oduct the sellers are usually required to deIiver their 

products on and over the highway project unde~r conatruci 

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~e 
Hon. 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,, 

.a contractor 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. In this 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 a fixed 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~nt of 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 of funds 

received by then contractor from State funds to which 

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 a highway contractor 

on a yardage 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 a fund to which motor 

fuel tax collections are allocated?” 

It is 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 to which 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 of Article 

7065bAl3, Vernon’s Civil Statutes, for a tax refund, and that the 

‘use~r of 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 in your letter. 
Hon. Robert SC Calvert, 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 a sub-contract, lease, 

rental, or other arrangement with the highwaycontractor is imy 

material in determining the ,legalityof the tax refund. In this 

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&e Highway 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 the subcontractor 

useu the motor.fuel in construction and maintenance 

~work on the highwsrys must be conceded. We think 

that Rortion of. the exception which reads, ‘ . . . which 

is paidfor from.aiy State funds to which motor fuel 

.ts.x collztions are allocated~.. . .’ does not have the 

effect of excluding from the exception the subcontract- - 

ors simply because they are ~paid by the prime contractor. It is sufficient to bring 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 and which 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 

a highway contractor engaged in highway construction or maintenance work paid~ for,,from State funds to which 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 a refitrid of motor fuel taxes paid by them: 
I-&OIL Robert Si Cakeit, page 4 (V-1496) i 

SUMMARY .' 

Pe~rsons selIing and delivering sand, gravel, 

and concrete mix to, or processing or crnshing 

gravel or rock for, highway contractors engaged 

in construction or maintenance work paid for with 

State funds to which motor fuel collections are 

allocated are not entiled to a refund of motor fuel 

taxes upon motor fuel purch&sed and used in con: 

nection with such work. Art. 7065b-U(b), V.C.S.; 

.Att”y Gen; Op:V-l379 (19%); 

APPROVED: 

: W; V,~Geppert 

Taxation Division 

. 

E. Jacobson. 

R.eviewing Assist& 

Charles D&&h&r 

Fhst Assistant, ’ 

Yours very truly, 

PRICE DANIEL 

,Attorney ~General 

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