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# E OFFICEOFTHEATTORNEY GENERALOFTEXAS AUSTIN

. 

### fionorable

OeorgeII.

Shemard CmptrOlle~ **of** PubllaAccOwit8 AllBtln,

Texas


### DearSirs OplnLonno. O-4731 !&other tax 

### 1

tmrof! Augurt 

### 4, 1942;
t the Cefanss PUnt r to the cement manw atlng by nnd through

xm.mSaot.urms in thla State dlmct Bale to the Dnltsd 

# i&d 47,seation4la,aa tuaimlsd by &ticle 12, EIciuae Bill 0,47th

# Lagl8lnture, reeds ln pact 

### as follows:

**I- ,-** 

**.~..**

**,. .**  **...: 1.**  **:.**

**.**Eonorable Oeorge H. shoppard, page 2

“CementDistributors. ticire Is hereby imposed .a tai of tvo and one-half (&) cents on the one bundred (100) pounds, or fractional part thereof, of cement on every p.erson in this state manufaaturln.3 or producing ti and/or lmportlry ceinent Into this state, and vho thereafter distrlbutea, sella 

### orUSest proid d hovever, no tax ahall,b &a~rlbutlon or une. id t on one sale, Thepefo?lla~~~~or said tax is hereby defined as a ldlstributor* + l 

### l .* (Zt~phaals ~OtlrS) The statute, on lta face, and In plak*tenns laya thetax upon the person vho manufacturers or produces in, or imports cement into this atste aud thereafter diotrlbutes, sells or uses it. The %EJI

is measured by the mount of cement distributed, sold or used, after euch marmfaature, production or importation and aac~e8 ot the time of suoh dlatrlbutlon, sale or use. other than the “distributor,’ Hoperson, as defined in the etatute, ever be

### comesl~iable

forthe payment of the tax. It 1s an occupation tax statute, and.there is no doubt of the Leglslative.intenta “The statute levies a te;Xfor eaoh100 pouikd; of cement on those manufacturing and Import Trinity Portl8nd C

“g.Tci) ‘gy%; of 

### errorrefused). ement 

### Co.vs.State,144S

.

In our opinion lo. O-3079 ve held the diistrlbutor llable for 

### thetax and held tkbt the tax 

### acoruedupon salea of cement by the distributor to a aost-plue aontraator whovas reimbursed for the aoet of materiale by a govermnent instz%mentalltg. At the date of that opinion, however, the 3nlted States Supreme Court had not overruled, though It had linlted Its dealsions in the 0888s of , Panhandle 011 Co. vs. Statei.277 u. s, 218 72 L. Ed. 857, 48 Sup. Ct. 451;.Indian Motorcycle Co. ~~a. U. S., 

### 263U. 9. 70, 5L. Ed. 

### 1277,51 sup.ct.6011andGraves 

### vu.Texas 

### Company,29;5 U. s. 393; 80L.zd. 1236,56SUP. 

### ct.818, That oplnlon vae based on the Principle 8nnounced in Trinityfaru Co.,va. 

### Orosjenn,291 U. 3. 466, 

### 514sup.ct.469,78L. Ed. 

### 918,that even though a stnte tax on an .: independent oontraator inareased the ultimate ooet to the govermnent, unless a direat burden vere placed on the goverxnwent, the tax vould not be unaonstltutlonal as InfrIngIng the governmental lmmunlty iron, taxation. Deaplte the Trlnltyfam 

### oaee,Ihovaver, invievof the holdlng in the case of Psnhandle 011 Co. VLI.State, aupra, that an oaoupatlon tax on gasoline distributore,,based on the amount of gasoline mold, could not, oonstltutlonally, 

### be oolleoted from a

### Ronomble George 

### H. Sheppard,page3
gasoline distributor vho sold direotly to the Federal Governme&, it beoameneaessary for us to deternine vhether or not the purcbasor of cement vas ea independent oontraator 

### or vhether he purchssed as an &gent.of the govemment.

Jlnoe the date of our oplnlon Ho. O-3079, however, 

### the manhandle011 Coqany cane and others 

### of like import have been defin1tely ovemuled. state of Alabama vs. ~r%.ng 8 Boozer, 

### 62sup. 

### Ct.43;Curry vs. United States, 62 sup. Ct. 4% Wethink thtaae cases are directly in Folnt. In the King &Soozsr case the oourt hadbefore It an Alabaam statute which levied a a&lea tax OS2 p&r cent of the gross retail sales prlae of tangible personal property on the retailer, and made Zt his duty to add ouoh sales tax to the salon price and collsat it fwzmthe purchaser, 3alos vere made to a "cost-plus contractor' vh6 was engaged In oonatructing an snay campunder contract vith the United states Government. In holding the tax constltutS.onal ati ool.leotlble as agaiaat such oontraotor the court saldt

‘Congress has daollned to pass legialaticm lmmunixlng: from state taxation oontraatom under *oostplus" oontraats SOPthe oonstmotion or governmental projects l Comequently the participants in the present transaction enjoy< only such tax bmrunlty as Is afforded by the Conetitutlon itself, and weare not now concerned \iLth~theextent and the epproprlate exerolao of the power of' Congnsa to.free suoh tram-\/ sotlona fron state taxation of i.ndlvlduala La euoh aimxtnstanaos that 

### thesoonomla bunlen of the tax la paassedon to the nat.fonal goverment. The government, rightly, ~8 think, disolalrms any oontentlon that the Gonatltutlon, unaided by aongresslonal legislation, prohibita 

### a tax sxaated from the oonEroctor8 merely beoauso it is passed on e~onomloally, by the terms of the oontract or othervlse; 88 a pa%%of the aonatruation ooot 

### to the 

### Gorerxment. So far as suuh 

### a nondlsoriminatory state tax upon the aontraotor enters into the oost of the materials to the Government, that is but a nomal tic&lent ot the organlsatlon within the 

### #ameterritoryof tvo lndeptmdent taxing sovere&nties. l?!m

aasertkd right of the one tobe free of taxation the other doer not spell lmaunlt fron pa %he adzd coets,attrlbutaixle to the texa~ionof t%i% vbo furnlsn suppllea to the Qovernment and whoBnve been granted EOtax Umnunity

. So far as a different

~~,,,_~ .,- - ~~.~~.i ~~--

### flonorable George Ii. Sheppard, Page 4

view ha8 prevuile~, 880 ;eaAhundle Oil co* ve. state ex rel, KAOX,supra~ Waves vu. Texas Co., e"pme 3 think It Ao lcuww tenable." (pals oure The aam of Curry vs. United States, eupra, involved the mme

### question px'eaented IA the Kl~g 8 Boozer oaee. the only 

### diffore~ce be- thet the tax involved in the Cumy OmeWe a use tax rather then a nales tax. The conrt made the 

### follow pertinent etStesleAt$"For the reaeane stated at lmgth in out=oplnlon in the siys h BoOZeI O&30 Y% 

### thbk t&t the OOAtPfL0tom, I~purchaaI~gand 

### brh.&n.g the bu?.ldIngmeterlal into the state and 5~ zrppropriatIng %t to their aoA= tract vith the ~VOPRBl~At, W0r0 AOt tP@At8 OF &8trUnentalltles of.the Ciovermmsntt 

### ad theyace not 

### ml&wed of the tax. to vhloh they would othemriee be subjeot, q
remon or tm fact that they are eovezmwmt Contraotors. xl-the 8tate lau‘laysthe taxqtllem rather than the. ~lvldu.al vlth whom #my enter 0 a ooet-plusoantraot **mS the**  PrSSeAt OAe, then **it** ef'foOt0 **the ~(;dVrBFAtWAt,**  

### r?3re theLtxllvidual., **OAly** 

### as the ec0~0Lulo burdd3A is shiftad **to it**  through **qml=atloA of**  **the COAt,-nOt,** **” (Bq~lX~lfi** 
**ours 1~**  Our attentlon~~hss been celled to the.caee of Pederal Lend Bank06. Blsmarclc Lumber CO,., 

### 62 Sup. Ct.~l, where the ocurt 

### had under consldemtion a florth Dakotil statute levying 6 2 per cent tax upon gross receipts from salos of property. TheFederal Fam Loaa Act exempted,tho bank 

### fromFederal,Statesnd loos1taxation,vith oertain exceptions. The Court held 

### thatthe 86bS t8iViBa AOtpyable c~ property sold to the Beck, becmee th6 bmk v&i exempt, 

### by statute, fran the paymoAt of the tax. 32~1 tex there acmsldered wae not upon the aoller, but upcmthe pwohaaer. Though the stetuta, IA 

### tom, deolamd the vendor, to be the taxpayer, It a?equlred h3mto add to 

### the sale prlae 

### the amount of the tpx and to oolleot 

### thetex frcathepurcrhnwr. It fuothe~ made tho auwunt of the tu a debt of the purohaser to the vendor amtl.1 paid, thereby plaoing the legal inoidenoe Of 

### the taxdireatlyOA 

### thap~~?~haaelr. OIW Statute, OA 

### the contP0ry,

maIkesno euoh CsqWwient. 

### The tax 

### ia, in tomis, 

### laid on the IS~dor. Bo

### aloneis l&able for the State, end AOore elae ever beoomee ll.ab 8 for pqmnt of the tex r 

### ymontof the tax to the Mleee by 

### virtueof oontreot vitb ?IkP. Our court.8 have deternine& that the legal **¶.noide~oe** of the tax iacm the vendor. **Trinity** Portla&d Ceglent co. vs. at&e, 1% 9. V. 

### (2d) 329 **(vrlt** 

### of error refuaed~,.
:~.

.,gonorable Qeorge H. Sheppard, Pwze

### 5

This department so hsld in our opinion Eo. O-3079, and VO pressntly hold that th8 legal l~oi.deAce of the cemAt distributors' oocupation tax is UpOAthe pel’8CNI VhO Sk6lWfROtU.r%~ Or **~rod~c6S** cesJ%Ikt ln this state or vho ImpoFt it into this sltate an8 thereafter sells, distributes or uses it; that the tax is measured by the amountof oemept so sold, distributed or **used,** and that the tax aCcrue5 at the time of suoh sale, distribution or use. Uhder the Cuthority of the oases of Uabsma vs. ping &Boozer, 

### 62 SUP. ct. 

### 43 **and q**  **vs.** msited States, 62 Sup. Ct. 48, ve hold that the fast that the sele,may be madedirectly to the Uhlted States ffovWAUleAtOX't0 89 iAStPUUbSAt.S~it~ thblY!Of iS iSlfIlRtPi~ial, aAd thatthe PAXsooruea and the vendor boouses liable therefor upon the sale of tile cemeAt.

SAthus holdlAg ve are not vm&ndSul of the faot that S0CtiOA 610, Title 15, U.S&.A

., spealfloally exempts the Defense 31ant CorporatlLaa frOmthe paymeAt OSsales or use taxes, Weare aonv%need, hovwer, that swh statute does not, and dws not under take to emmpt free. taxation all pornoAs vho deal vlth DeSeAsa ?+a Corporutlon. The mlyw3yD~eaae PlaAt Corporatioaoould ever become liable for the cement dlstrlbutors* 'tax levied by our statute ~vould be through aantraot with the distributor. &advhlle our holding here vouXd be the sameI IA any event, it 1s latereatIng to **note** that the evtientie ruraished us Soreoloees Amyaontention that in this **pRrtfCU&W instZ+Aee**  **the tRX**  **vould 6~8~**  **b8001810 a**  **8Wdexk Oil**  the Federal **C?OVe~~t OF**  **any Of**  **It8 inBtl** **’ USWXlt8litieS**  **beCraUse** as pointed out in the excelleat 

### briefsubs&ted **by** Kefmni. A~dmvs, Kelly, Z%rth &Cmapbedl, the aontmot vlth the distributor speoifically provides that **AO** sales or use tax &all be Included In the oement prioe quotatlans, and that no ruch tax will 

### be paid by Defense Plant corporation. Thus, raeltjter by our statute ~0x9by the oontraat, ¶.Athis 3mGaAae, does the tax ever beoome the llabillty of nor **payable** by say person other~than the oament distributor, Clearly he is not a~ %Astmssemtallty of the 

### FederalGovemment aAd clearly he is liable Sop the tax.

Wereturn herewith the dOOI%aOAtU bended to us for cOnsidoration in oomectlon vlth this opinian. Weexpresm our appreolatioA for the brief, **above** referred to, as well as for the dooumeAtary evldenoe **furnished,** all OS**vhtoh** has been very bsnefiolal **to** us.

Trwting that ve have Sully ansvered your inquiry, we ,Yours very truly **OvEI)SD 4,**  **1942 ‘** **-**

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