E TC GENERAL .‘. 

OF XAs 

December 6, 1962 

Honor&&e ~Jim U, Thompson Opinion No, WW-1489 

County Attorney 

Lamar County Ra: Whether paragraph (H) of 

Paris, Texas Article 20.04, Chapter 

2O;Title 122A, Taxation 

General (the aales tax), 

exsmpts both the seller 

and ths purchaser from 

all the taxes of Chapter 

20 undsr the submitted 

Dear Mr. Thompson: fact6. 

You requested the opinion of this office upon the following 

question: 

*Down paragraph (HI of Article 20.01, of 

Chapter 20,,Title 122A, Vernon's Texas Civil 

Statutes (the-Texas Limited Salee, Excise and 

Use Tax Act), exempt both the seller and the 

purchaser OF consumer from all of the taxes ' 

imposed by that Act where tangible personal 

property to be used in this State is purchased 

at retail and delivered by ths seller to the 

puraha8er pursuant to a valid written contract 

executed prior to September 1, 1961, the contract 

being a contract of sale of tangible personal 

property in a certain fixed quantity at a certain 

fixsdiprice with delivery to be on certain fixed 

datea after September 1, 1961, and notice of such 

contract and the exclusion claimad under paragraph 

(HI having been duly given by the taxpayer to the 

Comptroller on or before the lapse of one hundred 

and twenty (120) days from the date of the passage 

of the Act?" 

The Texae Limited Sales, Excise and Use Tax Act is, of 

course, new to the law of Texas and we are not aware of any reported 

case8 construing the effect of paragraph (H). The question presented 

is entirely one of statutory construction. Therefore, we muat use 

the rules of statutory construction.epplicable.to taxetion statutes. 
.- - 

. 

Hkmorablo Jim N: Thompson, Page 2 ,(W'ft-1'+89) 

Article 1.01, Title 122A, Taxation General, Vernon's 

Civil Statutes, states that: 

"Unless specifically altered by this Act or 

unless the context,requires,otherwise, the provision8 of Article8 10, 11, 12, 14, 22 and 23, 

Revised Civil Statute8 of Texas, and of Acts, 

Fiftieth Legislature, 1947, Chapter 359, compiled 

as Texae Civil Statutes, Article 23a (VernonJs 

1948) apply to this'Act.* 

Article 10, Vernon’s Civil Statutes, provides general rules for 

statutory construction and directs the courts to look diligently 

for the intention of the Legislature with a view to the old law, 

the evil and the remedy. It further directs that-statutory provisions,shall be liberally construed with a view to effect their 

objects and to promote justice. The provisions~of.Articles 11, 

12, 14, 22 and 23 are not applicable.to the present question, 

It is well settled,that,the.intention of the Legislature 

is the paramount conaiderationinconstruing a statute, because 

such intention is the law itself. 5 Tex. 566, 

, 58 Tex. 334 

50 Tex. 18, 

from,the words, 

phrase or paragraph under consideration, rules of construction 

become unnoceseary. The word8 of paragraph (H) are sufficiently 

clear to reveal the,intent of the Legislature.~ 

"(HI Writtencontracts and Bids Executed Prior 

to the Effective Date of this Chapter. There are 

exempted from the taxes imposed by this Chapter the 

receipts from the sale, use or rental of, and the 

storage use or other consumptionin this State of, 

tangible personal property (i3 used for the performance 

of a written contract entered~into prior to the 

effective date of this Chapt.er~or. (ii) pursuant to the 

obligation of a bid or bids uubmitted prior to the 

effective date of thisChapter,which bid or bids could 

not be altered or withdrawn on or after that date and 

which bid or bids and contract entered into pursuant 

thereto are. at a fixed prioe not subject to change or 

edification by reason of a tax imposed by this Chapter. 

. 

"Provided, however, that.notice of such contract 

or bid by reason of which an,exclusion is claimed under 

,thi8 paragraph (H) must .be given by the taxpayer to the 
iionorablo Jir N. Thompson, Page.3 (WW-ls89) 

- f 

,COarptroller on or bsfore tha'~'lapse of ,on,e hundred 

: and twenty (120) days from.the~.date of passage 

of this Chapter." 

The requirement,of notice.to the Comptroller within one 

hundred and twenty (120) days is met in the situation posed by your 

question and its effect need not be considered. 

We believe that-paragraph (H) exempts both the seller and 

the purchaser or consumer from all the-taxes imposed by Chapter 20 

where tangible personal pro erty to.be Used in this~state i? 

purchased at retail and de1 E vered.by the seller to the purchaser 

pursuant to a velid written contract.exeouted prior to,September 

1, 1961, with delivery to be~on certain, fixed dates after September 

1, 1961, ina certain fixed quantity at a certain fixed price. 

While we believe that the plain,words of paragraph (HI are 

sufficiently clear to reveal the intention.of,the Legislature, it 

must be remeabered tha? wevery word of 6 statute is presumed to have 

been used for a purpose and a cardinal rule of statutory construction 

requires that each~swOmice, clause, phrase and word be given effect 

if reasonably possible." Eddins-Walche Butane Co. v. Calvert, 156 

Tex. 507, 298 S.W.ld 93, 96 (1967) iti 39 T 

Statptes, Section 112, and authori& c%ed thi%itf' 

. 208 

Fur;hermore, 

a likrsl oonstruction, as directed by Article 10, Vernon's Civil 

St&tUtOSi means to give to the words of.6 statute their generally 

accopted waningi Maryland Cas. Co, v. Smith, 40 S.W.2d 913 (Civ, 

App; 19311, 

Paragraph (R) begina, "There hre exempted from the taxes 

imposed by this Chaptar e a ." It will be noted that the wr 

*taxer" IB used in tns plural form, and must therefore relate to 

all taxes irapossdby Chapter 20.. namsly the sales, excise, and use 

taxes a If the exuption had been meant~to apply to lea8 than all 

taxes, limiting terms would have beenused, The language "by this 

Cha term is obviously broad and l pplies.to any tax imposed by any 

art f cle within Chapter 20. Ths exemption then is from,all taxes 

imposed by any mrt of Chaptar 20. 

- 

;-. 

This broad sxamption. 6pplia&% "the receipt8 from the sale, 

use or rental of, and the storage use or other consumption in this 

wise broad. 

State of, tangble rrsonal property D 0 0: Th$a languagon:zc;i;;; 

l se ler is exempted from liability on his 

from tha sale, usa OF rental of" tangible personal~property, and 

the buyor or oomsoyr ir sxeaptmd from a-use-tax on "the storage 

use or other aoammptioa-bt this State~of, tangibls personal 

ProwW Q. To s6y that ths buyer or consumer is not exempted from a 
Honorable Jim N. Thompson, Page 4 (WW-1489) 

use tax,ir to insert restrictive.or limiting language in the statute 

where, none actually existso Tbe.words "storage use or other conrurption" are vew broad and are in,no way limited by the plain 

(~otis of.the statute to-certain types-of~use or particular types of 

consumption, 

The language,exanined above is broad and general. The limitations imposed in paragraph (Ii) are'categorized in twos conditions. 

The first is that the property must be "used for the performance of 

a written contract entered into prior tom the.effective date of this 

Chapter . , . and whach contract entered into pursuant thereto 

are at's fixed.~price not's;bject to,change or modification by reason 

of a tax imposed by this Chapter." 

bids and does not concern us here, 

The second condition pertains to 

It is readily apparent that this 

limiting clause is both narrow and precise, and we must assume that 

if further limitations were intended they would be equally explicit, 

To qualify for the exemption from the taxes of Chapter 20, one must 

have entered into a-contract concerning the-tangible personal 

property in question prior to the effective date of the Chapter, 

September 1; 1961, and the contract price must not be subject to 

change because of taxes levied by this Chapter 20. These requisites 

have.apparently been met by the contract,described in your question. 

There appears to beno-official record of the intent of 

Legislators in wording paragraph (Ii) as they did, other than the 

words of thp statute itself, 

An examination of a contrary construction of paragraph (H) 

proves the,correctness of our conclusions, The Texas Supreme Court 

has stated that in the event that Yhe.intention of the Legislature 

is so inadequately or vaguely expressed that the court must resort 

to con8truction, it is prosper to considsr~the results and consequences 

of any proposed constructioni and the,court will, if possible, place 

upon the statute a construction which will not result in injustice, 

oppression) hardshipi or inconvenience, unreasonableness, prejudice 

to public,antere8t, or absurd coneequences,n National Suret 

Corporation.v. Ladd, 131 Tax. 295, 116 S,W,2d 600, 603 (1936 

eating 59 C orpus J Uris. 969. 

9 

The sale8 tax is~imposed by Article 20.02 on retail sales. 

The responsibility for paying the tax,to~the State is that of the 

retailer, but Article 20.02, Section (A) states that the tax is to 

be collected fqom the.consumer. 

tax burden at all by the 

If.para raph (Ii) is to relieve any 

exceptionconta B ned,therein, it will 

eliminate the tax paid by the consumer-rather than merely eliminate 

the aollection of the,tax by the~retailer. If paragraph (HI is 

construed to exempt,property from only the~sales tax and~not exempt 

it from a use tax on the consumer; the.effect.is to give.no~relief 
Honorable Jim 1. Thompson, Page 6 tWW-1489) 

et all. Rather, tha same amount of tax would be paid by the 

consumer and the only effect would be to call the tax by another 

name, i.e., a use tax rather than l ~ealee tax. Therefore, if 

paragraph (Ii) is to be,given effect ae~ an exemption from “the 

tax88 imposed by this Chapter, " the proper interpretation, in our 

opinion, of the Legislature's intent is that both the seller and 

the purtihaeer or consumer are to be exempt from all taxes imposed 

by Chapter 20 when the limiting requirements of magraph (H) are 

met. To construe paragraph (Hl otherwise would be to ignore the 

rule quoted above from Eddins-Walchsr Butane Co. v. Calvert, 

eupra : 

‘, 

SUMMARY 

Paragra 

Varnon’s p" 

(Ii) of Article 20.04, Taxation General, 

Civ 1 Statutes, exempts both~the seller and 

purchaser orooneumer from all the taxes imposed by 

Chapter 20, when tangible 'personal property is sold 

pursuant to a written.contruct,entered into prior to 

S*ptember,l, 1961, provided that the express conditions 

of paragraph (H) are met. 

JAP:ca 

Youra very truly, 

WILL WILSON 

Attor ey 

9 

General of Texas 

By: 

4zuQYPq* 

e Albert Pruett, Jr. 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Y. V. Oeppert, Chairman 

Bill Allen 

Arthur Sandlin 

L. P, Lollar 

Thou8 H. Peterson 

REVIEWED FOR THE ATTORNEY GENERAL 

BY: Leonard Passmore