Aws- 11. TEXAS

December 19, 1962

Mr. Robert S. Calvert Opinion No. ~~-1502 Comptrollerof PublicAccounts Austin, Texas Re: Whether motor fuel purchased for use of the Texas National Guard Is subject to the State excise tax Imposedby Ch. 9, Title 122A, TaxatlonQeneral,Revised Civil Dear Mr. Calvert: Statutes.

You ask whether sales of motor fuel to the Texas National Guardare exempt from the Texas motor fuel excise tax imposed by Chapter 9 of Title 122A, Taxation-General, Revised Civil Statutes of Texas.

Our answer is that all motor fuel purchased by the United States Propertyand Fiscal Officer and used by the Texas National Guard Is exempt, but that all such fuelpurchased for use of the Guardwhile It is on active State duty under command of the Covernorof Texas Is subject to this tax.

A letter to this office from Col. Carl F. Schupp II, the United States Property and Fiscal Officer for Texas, gives the following informationrelative to the three separate statuses of the Guardand the purchase of motor fuel for each.

CoL Schupp states that the Guardmay have the status for any particular duration of time of being on (1) Federal active duty'atwhich time it is on the active list of the U. S. Army, or (2) inactive Federal status, or (3)active State duty upon call-upby the Governorof Texas.

He states,also, with reference to purchase of motor fuel for the Guard, that:

1) while the Guard Is on active Federal duty all gasoline It uses Is furnishedby the U. S. Department of Defense.Mr. Robert S. Calvert, Page 2 (OpinionNo. ww-1502)

2) while the Guard Is ^__ on inactive Federal status,all motor sue1 sor it Is purchased by the U. S. Propertyand Flscal Officer of Texas for the exclusiveuse of the Guardand paid for by funds furnishedby Congress for operationand maintenance of its Army National Guard. This motor fuel is delivered into the exclusivepossession of the U. S. Property and Fiscal Officerwho is a commissionedofficer on the active list of the United StatesArmy detailed to,the National Guard Bureau. All petroleumproducts purchased by this office are paid for by the Finance and Accounting Officer, Fort Sam, Houston, Texas. Procurementsare made on Federal contract form and/or purchase orders for the Texas National Guard, both Army and Air. This gasoline is delivered in kind to the various using units of the Guard for their exclusive use under U. S. Army regulations.

3) while the Guard Is on active State duty, the motor fuel purchased for and used by It is purchased by the State of Texas with State funds. All vehicleswhich use motor fuel are owned by the United States.

2. The case of McCulloch v. Maryland, 4 Wheaton 316 (1819), established the principle that no state .maytax any function or property of the United States. The Constitution of the United States,Art. 1, Sec. 7, grants to Ctngress the exclusivepower "Toraise and supportArmies, The Army of the United States is composed'lnpart of ;'.'.'.'the Army National Guard while In the service of the United States,
. . L The "Army National Guard"2 Is composed in part of the Texas'Natlonal Guard. The motor fuel tax law,(Ch. 9, Title 122A,V.C.S.) expresslyprovides that motor fuel sold to the Federal Government for the exclusiveuse of the Federa sold tax-free.3 Further, these statutes 1:Governmentmay be provide for a refund

1 lo u.S.C.A. sec. 3062 (70A. Stat. 166). 2 32 U.S.C.A. Sec. 101 (72 Stat. 1542). 3 Article 9.05 (1)and (3),V.C.S. 4 Article 9.13 (8),V.C.S.Mr. Robert S. Calvert, Page 3 (OpinionNo. WW-1502)

of this tax upon all motor fuel sold to the United States Government for the exclusive use of the Government. These statutes5require specificreports coveringmotor fuel sold to the United States Government.

3. We now consider the reasons for our holding that motor fuel used by the Guardwhen It Is on active State duty under command of the Governor of Texas is subjectto this tax.

We know of no constitutionalprohibition against the Legislature levyingan excise tax to be paid by the Stateand its agencies. The law is settledthat our State Constitution

9,
, is in no manner a grant of power. It operates solely as a limitation of power. All power which is not limited by the Constitution Inheres In the people, and an act of a state legislature Is lenal when the Constitutionco%alns no prohibition against it." Watts v. Mann, 187 S.W.2d 917, 923 (Civ.App. 1945, error ref.) See also Statev. Wynne, 134 Tex. 455, 133 S.W.2d 951, 958 (1939); 40 Tex.Jur. 20-21,Taxation, Sec. 8.

The tax under consideration Is an excise tax. State v. City of El Paso, 135 Tex. 359, 143 S.W.2d 366, 369 (m.

We recognize the well-established generalprinciple that usually the Legislaturedoes not intend to tax property of the State. This principle is stated In Lower Colorado River Authority v. ChemicalRank & Trust Company, 144 Tex. City of Marlin v. State, 205 However,we distinguish upon the fact that these authorities apply this principle to ad valorem taxes and not to excise taxes. Further, In the absence of express constitutionalprohibition against such an excise tax as the one under consideration,this generalprinciple is one of statutory constructiononly. Cooley on Taxation (4th.

5 Articles 9.03 (1)and 9.05 (3),V.C.S.Mr. Robert S. Calvert, Page 4 (OpinionNo. WW-1502)

Ed. 1924),Vol. 1,p. 217, Sec. 91 and Vol. 2, pp. 1312-1317, Sec. 621; Eagle.Polnt Irr. Dlst.v. Cowden, 1 P.2d 605 (Ore. Sup. 1931). Severaldistinctionsbetween an ad valorem tax and an excise tax are stated in Statev. Wynne (supraat p. 956).

The very broad and specificprovisions of the motor fuel tax statutes (Ch. 9, Title 122A,V.C.S.) make clear that the Legislaturedid not intend to exempt from this tax the motor fuelpurchased by the State for the Texas National Guard. We mention severalprovisions of these statuteswhich make-this Intent clear: 

### 1)

2)

3)

4)

5)The statutesare general In the&r appllcationand the Legislature certainlyknew at the time of passage of these statutes and of their amendments that the State purchased and consumed large quantities of motor fuel in,motorvehicles operated by It. Article 9.02 (1) imposes the tax '.
. . upon the first sale,distribution, or use of motor fuel in this State
. . .' without any exceptions. While motor fuel and certain other petroleum derivativesmay be sold taxfree to the Federal Governmentunder the provisions of Article 9'.05,subd. (1) and (3),and while the tax paid upon motor fuel sold to the United States Government for the exclusiveuse of said Government is expressly sub ect to tax refund under Art. 9.13 (8 3,yet in none of these statutoryprovisions which make specificreference to the Federal and United States Government is the Statementioned;nor may the State be'implied from the wording of any of these provisions. The State Is not mentioned in Article 9.03 (1)wherein the United States Government Is specificallymentioned. The State Is neither mentionednor implied in Article 9.02 (4)which makes certain specificexemptions from this tax..

Mr. Robert S. Calvert, Page 5 (OpinionNo. ~~-1502)

6)The provisions for refund of the tax contained In Article 9.13, subd. (2), (4), (6), (7)and (8)are both specificand comprehensiveand make no provision for refund of the tax on motor fuelpurchasedby or for the State of Texas. Art. 9.02 (1) levies the tax upon the purchaser ore recipient of the first sale of motor fuel in the following language: "There shallbe and is hereby leviedand

imposed (exceptas hereinafterprovided) upon the first sale,distribution, or use of motor fuel,in this Statean excise tax of five cents (5#)per gallon or fractional part thereof so sold,distributed, or used In this State. Every distributorwho makes a first sale or distribution of motor fuel in this State For any purpose whatsoever shall, at the time of such sale or dlstributlon, collect the said tax from the purchaser or recipient of saidmotor fuel, in addition to his sellingprice

. . .' (emphasisadded). This statute levies the tax upon every "purchaseror recipient", and not upon only a "person"as defined in Art. 9.01 (6) of the motor fuel act. The definition of "first sale" in Art. 9.01 (10) is not restricted to any particular kind of "purchaseror recipient".

Also, you informus that your departmental construction since 1941 has been that motor fuel ourchased by the State and used by-the Guard is subjectto this-tax, and we feel that your departmental construction is entitled to greatweight zheLyles, 142 Tex. 704, 181 S.W.2d 570, 573 (1944). Paytax by the Stateand Its agencies since 1941 Is a matter of financial-concernwhich, 'wehave no doubt, has been well known to the severalLegislatureswhich have convened since that date. The acauiesence in this statutorv construction should be given greatweight. s.w.2d 322, 328-329 (civ Butler, 142 Tex. 692, 1.8

Our holding that the State mustpay to itself this tax is distinguished from the holdings in Attorney Generals'Opinions Numbers o-6791 (1945)and WW-721 (1959). The first of these opinionsheld that the Statewas not liable for ad valorem taxes1..

Mr. Robert S. Calvert, Page 6 (CpinlonNo. WW-1502)

on lands owned by the Texas Prison System; the secondheld that the Statewas not liable for certain excise taxes on itemspurchased for Its use by the Board of Control. Roth opinionswere based upon the ground that no appropriationhad been made by the Legislature to cover such taxes. The last general appropriation to the Adjutant General'sDepartment for the Texas National Guard6 is broad enough to coverpayment of the State excise tax on motor fuelpurchased by the State for use by the Texas National Guard.

b Acts 1961, 57th Leg., lst.C.S., Ch. 62, p. 203.

SUMMARY 1. Motor fuel furnished by the 'U.S. Lkpartment of Defense and that purchased by the U. S. Property and Fiscal Officer for use of the Texas National Guardwhile the Guard is on active and Inactive Federal status Is exempt from payment of the motor fuel excise tax imposed by Ch. 9 of Title 122A, TaxatlonGeneral,Revised Civil Statutes. 2. Motor fuel purchased by the State of Texas for use of the Guardwhile It is on active Stateduty under Command of the Governor of Texas Is subject to this motor fuel tax. Very truly yours,

WILL WILSON Attorney General of Texas

By' W/4 &eti AssistantAttorney General WEA:pw. ,-

Mr. Robert S. Calvert, Page 7 (OpinionNo. WW-1502)

APPROVED: OPINION COMMITTEE W. V. Geppert, Chairman Joseph Trimble GrundyWllllams W. 0. Shultz L. P. Lollar RhVI.EWED

FOR THE ATTORNEY GENERAL By: Leonard Passmore