E QXORNEY GENERAL..oFAUSTIN aa. TEXAS

., WVILL WILSON ATTGRNEYGENERAr.

. April 2, 1959,

Hon. V. L. Ramsey Chalrman;Committee'on Revenue and,Taxatlo~n Re:. Constitutionalityof House of Representatives House Bill No. 67, 56th The State of Texas Leg*, Repealing the Tax Austin, Texas ExemptionAccorded Cigarettes'sold at Federal Military Installations Dear Mr. Ramsey:, Within the State.
We quote from your opinion requests as follows: Opinion No. ~~-582

"The committee requests to be advised on the question as to whether or not this proposed Bill [H. B. 67_7 contravenes the Federal Constitution,any Federal statute, or any court decisionwith regard to taxing a:Federal instrumentalityand specificallywould this Bill be constitutional?"

:, House Bill 67 has as Its singlepurpose the repeal of

Chapter 14, Acts of the 47th'Leg.,Regular Session, 1941, as last amended by ch. 27.5, Acts of the &&h Leg., Regular Session, 1943,'whichfs,codlfied as Article 7047c-3,V,A.C.S. Article 7047c-3 accords exemption from the State cigarette tax to: (1) all salesby "Post, Camp or Unit Exchanges established and operatedwithin the State of Texas, by the United StatesMilitary, Naval or Marine forces and not otherwise, on Military, Naval or Marine Posts; Cmps or Reservations," to "~officers,..soldiers, sailors,n-urses,

or marines of the United StatesArmy, Navy or Marine Corps"; (2)all sales by any authorizedbranch of a Post, Cs~p or Unit Exchange established for the exclusive benefit of officers, soldiers, sailors,nursea or marines in fhe.Army, Navy or Marine Corps.or on a?~thorized militarymaneuvers; and (3) all sales to,any such Post, Canp, or Unit Exchange under the conditions and for the purposes .specifi::d in (1) and (2) above by a cigarette distributor licensed in Texas. Tne'obviousintentlon of H.B. 67 is to allow imposition of the cigarette taxon all sales to or by Post, Camp or Uni,t Exchanges on Federal installations,or authorized branches-Ron.V. L. Ramsey, Page 2, Opinion No. ww-582

thereof. "You are advised that this cannot be accomplished, Irrespective of the'repeal,vel non, of Article 7047c-3, V.A.C.S. -- Title 4, U.S.C.'Aap' Seotion 105(a),provides as follows:
"No person shall be relieved from liability for payment of, ,colleotionof, or accounting for any sales .oruse"tax levied by any State, or by any duly constituted taxkig authority therein,having jurls- ,dictionto levy 'such~ a tax, on the ground that the sale,oruse, wlfh'respect to which such tax is levied, occurred in whole or in part within a Federal area; and such 'Stateor taxing authority shallhave full jurisdiotionand p,owerto levy and collect any such tax in any Federal.areawithin such State to the same ext,ent

and with the ssme effect as though such area wasnot a Federal area." Then power to levy sales or use‘taxes under the foregoing provision is Limitedby Title 4,'U.S.C.A., Section 107, which provides:.,.... ; "(a) The provisions of Sections 105 and 106 of this title shall not be deemed to authorize the levy or collection of any tax on or from the United States or any instrumentalitythereof, or the levy or Collection of any tax with respectto sale,purchase, ~tot"h"~e~~~t~fe",a~~i~~e, p;;sg;np',"pe;ty E;,;zf toany "(b) A~person shall,bedeekezto bk an authorized purchaser under this section only wlth*respect to purchases which he is permitted to make from commissaries, ship's stores, or voluntaryunincorpor-; ated organizationsof personnel of any branch of the Armed Forces of the,United States,under regulations,promulgatedby the departmental Secretary having jurisdiotionover such branch." The case of Falls City Brewing Companyv. Reeves, 40 F. Sup. 35 (USDC,W,D, Ky. 1941)held that a'post exchangewas a governmental Instrumentality,and, pursuant to Section 107, above, accorded it exemption from 'Statetaxes imposed on the "sale of malt beverages. The'llmitation imposed by,Tltle 4, 'U,S.C,A.,Section 107, as construedby the Falls City Brewing Company case, is controlling in the present situation. The State of Texas cannot 1~~

Hon.,V. L,~Ramsey, Page 3, Opinion NO. w-582

levy or collect the cigarette tax on any sales to any Federal Post, Camp or Unit Exchange or authorizedbranch thereof; or on any sales:by such instrumentalityto any~"authorizedpurchaser." llthough'the~purpose,forwhich repeal of Article

‘70470-3 was proposed contravenes the foregoingprinciples, such repeal will, In and of Itself,have no effect whatsoever. "' The existing.'Federal law will not be affeoted regardless of whether or not Article 7047c-3 is repealed; therefore, the . question of.the constitutionalityof such'repeal, Is immaterial. This opinion is not in conflictwith Attorney General's,

. ,OplnlonNo. WW-354. That opinion dealt witbthe authority of manufacturers or distributorsto sell and ,le&Lver beer in military establlshme?&s,and the.authorityof the State to -grant refunds on taxes on such' sales ,under,

the provisions Qf Art; 667 V.P.C.'.Incident to the d.ebision of-such 'qu%stiona ,the opinion 'statesthat "under the Duck Amendment,

. . .the State of Texas may impose sales or use taxes on sales or uses occurringwithinthe Federal area, regardless of the fact that the State has ceded exclusive jurisdictionover the area to the Federal Government." Section 107 of the Buck Amendment was not quoted,or referred to in W-354, in that.the:question ~ of .taxabilltyof sales to,or'by.Fi?deral lnstrumentalitfcs. was not involved,.andthe oplnio'n'ah$uldnot be const'rued'as '.'M lndioatlng that such sal& are taxable.
SUMMARY Under Title 4, U.S.C.A., Section 107, as .oonstruedby Falls City Brewing Companyv. ,peeves. the StateHas no Dower to levv or col- -the cigarette tax on'salesmade to Post Exchanges, or by suchExchanges to authorized purchasers. Repeal of Article 7047c-3, vel non, will have no'effect upon the law asT xsts in this regard.
WILL WILSON Attorney Gene::al

of Texas .JNP:bct
APPROVED OPINION COMMITTEE .: Geo. P. Blackburn, Chairman
C. Dean Davis . Riley Eugene Fletcher
REVIEWED FOR THE ATTORNEY GENERAL Bye: W. V.,Geppert