Court Opinion

ID: 4137763
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:28:39.282562+00
Date Added: 2024-06-11T14:37:45.420248
License: Public Domain

February     20,    1950

Hon. Jimmy P. Horany, Chairman
Subcommittee     on Revenue and Taxation
Revenue and Taxation Committee
House of Representatives
51st Legislature
Austin, Texas                     Opinion            No. V-1909;
                                                                               ..!

                                         Re:      The adequacy of designated.
                                                  provisions   in House Bill No.
Dear   Sir:                                       7. 51st Leg., 1st~C.S..  1950.

              Your   request    for an, opinion reads          as follows:

               “The Committee   desires   a general ruling from
       your Department   as to the. sufficiency   and general ad-
       equacy of the term ‘gathering’ as defined in Subdivi-
       sion 2 of Section 1. page 2 of this bill, and also.as  to
       the adequacy of Section 2. page 4 in preventing the tax
       imposed by this bill from being passed on to the pro-
       ducer.”

              ,Subdivision     2 of Section     1 of House     Bill No.      7 reads   as
follows:

              “(2)   ‘Gathering’    gas shall mean the first, taking
       or acquiring    of custody, possession,       title or control.
       in Texas,   from the producer       of gas produced in this
       State. after the severance       of such gas from the earth,
       and after the passage      of such gas through any separa-
       tor, drip, trap or meter that may be located at or near
       the well, and prior to its admission        into any transmis-
       sion line for any purposes        whatsoever .except those here-
       in provided.     Provided    that in the case of gas containing
       gasoline or liquid hydrocarbons         that are removed or ex-
       tracted in commercial        quantities at a plant by scrubbing,
       absorption,    compression,      or any, similar   process,  the
       term ‘gathering      gas’ shall mean the first taking or the
       first retaining    of possession    of such gas for transmis-
       sion through a pipe line after such gas has .passed through
       the outlet of such plant.”

              Section   2 of the Bili    reads,     in part:            .’
Hon. Jimmy P. Horany, Page 2 (V-10’09)

             “Provided     that the, tax herein levied being strict-
      ly a privilege    tax for the privilege   of engaging in such
      business    of gathering    gas produced in this State shall
      in no case be deducted from any payments due by gath-
      erers to producers       of gas.”

             It is fundamental     that laws must be certain       and defi-
nite in order to be valid.          3

              In State v. International and G. N. Ry. Co., 107 Tex. 349,
179 S.W. 867 (1915), the Supreme Court said (at page 868):

               “The provisions     of the acti in order for it to be
      enforceable,      should be plain enough in meaning         for
      those operating      the industry affected by it to know and
      realize    whether by engaging in an act of repair          they
      would breach its terms.         If the act meets and fulfills
      the requirements       of this rule, it would be sufficiently
      definite in meaning to be operative.          If it is not suffi-
      ciently plain in meaning for those engaged in the line
      of industry affected to so understand its terms and pro-
      visions,    then the act would and should be held void for
      uncertainty,     as it would be inexcusable       for a govern-
      ment to fine or punish its citizens        for an infraction of
      a law which in its terms could not be understood              by
      them.     But it is equally true that, if the act of the Leg-
      islature    is as definite in meaning as the nature of the
      subject would allow, no more than this should be expect-
      ed to meet the rule of certainty required;           to hold other-
      wise would be to nullify the power of the .Legislature            to
      legislate    at all on a proper subject for its consideration.”

             The word “gathering”   as used in House Bill No. 7 is de-
fined in language that is specific and definite and its meaning can be
clearly  understood.

             Subject to constitutional   restrictions    the Legislature   has
the inherent power to determine      the persons,    property,  and privileg-
es to be taxed, the mode, form and extent of the tax, and the manner
and means of enforcing    the tax. 51 Am. Jur. 73, 85. 432, Taxation,
Sets. 43, 55, 409.

             The Supreme Court of Alabama            is upholding a provision
in a sales tax statute requiring the retailer        to add or “pass on” the
amount of the tax to the sales price said:

             “The taxpayer,     the seller, is charged with the
       mandatory    duty to’ add the amount of the tax to his
       sales price, and to collect it from the purchaser    along
         Hon.   Jimmy       P. Horany,   Page   3,(V.-10.09)   ,:.     .~

                with the sales +Pice. .‘Hi?has’,all   thena&hority:to   coi-     so
                lect this added sum whiclrhe has to c.ollect,.his.     sales
                price.   The flaw intervenes”and    adds the amount of’the
                sales. tax which th’s seller must pay to the state to the         .’
                price he niust collect from the purchaser.”         Doby v.
                State Tax Commission,      234 Ala. 150. 174 So. L33. 237
                       * (Emphasis    adaed throughout.)
                                                                                       ‘.
                       The Supreme Court of Illinois has upheld a statute pro-
         vidinn~that the’ retailer  could not collect the retailer’s    occunation
          tax from the purchaser.      Thatxurt    in People’s    Drug Shop v;,tioy-
         -sey, 384 111. 283, ~51 N.E.2d   144, 146 (1943) , said:

                               that the tax imposed is upon retailers     an& .i     ~.
                        *
                             .   a   .

                not upon consumers,      and that the sole duty of paymg
                the tax,rests    upon the former.    It follows necesSarily      .‘.
                that plaintiff was without legal authority to collect fro&~
                its customers: the defendant. -thenchallenged     item& in’&
                invoices   representing   additional charges ftii retail&s
                occupation    taX;”
                                                                                  -.
                      Section 2 of the Bill piovides   that the gathering tax can-
         not be ‘passe8   on” to the producer.    The implication   is that the “gath-
         erer ” must either absorb the tax or “pass it on” to the transmission
         pipe line operator  to be ultimately’assumed     by thenconsumer:

                        .It is our contilu&on that the terniinology    of Subdivision    2
         of Sectioti~ l~and’~of Section 2 of the Bill is Sufficient to d&&mine        the
         legislative   intent and i$ adequate to accomplish      the purl&e’s   for which
         they were‘ included in the 5ill.      The 1egislatiLe  inter+, when ascertain-
         ed, is the law.      City of Wacb v. McGraw.     127 Tex. 268. 93 S.w.2d      717
         (1936);   Lone Star Gas Co. v. State, 137 Tex. 279, 153 S.W.2d 681 (1941;
         leave to file petition for mandamus denied 315 U.S. .8, 1.9’42); Thompson
         v. United Gas Corp..       190 S.W.2d~504  (Tex. Civ. App. 1945. eirw
         39 Tex. Jur. 166. Statu.tes. Sec. 90.

                         This opinion IS limit&d       to the specific ~question asked and
         is ziiot a Pulitig on the effecfiv~~&ss       Or validrty of the Bill as’! who!&.
                                                                               ~.:.  ::.
                                                                  :                     t
                                         *   SUMMARY
I
                       Subdivision 2 of Section 1 and Section 2 of H.B.
                No. 7, Acts’ 51gt Legislature,  1st C;S.,- 1950;relative~
                to a’gas gathering tax, are sufficiently   definite to a&er-
                                                                                            .   .,

    (.
Hon. Jimmy   P. Hprany,      Page   4 (V-1009)

      tain the legislative    intent and are adequate to accom-
     .plish the purposes     for which they were inserted in the
      Bali

                                                 Yours   very   truly,

                                                  PRIG E DANIEL
                                                 Attorney General

APPROVED:

W. V. Geppert                                              Assistant
Taxation Division

Charles D. Mathews
Executive Assistant

FL/mwb