A-17003, FEBRUARY 17, 1927, 6 COMP. GEN. 539

A-17003: Feb 17, 1927

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

STATE TAX ON GASOLINE WHERE GASOLINE IS PURCHASED BY A GOVERNMENT AGENCY UNDER A CONTRACT FOR A FIXED OR AGREED PRICE PER GALLON WITH NO PROVISION FOR INCREASE CONTINGENT ON THE PAYMENT BY THE CONTRACTOR OF A STATE TAX. WHERE A CONTRACT IS ENTERED INTO BETWEEN THE GOVERNMENT AND A DISTRIBUTOR FOR THE PURCHASE OF GASOLINE AT A FIXED PRICE PER GALLON SUBSEQUENT TO THE PASSAGE OF A STATE LAW REQUIRING THE PAYMENT OF A GASOLINE TAX OF 1 CENT PER GALLON. IT MUST BE ASSUMED THAT SUCH TAX WAS TAKEN INTO CONSIDERATION BY THE DISTRIBUTOR IN FIXING THE CONTRACT PRICE. THE PRICE AT WHICH A GOVERNMENT COMMISSARY MAY DISPOSE OF GASOLINE PURCHASED BY IT CAN HAVE NO BEARING ON ITS OBLIGATION TO THE CONTRACTOR OR THE STATE.

A-17003, FEBRUARY 17, 1927, 6 COMP. GEN. 539

STATE TAX ON GASOLINE WHERE GASOLINE IS PURCHASED BY A GOVERNMENT AGENCY UNDER A CONTRACT FOR A FIXED OR AGREED PRICE PER GALLON WITH NO PROVISION FOR INCREASE CONTINGENT ON THE PAYMENT BY THE CONTRACTOR OF A STATE TAX, THE SUBSEQUENT PASSAGE OF A STATE LAW IMPOSING A TAX TO BE PAID BY THE DISTRIBUTOR ON ALL GASOLINE SOLD CAN NOT OPERATE TO REQUIRE OR AUTHORIZE THE GOVERNMENT TO PAY THE AMOUNT OF THE TAX OR ANY OTHER SUM IN ADDITION TO THE FIXED OR AGREED PRICE. WHERE A CONTRACT IS ENTERED INTO BETWEEN THE GOVERNMENT AND A DISTRIBUTOR FOR THE PURCHASE OF GASOLINE AT A FIXED PRICE PER GALLON SUBSEQUENT TO THE PASSAGE OF A STATE LAW REQUIRING THE PAYMENT OF A GASOLINE TAX OF 1 CENT PER GALLON, IT MUST BE ASSUMED THAT SUCH TAX WAS TAKEN INTO CONSIDERATION BY THE DISTRIBUTOR IN FIXING THE CONTRACT PRICE, AND THE GOVERNMENT CAN NOT BE HELD LIABLE FOR THE PAYMENT OF SUCH TAX. THE PRICE AT WHICH A GOVERNMENT COMMISSARY MAY DISPOSE OF GASOLINE PURCHASED BY IT CAN HAVE NO BEARING ON ITS OBLIGATION TO THE CONTRACTOR OR THE STATE.

DECISION BY COMPTROLLER GENERAL MCCARL, FEBRUARY 17, 1927:

THE STANDARD OIL CO. OF NEW YORK REQUESTED, NOVEMBER 15, 1926, REVIEW OF SETTLEMENT NO. 01697-320, DATED APRIL 13, 1926, DISALLOWING ITS CLAIM FOR $462.22, THE AMOUNT ALLEGED TO HAVE BEEN PAID BY IT TO THE STATE OF RHODE ISLAND AS A TAX OF 1 CENT PER GALLON ON GASOLINE FURNISHED THE COMMISSARY STORE, UNITED STATES NAVAL TRAINING STATION, NEWPORT, R.I., DURING JUNE, JULY, AUGUST, AND SEPTEMBER, 1925.

BY AN ACT OF THE GENERAL ASSEMBLY OF THE STATE OF RHODE ISLAND, APPROVED APRIL 29, 1925, A TAX OF 1 CENT PER GALLON WAS IMPOSED UPON DISTRIBUTORS OF GASOLINE AND OTHER PRODUCTS USED IN THE PROPELLING OF MOTOR VEHICLES IN THAT STATE. SECTION 4 OF SAID ACT PROVIDES:

EVERY DISTRIBUTOR SO REGISTERED SHALL ON OR BEFORE THE FIFTEENTH DAY OF EACH MONTH RENDER A REPORT UNDER OATH TO THE STATE BOARD OF PUBLIC ROADS STATING THE NUMBER OF GALLONS OF SUCH FUEL SOLD AND USED BY HIM WITHIN THE STATE DURING THE PRECEDING CALENDAR MONTH, ON FORMS TO BE FURNISHED BY THE STATE BOARD OF PUBLIC ROADS, AND SAID REPORT SHALL CONTAIN SUCH FURTHER INFORMATION RELATING TO THE USE AND SALE OF GASOLINE, BENZOL OR LIKE PRODUCTS (OTHER THAN LUBRICATING OILS) AS THE SAID BOARD SHALL PRESCRIBE. THE STATE BOARD OF PUBLIC ROADS SHALL ASSESS A TAX OF ONE CENT PER GALLON ON ALL SUCH FUELS SO REPORTED, AND ON OR BEFORE THE FIRST DAY OF THE CALENDAR MONTH NEXT SUCCEEDING THE FILING OF SUCH REPORTS SAID BOARD SHALL CERTIFY TO THE GENERAL TREASURER THE AMOUNT OF TAX DUE FROM EACH DISTRIBUTOR, AND ON OR BEFORE THE TENTH DAY OF SUCH CALENDAR MONTH EACH DISTRIBUTOR SHALL PAY TO THE GENERAL TREASURER THE TAX SO CERTIFIED.

IT APPEARS THAT BY CONTRACTS NOS. 348 AND 57, DATED APRIL 7, 1925, AND JULY 1, 1925, RESPECTIVELY, CLAIMANT COMPANY AGREED TO FURNISH GASOLINE TO THE UNITED STATES NAVAL TRAINING STATION AT NEWPORT, R.I., DURING THE PERIOD FROM APRIL 7 TO SEPTEMBER 30, 1925, AT STIPULATED PRICES. NEITHER OF THE CONTRACTS MADE ANY PROVISION FOR THE PAYMENT BY THE GOVERNMENT OF ANY AMOUNT IN ADDITION TO THE PRICES THEREIN STIPULATED BY REASON OF ANY TAX WHICH CONTRACTOR MIGHT BE REQUIRED TO PAY THE STATE.

THE CLAIMANT COMPANY SUBMITTED ITS INVOICES TO THE COMMISSARY STORE, NEWPORT, R.I., FOR REIMBURSEMENT OF THE 1-CENT TAX PER GALLON ALLEGED TO HAVE BEEN PAID BY SAID COMPANY TO THE STATE ON 46,222 GALLONS OF GASOLINE FURNISHED DURING THE PERIOD SUBSEQUENT TO JUNE 1, 1925, CONTENDING THAT THE COMMISSARY STORE COLLECTED THE AMOUNT OF THE TAX FROM EACH PURCHASER OF GASOLINE AFTER JUNE 1, 1925, IN ADDITION TO THE FULL SALE PRICE.

IT IS CLEAR THAT THE RETAIL PRICE CHARGED BY THE COMMISSARY STORE TO THE CONSUMERS OF THE GASOLINE CAN HAVE NO BEARING ON THE QUESTION OF THE LIABILITY OF THE GOVERNMENT FOR THE STATE TAX. THE GASOLINE WAS PURCHASED UNDER CONTRACTS ENTERED INTO BOTH PRIOR AND SUBSEQUENT TO THE DATE OF THE ACT IMPOSING THE TAX AND THE PASSAGE OF THE SAID LAW CAN NOT OPERATE TO REQUIRE OR AUTHORIZE THE GOVERNMENT TO PAY THE AMOUNT OF THE TAX OR ANY OTHER SUM IN ADDITION TO THE FIXED CONTRACT PRICE. CLAIMANT COMPANY WAS NECESSARILY OBLIGED IN BIDDING ON THE FURNISHING OF THE GASOLINE IN QUESTION TO KNOW ALL THE CONDITIONS THAT ENTERED INTO THE FIXING OF THE PRICE QUOTED IN ITS BID AND IT MUST BE ASSUMED THAT THE ACT THEN PENDING IMPOSING A TAX ON ALL DISTRIBUTERS OF GASOLINE WAS KNOWN TO THE CLAIMANT COMPANY AND TAKEN INTO CONSIDERATION IN THE FIXING OF THE CONTRACT PRICE. 4 COMP. GEN. 911.