A-50762, SEPTEMBER 2, 1933, 13 COMP. GEN. 70

A-50762: Sep 2, 1933

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ARE NOT AVAILABLE FOR PAYMENT. WHEN THE CONTRACT CONTAINED NO PROVISION FOR AN ADDITION TO THE CONTRACT PRICE OF AN AMOUNT EQUAL TO WHATEVER PROCESSING TAX THE CONTRACTOR MIGHT SHOW AS A FACT TO HAVE BEEN PAID IN CONNECTION WITH THE MANUFACTURE OF THE FLOUR. THE PROPOSAL AND ACCEPTANCE WERE ON STANDARD FORM NO. 33. THE DELIVERY OF THE 380 BARRELS OF FLOUR IN QUESTION WAS IN PART SATISFACTION OF THE REQUIREMENTS OF THE CONTRACT AND THE AGREED COMPENSATION HAS BEEN PAID THEREFOR. YOU HAVE APPARENTLY CLAIMED IN ADDITION TO THE CONTRACT PRICE THE SUM OF $524.34 FOR THE 380 BARRELS OF FLOUR. ON THE GROUND THAT YOU WERE REQUIRED TO PAY $524.34 AS PROCESSING TAX IMPOSED UNDER SECTION 9 OF THE ACT OF MAY 12.

A-50762, SEPTEMBER 2, 1933, 13 COMP. GEN. 70

CONTRACTS - INCREASED COSTS - PROCESSING TAX APPROPRIATIONS MADE PRIOR TO SECTION 9 OF THE ACT OF MAY 12, 1933, 48 STAT. 35, ARE NOT AVAILABLE FOR PAYMENT, AS SUCH, OF THE PROCESSING TAX IMPOSED THEREUNDER, NOR TO PAY ANY AMOUNT IN EXCESS OF THE PRICE STIPULATED IN A CONTRACT ENTERED INTO PRIOR TO SAID ACT FOR THE DELIVERY OF FLOUR, WHEN THE CONTRACT CONTAINED NO PROVISION FOR AN ADDITION TO THE CONTRACT PRICE OF AN AMOUNT EQUAL TO WHATEVER PROCESSING TAX THE CONTRACTOR MIGHT SHOW AS A FACT TO HAVE BEEN PAID IN CONNECTION WITH THE MANUFACTURE OF THE FLOUR.

COMPTROLLER GENERAL MCCARL TO THE COLORADO MILLING AND ELEVATOR CO., SEPTEMBER 2, 1933:

THERE HAS BEEN RECEIVED A COPY OF YOUR LETTER OF AUGUST 23, 1933, TO THE WARDEN OF THE FEDERAL PENITENTIARY AT LEAVENWORTH, KANS., AND YOUR TELEGRAM OF AUGUST 28, 1933, RELATIVE TO YOUR CLAIM FOR $524.34 AS PROCESSING TAX ON 380 BARRELS OF FLOUR DELIVERED UNDER CONTRACT J1C 2520, CONSISTING OF YOUR PROPOSAL DATED MAY 22, 1933, AND ITS ACCEPTANCE OF MAY 26, 1933, FOR THE DELIVERY OF 2,235 BARRELS OF FLOUR IN ACCORDANCE WITH SPECIFICATIONS NO. 9 AT $3 A BARREL AND 615 BARRELS IN ACCORDANCE WITH FEDERAL SPECIFICATION N-F-481, E-1 AT THE SAME PRICE PER BARREL. THE PROPOSAL AND ACCEPTANCE WERE ON STANDARD FORM NO. 33, STANDARD SHORT FORM OF CONTRACT FOR SUPPLIES, AND CONSTITUTED A CONTRACT BINDING ON YOU TO FURNISH THE FLOUR OR TO PAY THE UNITED STATES ANY EXCESS COST BY REASON OF YOUR FAILURE TO DO SO. SEE UNITED STATES V. NEW YORK AND PORTO RICO STEAMSHIP COMPANY, 239 U.S. 88; UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313.

THE DELIVERY OF THE 380 BARRELS OF FLOUR IN QUESTION WAS IN PART SATISFACTION OF THE REQUIREMENTS OF THE CONTRACT AND THE AGREED COMPENSATION HAS BEEN PAID THEREFOR, BUT YOU HAVE APPARENTLY CLAIMED IN ADDITION TO THE CONTRACT PRICE THE SUM OF $524.34 FOR THE 380 BARRELS OF FLOUR, ON THE GROUND THAT YOU WERE REQUIRED TO PAY $524.34 AS PROCESSING TAX IMPOSED UNDER SECTION 9 OF THE ACT OF MAY 12, 1933, 48 STAT. 35, ON THE MILLING OF THE WHEAT ENTERING INTO THE FLOUR.

THERE IS NO EVIDENCE BEFORE THIS OFFICE THAT YOU ACTUALLY PAID THE PROCESSING TAX OF $524.34, BUT THAT POINT IS NOT MATERIAL IN THIS CASE FOR THE REASON THAT THE CONTRACT OF MAY 26, 1933, MADE NO PROVISION WHATEVER FOR THE ASSUMPTION BY THE UNITED STATES OF ANY PROCESSING TAX IMPOSED UNDER THE TERMS OF THE ACT OF MAY 12, 1933, OR OTHERWISE, AS AN ADDITION TO THE CONTRACT PRICE. THERE HAS NOT BEEN OVERLOOKED IN THIS CONNECTION SECTION 18 OF THE ACT OF MAY 12, 1933, AS FOLLOWS:

(A) IF (1) ANY PROCESSOR, JOBBER, OR WHOLESALER HAS, PRIOR TO THE DATE A TAX WITH RESPECT TO ANY COMMODITY IS FIRST IMPOSED UNDER THIS TITLE, MADE A BONA FIDE CONTRACT OF SALE FOR DELIVERY ON OR AFTER SUCH DATE OF ANY ARTICLE PROCESSED WHOLLY OR IN CHIEF VALUE FROM SUCH COMMODITY, AND IF (2) SUCH CONTRACT DOES NOT PERMIT THE ADDITION TO THE AMOUNT TO BE PAID THEREUNDER OF THE WHOLE OF SUCH TAX, THEN (UNLESS THE CONTRACT PROHIBITS SUCH ADDITION) THE VENDEE SHALL PAY SO MUCH OF THE TAX AS IS NOT PERMITTED TO BE ADDED TO THE CONTRACT PRICE.

(B) TAXES PAYABLE BY THE VENDEE SHALL BE PAID TO THE VENDOR AT THE TIME THE SALE IS CONSUMMATED AND SHALL BE COLLECTED AND PAID TO THE UNITED STATES BY THE VENDOR IN THE SAME MANNER AS OTHER TAXES UNDER THIS TITLE. IN CASE OF FAILURE OR REFUSAL BY THE VENDEE TO PAY SUCH TAXES TO THE VENDOR, THE VENDOR SHALL REPORT THE FACTS TO THE COMMISSIONER OF INTERNAL REVENUE, WHO SHALL CAUSE COLLECTIONS OF SUCH TAXES TO BE MADE FROM THE VENDEE.

WHILE THE CONTRACT WAS SUBSEQUENT TO THE DATE OF THE STATUTE, IT APPEARS TO HAVE BEEN PRIOR TO THE DATE THE TAX WAS IMPOSED BY THE SECRETARY OF AGRICULTURE UNDER THE TERMS OF THE ACT, BUT IT WILL BE NOTED THAT THERE IS NOTHING CONTAINED IN THE QUOTED SECTION 18 WHICH, IN TERMS, REQUIRES THE UNITED STATES AS VENDEE TO PAY A PROCESSING TAX ON DELIVERIES UNDER SUCH CONTRACTS WITH IT AS MAY HAVE BEEN ENTERED INTO PRIOR TO THE EFFECTIVE DATE OF THE TAX. THE RULE OF STATUTORY INTERPRETATION IS THAT THE SOVEREIGN, AS THE LAWMAKER, IS NOT BOUND BY THE TERMS OF STATUTES UNLESS THE LAW EXPRESSLY SO PROVIDES. SEE SAVINGS BANK V. UNITED STATES, 19 WALL. 227, 241; 36 CYC. 1171, 1172; DISTRICT OF COLUMBIA V. AMERICAN OIL COMPANY, 39 FED./2D) 510.

MOREOVER, THE APPROPRIATIONS MADE BY THE CONGRESS FOR THE PURCHASE OF FLOUR BY THE DEPARTMENT OF JUSTICE DURING THE FISCAL YEAR 1934, THE FISCAL YEAR NOW CURRENT, WERE CONTAINED IN THE ACT OF MARCH 1, 1933, (47 STAT. 1384), AND SUCH APPROPRIATIONS ARE AVAILABLE FOR THE PURPOSE FOR WHICH MADE AND NONE OTHER. SEE SECTION 3678, REVISED STATUTES. AS THE APPROPRIATIONS FOR THE PURCHASE OF THE FLOUR IN QUESTION DO NOT SPECIFICALLY PROVIDE FOR THE PAYMENT OF ANY TAX, SUCH APPROPRIATIONS ARE NOT AVAILABLE FOR THE PAYMENT OF THE PROCESSING TAX, AS SUCH, ON THE FLOUR DELIVERED UNDER THE CONTRACT OR FOR THE PAYMENT OF ANY SUM IN EXCESS OF THE PRICE STIPULATED IN THE CONTRACT FOR THE FLOUR.

THE QUESTION HERE IS NOT WHETHER THE WARDEN OF THE FEDERAL PENITENTIARY HAS ANY OBJECTIONS TO MAKING THE PAYMENT OF THE PROCESSING TAX UNDER THIS CONTRACT BUT WHETHER THE LAW IMPOSES ON THE UNITED STATES ANY LEGAL LIABILITY FOR THE PAYMENT OF THE PROCESSING TAX AND WHETHER THERE ARE ANY APPROPRIATIONS AVAILABLE FOR SUCH PAYMENT. AS STATED, THERE ARE NO APPROPRIATIONS AVAILABLE FOR MAKING THE CLAIMED PAYMENT, AND YOU ARE ADVISED ACCORDINGLY.