A-69303, MAY 12, 1936, 15 COMP. GEN. 988

A-69303: May 12, 1936

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ON ARTICLES INVOLVED IS DIFFICULT OR IMPOSSIBLE TO DETERMINE. IF TAX DEDUCTION IS MADE ON THAT BASIS THE AMOUNT THEREOF SHOULD BE SHOWN IN THE TAX EXEMPTION CERTIFICATE FURNISHED THE CONTRACTOR. DO NOT LOSE THEIR IDENTITY AS SUCH EVEN THOUGH THE ARTICLES TAXES ARE SOLD TO THE UNITED STATES BY DEALERS WHO DID NOT PAY THE TAX DIRECT TO THE UNITED STATES. THE REFUSAL OR OBJECTION OF THE CONTRACTOR TO THE DEDUCTION IS NOT FOR CONSIDERATION. SHOULD BE REQUIRED TO STATE WHETHER SUCH TAX WAS CONSIDERED IN ARRIVING AT THE BID PRICE. WHETHER CLAIM HAS BEEN OR WILL BE MADE FOR EXEMPTION FROM. 1936: THERE WAS RECEIVED YOUR LETTER OF APRIL 1. WILL THE ITEMIZATION OF THE TAX IN THE CERTIFIED VOUCHER OF A CONTRACTOR BE ACCEPTABLE EVIDENCE THAT THE AMOUNT OF THE TAX THUS INDICATED IS THE CORRECT AMOUNT.

A-69303, MAY 12, 1936, 15 COMP. GEN. 988

CONTRACTS - TAX-EXEMPT ARTICLES - REVENUE ACT OF 1935 WHERE, IN CONNECTION WITH GOVERNMENT CONTRACTS, THE TAX IMPOSED BY THE REVENUE ACT OF 1932, 47 STAT. 259, ON ARTICLES INVOLVED IS DIFFICULT OR IMPOSSIBLE TO DETERMINE, THE TAX STATEMENT IN THE CONTRACTOR'S CERTIFIED VOUCHER MAY BE ACCEPTED AS CORRECT IN THE ABSENCE OF FACTS OTHERWISE, BUT IF TAX DEDUCTION IS MADE ON THAT BASIS THE AMOUNT THEREOF SHOULD BE SHOWN IN THE TAX EXEMPTION CERTIFICATE FURNISHED THE CONTRACTOR. TAXES IMPOSED BY THE REVENUE ACT OF 1932, 47 STAT. 259, DO NOT LOSE THEIR IDENTITY AS SUCH EVEN THOUGH THE ARTICLES TAXES ARE SOLD TO THE UNITED STATES BY DEALERS WHO DID NOT PAY THE TAX DIRECT TO THE UNITED STATES. WHERE CONTRACTS EXECUTED PRIOR TO THE ACT OF AUGUST 30, 1935, 49 STAT. 1025, CONTAIN A PRICE ADJUSTMENT CLAUSE IN CASE OF TAX CHANGES APPLICABLE THERETO THE PRICE MAY BE REDUCED BY AN AMOUNT EQUAL TO THE TAXES MADE INAPPLICABLE BY SAID ACT, AND THE REFUSAL OR OBJECTION OF THE CONTRACTOR TO THE DEDUCTION IS NOT FOR CONSIDERATION, BUT IF ADMINISTRATIVELY DETERMINED DESIRABLE THAT THE FULL CONTRACT PRICE BE PAID NO TAX EXEMPTION CERTIFICATE SHOULD BE ISSUED THE CONTRACTOR. VENDORS UNWILLING TO ALLOW CONTRACT PRICE DEDUCTIONS FOR TAXES IMPOSED BY THE REVENUE ACT OF 1932, 49 STAT. 1025, LATER MADE INAPPLICABLE TO THE ARTICLES INVOLVED, SHOULD BE REQUIRED TO STATE WHETHER SUCH TAX WAS CONSIDERED IN ARRIVING AT THE BID PRICE, AND WHETHER CLAIM HAS BEEN OR WILL BE MADE FOR EXEMPTION FROM, CREDIT FOR, OR REFUND OF THE TAX INVOLVED.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF AGRICULTURE, MAY 12, 1936:

THERE WAS RECEIVED YOUR LETTER OF APRIL 1, 1936, RELATING TO YOUR LETTER OF DECEMBER 26, 1935, AS FOLLOWS:

THERE HAS BEEN RECEIVED A COPY OF YOUR DECISION A-67334, OF NOVEMBER 29, 1935, TO THE ADMINISTRATOR OF VETERANS' AFFAIRS IN REPLY TO HIS LETTER OF NOVEMBER 4, 1935, READING IN PART AS FOLLOWS:

"PLEASE ADVISE WHETHER THE AMOUNT OF TAX APPLICABLE TO TOILET SOAP DELIVERED PURSUANT TO THESE CONTRACTS ON AND AFTER OCTOBER 1, 1935, SHOULD BE DEDUCTED FROM CONTRACTORS' VOUCHERS AND, IF SO, WILL THE ITEMIZATION OF THE TAX IN THE CERTIFIED VOUCHER OF A CONTRACTOR BE ACCEPTABLE EVIDENCE THAT THE AMOUNT OF THE TAX THUS INDICATED IS THE CORRECT AMOUNT, AND IF NOT WHAT DATA WILL BE REQUIRED BY YOUR OFFICE TO ESTABLISH THE AMOUNT DEDUCTIBLE WHEN THE CONTRACTOR PAYS THE TAX DIRECTLY TO THE GOVERNMENT, AND WHAT DATA WILL BE REQUIRED TO ESTABLISH THE AMOUNT DEDUCTIBLE WHEN THE CONTRACTOR DOES NOT PAY THE TAX DIRECTLY TO THE GOVERNMENT?

YOUR REPLY TO THE ABOVE QUESTIONS WAS CONFINED TO THE PROVISIONS OF SPECIFIC CONTRACTS OF THE VETERANS' ADMINISTRATION WHICH, IT IS PRESUMED, ARE WITH CONTRACTORS WHO MANUFACTURE THE TOILET SOAP TO BE DELIVERED THEREUNDER AND, AS MANUFACTURERS, ARE RESPONSIBLE DIRECTLY TO THE GOVERNMENT FOR THE AMOUNT OF TAX. THAT PART OF THE SUBMISSION ITALICIZED ABOVE REMAINS UNANSWERED, AND AS ALL DEPARTMENTS AND ESTABLISHMENTS ARE INTERESTED IN RECEIVING INFORMATION ON THIS SUBJECT YOUR RULING ON THIS AND OTHER CLOSELY CONNECTED QUESTIONS IS SOLICITED.

SECTION 619 OF THE REVENUE ACT OF 1932 READS IN PART AS FOLLOWS:

"/A) IN DETERMINING, FOR THE PURPOSES OF THIS TITLE, THE PRICE FOR WHICH AN ARTICLE IS SOLD, THERE SHALL BE INCLUDED ANY CHARGE FOR COVERINGS AND CONTAINERS OF WHATEVER NATURE, AND ANY CHARGE INCIDENT TO PLACING THE ARTICLE IN CONDITION PACKED READY FOR SHIPMENT, BUT THERE SHALL BE EXCLUDED THE AMOUNT OF TAX IMPOSED BY THIS TITLE, WHETHER OR NOT STATED AS A SEPARATE CHARGE. A TRANSPORTATION, DELIVERY, INSURANCE, INSTALLATION, OR OTHER CHARGE (NOT REQUIRED BY THE FOREGOING SENTENCE TO BE INCLUDED) SHALL BE EXCLUDED FROM THE PRICE ONLY IF THE AMOUNT THEREOF IS ESTABLISHED TO THE SATISFACTION OF THE COMMISSIONER, IN ACCORDANCE WITH THE REGULATIONS.'

ARTICLE 24 OF INTERNAL REVENUE REGULATIONS 44, AS AMENDED BY TREASURY DECISION NO. 4604, DATED NOVEMBER 12, 1935, PROVIDES THAT:

"ON AND AFTER OCTOBER 1, 1935, NO SALE MAY BE MADE FREE OF TAX BY THE MANUFACTURER TO A DEALER FOR RESALE TO THE UNITED STATES * * * EVEN THOUGH IT IS KNOWN AT THE TIME OF THE SALE THAT THE ARTICLE WILL BE SO RESOLD.'

THERE ARE INSTANCES IN WHICH A CONTRACT REQUIRES DELIVERY BY A MANUFACTURING CONTRACTOR OF ARTICLES AT DESTINATION, THE PRICE INCLUDING TRANSPORTATION, DELIVERY, INSTALLATION, OR OTHER CHARGES. IN SUCH INSTANCES THE AMOUNT OF TAX MAY NOT BE DETERMINED DEFINITELY BY SIMPLE CALCULATIONS. WILL THE ITEMIZATION OF THE TAX IN THE CERTIFIED VOUCHER BE ACCEPTABLE EVIDENCE THAT THE AMOUNT OF THE TAX THUS INDICATED IS THE CORRECT AMOUNT?

THERE ARE ALSO CONTRACTS ENTERED INTO WITH FIRMS WHO DO NOT MANUFACTURE THE ARTICLES TO BE PROCURED, THE PRICES TO THE GOVERNMENT BEING THE MANUFACTURER'S SELLING PRICE, INCREASED BY THE AMOUNT OF TAX PAID BY THE MANUFACTURER, PLUS TRANSPORTATION, DELIVERY, INSURANCE, IN SOME INSTANCES PROFITS AND HANDLING CHARGES OF MIDDLEMEN, ETC., AS WELL AS THE CONTRACTOR'S HANDLING COST AND PROFIT. IN SUCH INSTANCES THE AMOUNT OF TAX MAY NOT BE READILY DETERMINED, EVEN BY THE CONTRACTOR. IN SUCH A CONTRACTOR BOUND TO ALLOW THE GOVERNMENT EXEMPTION FROM THE TAX OR DOES THE RULE LAID DOWN IN 14 COMP. GEN. 747 APPLY, TO THE EFFECT THAT THE TAX HAVING BEEN PAID BY SOME PERSON PRIOR TO THE ARTICLES OR SUPPLIES COMING INTO POSSESSION OF THE PERSON FROM WHOM PURCHASED, THE ADDITION, IF ANY, TO THE NORMAL PRICE OF THE ARTICLES OR SUPPLIES MAY NOT BE CONSIDERED A TAX BUT IS A PART OF THE PRICE?

WHILE THE LATEST AMENDMENT OF SEC. 620 DOES NOT SPECIFICALLY PROVIDE THAT NO TAX SHALL BE IMPOSED ON ARTICLES RESOLD TO THE UNITED STATES (AMENDMENT IN PUBLIC, 73, 73D CONGRESS CONTAINED A RESALE PROVISION AS TO STATES), SECTION 621 CONTAINS PROVISIONS UNDER WHICH THE MANUFACTURER MAY OBTAIN CREDIT FOR A REFUND OF TAX APPLICABLE TO SUCH RESOLD ARTICLES. THE REGULATIONS RELATING TO THIS SECTION (ARTICLE 84, AMENDED) LIMIT SUCH CREDIT OR REFUND TO ARTICLES AS TO WHICH AN EXEMPTION CERTIFICATE HAS BEEN ISSUED BY THE CONSUMER GOVERNMENT AGENCY. THERE APPEARS TO BE NO REQUIREMENT THAT THE PURCHASING GOVERNMENT AGENCY CLAIM TAX EXEMPTION AND ISSUE A CERTIFICATE, BUT UNLESS THE GOVERNMENT AGENCY HAS SO AVAILED ITSELF OF THE EXEMPTION THE MANUFACTURER UNDER THE REGULATIONS MAY NOT IN TURN BE ALLOWED CREDIT OR REFUND. DECISION THEREFORE IS DESIRED AS TO THE FOLLOWING:

WHEN SALE IS NOT DIRECT FROM THE TAXPAYING MANUFACTURER OR PRODUCER TO THE GOVERNMENT MUST THE PURCHASING GOVERNMENT AGENCY INSIST ON DEDUCTION OF THE TAX, OR MAY IT PAY THE PRICE INCLUDING THE TAX AND WITHHOLD ISSUANCE OF A TAX-EXEMPTION CERTIFICATE?

IF TAX MUST BE DEDUCTED WHAT SHOULD BE THE PROCEDURE WHEN (A) THE DEALER REFUSES TO DEDUCT THE TAX BECAUSE HE FEARS INABILITY TO RECOVER FROM THE MANUFACTURER OR FOR OTHER REASONS, OR (B) WHERE NEITHER THE DEALER NOR PURCHASING OFFICER CAN READILY DETERMINE THE AMOUNT OF TAX APPLICABLE TO THE ARTICLE? AS A PRACTICAL MATTER IT IS NOT FEASIBLE IN MANY INSTANCES TO REFRAIN FROM PURCHASING AND ENDEAVOR TO FIND A VENDOR WHO KNOWS, AND IS WILLING TO ALLOW DEDUCTION OF, THE TAX AMOUNT.

THE DECISION OF NOVEMBER 29, ABOVE REFERRED TO, INDICATES THAT UNDER PARAGRAPH 5 OF THE VETERANS' ADMINISTRATION CONTRACTS, WHICH IN THIS RESPECT ARE SIMILAR TO OTHER CONTRACTS WITH THE GOVERNMENT, THE CONTRACTOR SHOULD REDUCE HIS PRICE TO THE GOVERNMENT BECAUSE OF THE FACT THAT SALES DIRECT TO THE GOVERNMENT ARE NOW EXEMPT FROM THE TAX AND PROVISION IS MADE FOR CREDITING OR REFUNDING TAX ON RESALES. WHEN A CONTRACTOR IS NOT THE TAX-PAYING MANUFACTURER OR PRODUCER AND DOES NOT DIRECTLY PAY THE TAXES IMPOSED BY CONGRESS, IS IT NECESSARY THAT THE GOVERNMENT AGENCY, BECAUSE OF THE INCLUSION OF SUCH A PROVISION IN THE CONTRACT, INSIST UPON REDUCTION OF THE PRICE BY THE AMOUNT OF TAX, IN CONSIDERATION OF WHICH THE TAX EXEMPTION CERTIFICATE WOULD, OF COURSE, BE ISSUED TO THE CONTRACTOR IN THE USUAL MANNER?

OBVIOUSLY THERE IS NO NET LOSS TO THE GOVERNMENT IN FAILING TO CLAIM EXEMPTION ON RESOLD ARTICLES AND EXPERIENCE SINCE OCTOBER 1 INDICATES THAT MUCH TIME MIGHT BE EXPENDED AND CASH DISCOUNTS LOST THROUGH EFFORTS TO REQUIRE DEDUCTIONS OF THE TAX FROM VENDORS OTHER THAN THE TAX-PAYING MANUFACTURER. ON THE OTHER HAND WHEN THE TAX AMOUNT IS APPRECIABLE AND CAN BE READILY DETERMINED THE PURCHASING AGENCY CAN CONSERVE ITS APPROPRIATION BY OBTAINING EXEMPTION, EVEN THOUGH THE CONTRACTOR MAY NOT LEGALLY BE REQUIRED TO ALLOW IT. AT THE PRESENT TIME PAYMENT ON MANY VOUCHERS IS BEING DELAYED BECAUSE DISBURSING OFFICERS ARE UNCERTAIN WHETHER DISALLOWANCE WILL RESULT IF FEDERAL TAX IS INCLUDED IN THE PRICE PAID, AND MERCHANTS EITHER DO NOT KNOW THE AMOUNT OF TAX APPLICABLE OR ARE NOT CONFIDENT OF BEING ABLE IN TURN TO RECOVER THE AMOUNT OF ANY EXEMPTION PERMITTED BY THEM. THIS UNCERTAINTY MAY READILY RESULT IN LOSS OF DISCOUNTS FOR PROMPT PAYMENT UNLESS THE EXISTING DOUBTS CAN BE REMOVED.

BECAUSE OF THE WIDESPREAD UNCERTAINTY AND THE CONSEQUENT DELAY IN PAYMENT OF ACCOUNTS IT IS HOPED A DECISION MAY BE RENDERED AT A VERY EARLY DATE.

THE BASIS FOR IMPOSING THE EXCISE TAXES LEVIED BY SECTION 616 OF THE REVENUE ACT OF 1932 IS DEFINED BY BUREAU OF INTERNAL REVENUE REGULATIONS 46, APPROVED JUNE 18, 1932, BY WHICH IT IS PROVIDED.

ART. 8. BASIS OF TAX ON SALES GENERALLY.--- THE TAX IS IMPOSED ON EACH SALE BY THE MANUFACTURER OF THE ARTICLES ENUMERATED IN THESE REGULATIONS. THE PROVISIONS OF THE ACT QUOTED EMBODY THE RULES FOR DETERMINING THE SALE PRICE, WHICH IS THE BASIS OF THE TAX. IN GENERAL, THIS SHOULD BE THE MANUFACTURER'S ACTUAL PRICE AT THE FACTORY OR PLACE OF PRODUCTION. DETERMINING THE SALE PRICE, FOR TAX PURPOSES, THERE SHALL BE INCLUDED ANY CHARGE INCIDENT TO PLACING THE ARTICLE IN CONDITION PACKED READY FOR SHIPMENT. THERE SHALL BE EXCLUDED (1) THE AMOUNT OF TAX IMPOSED BY TITLE IV, WHETHER OR NOT BILLED AS A SEPARATE ITEM, AND (2) (SUBJECT TO THE PROVISIONS OF ARTICLE 12) TRANSPORTATION, DELIVERY, INSURANCE, INSTALLATION, OR OTHER CHARGES (NOT REQUIRED BY THE PRECEDING SENTENCE TO BE INCLUDED.)

ART. 10. CHARGES FOR COVERINGS, CONTAINERS, ETC.--- ANY CHARGES FOR COVERINGS, CONTAINERS, ETC., INCIDENT TO PLACING THE ARTICLE IN CONDITION PACKED READY FOR SHIPMENT SHALL BE INCLUDED AS A PART OF THE SALE PRICE FOR THE PURPOSE OF COMPUTING THE TAX. THEREFORE, THE AMOUNT PAID FOR THE ARTICLE AND ITS COVERING OR CONTAINER IS THE BASIS FOR COMPUTING THE TAX EVEN THOUGH A SEPARATE CHARGE FOR SUCH COVERING OR CONTAINER IS BILLED ON THE INVOICE. * * *

ART. 12. EXCLUSION OF CHARGES FOR TRANSPORTATION, DELIVERY, ETC.--- CHARGES FOR TRANSPORTATION, DELIVERY, INSURANCE, INSTALLATION, AND OTHER CHARGES WHICH HAVE NO CONNECTION WHATEVER WITH THE MANUFACTURING PROCESS OR WITH PLACING THE ARTICLE IN A FINISHED CONDITION PACKED AND READY FOR SHIPMENT, ARE TO BE EXCLUDED IN COMPUTING THE TAX. ANY ADDITIONAL CHARGE WHICH A PURCHASER WOULD NOT BE REQUIRED TO PAY IF HE ACCEPTED DELIVERY OF THE ARTICLE AT THE FACTORY MAY BE SO EXCLUDED.

THE MANUFACTURER'S SALE PRICE AT THE FACTORY IS THE BASIS FOR THE TAX. WHERE THIS PRICE IS NOT KNOWN OR IS DIFFICULT TO DETERMINE, THE ITEMIZED STATEMENT OF THE TAX IN THE CERTIFIED VOUCHER OF A CONTRACTOR MAY BE ACCEPTED AS THE CORRECT AMOUNT OF THE TAX IN THE ABSENCE OF ANY FACTS TO THE CONTRARY. IN SUCH CASES THE AMOUNT OF THE TAX DEDUCTED SHOULD BE STATED IN THE EXEMPTION CERTIFICATE OR OTHER EVIDENCE FURNISHED UPON REQUEST TO ENABLE THE MANUFACTURER, PRODUCER, OR IMPORTER TO OBTAIN CREDIT FOR, OR REFUND OF THE TAX.

THE DECISION OF APRIL 9, 1935 (14 COMP. GEN. 747), IS NOT FOR APPLICATION HERE. THE REVENUE ACT OF 1932 (47 STAT. 259), AS AMENDED BY SECTION 4 OF THE ACT OF JUNE 16, 1933 (48 STAT. 255), AND BY SECTION 401 OF THE ACT OF AUGUST 30, 1935 (49 STAT. 1025/--- UNDER REGULATIONS PRESCRIBED BY THE COMMISSIONER OF INTERNAL REVENUE, WITH APPROVAL OF THE SECRETARY OF THE TREASURY--- AUTHORIZES CREDIT FOR, OR REFUND OF THE TAXES IMPOSED THEREBY AND PAID BY THE MANUFACTURER, PRODUCER, OR IMPORTER, UPON SALE TO A DEALER WHO RESOLD SUCH ARTICLES FOR THE EXCLUSIVE USE OF THE UNITED STATES, ETC. THE RELEVANT PARTS OF INTERNAL REVENUE REGULATIONS 44, REFERRED TO IN YOUR LETTER, ARE QUOTED IN 15 COMP. GEN. 588, 590. THE SENTENCE FOLLOWING THAT QUOTED IN YOUR LETTER PROVIDES:

* * * HOWEVER, WHERE ANY DEALER RESELLS A TAX-PAID ARTICLE ON OR AFTER OCTOBER 1, 1935, TO ANY OF THE GOVERNMENTAL UNITS NAMED ABOVE FOR ITS EXCLUSIVE USE, THE MANUFACTURER WHO PAID THE TAX TO THE UNITED STATES ON HIS SALE OF THE ARTICLE IN QUESTION MAY SECURE A REFUND OR CREDIT IN ACCORDANCE WITH PROVISIONS OF ARTICLE 84, AS AMENDED.

UNDER THE LAW AND REGULATIONS OF THE COMMISSIONER PROMULGATED PURSUANT THERETO, THE TAX IN QUESTION DOES NOT LOSE ITS IDENTITY AS SUCH, BUT REMAINS A TAX EVEN THOUGH THE ARTICLES TAXED ARE SOLD TO THE UNITED STATES BY A DEALER WHO DID NOT PAY THE TAX DIRECT TO THE UNITED STATES. HOWEVER, IF THE CONTRACT PRICE INCLUDES THE TAX AND THE FULL CONTRACT PRICE IS PAID, NO REFUND IS AUTHORIZED. (SEE 15 COMP. GEN. 588;ID. 686; ID. 694; AND ID. 728.) WHERE CONTRACTS WERE EXECUTED PRIOR TO THE ACT OF AUGUST 30, 1935, AND THE CONTRACT PRICE INCLUDES THE TAX AND THE CONTRACT AUTHORIZES AN ADJUSTMENT IN PRICE IN CASE OF ANY CHANGE IN THE TAXES APPLICABLE TO THE ARTICLES PURCHASED, AN AMOUNT EQUAL TO THE EXCISE TAXES MADE INAPPLICABLE ON AND AFTER OCTOBER 1, 1935, MAY BE DEDUCTED FROM THE CONTRACT PRICE OF ARTICLES DELIVERED SUBSEQUENT TO THAT DATE, OR THE FULL CONTRACT PRICE MAY BE PAID INCLUDING THE TAX IN WHICH CASE NO TAX EXEMPTION CERTIFICATE SHOULD BE ISSUED.

IF THE CONTRACT AUTHORIZES DEDUCTION OF THE TAX, THE OBJECTION OR REFUSAL OF THE CONTRACTOR IS NOT FOR CONSIDERATION IN DETERMINING WHETHER THE DEDUCTION SHOULD BE MADE. IF FOR ADMINISTRATIVE REASONS IT IS IMPRACTICABLE TO MAKE THE DEDUCTION, THERE IS NO LEGAL OBJECTION TO PAYMENT OF THE FULL CONTRACT PRICE FOR ARTICLES UNDER CONTRACTS IN WHICH SUCH PRICE INCLUDES THE EXCISE TAXES NOT NOW FOR IMPOSING ON ARTICLES SOLD FOR THE EXCLUSIVE USE OF THE UNITED STATES.

IT IS NOT FEASIBLE TO REFRAIN FROM PURCHASING FROM A VENDOR WHO IS UNWILLING TO ALLOW DEDUCTION FOR THE TAXES, BUT WHERE THE BIDDER IS A MANUFACTURER, PRODUCER, OR IMPORTER OF ANY ARTICLE SUBJECT TO EXCISE TAX UNDER TITLE IV OF THE REVENUE ACT OF 1932, AS AMENDED, SUCH BIDDER SHOULD BE REQUIRED TO STATE WHETHER THE AMOUNT OF SUCH TAX HAS BEEN CONSIDERED IN FIXING THE AMOUNT OF HIS BID AND WHETHER CLAIM HAS BEEN, OR WILL BE, MADE FOR EXEMPTION FROM, CREDIT FOR, OR REFUND OF SUCH TAX WITH RESPECT TO SALE OF SAID ARTICLES.