A-86269, MAY 21, 1937, 16 COMP. GEN. 1021

A-86269: May 21, 1937

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FEDERAL EXCISE TAXES NOT INCLUDED IN BID PRICE - ARTICLE USED IN MANUFACTURE BY GOVERNMENT CONTRACTOR - ISSUANCE OF TAX EXEMPTION CERTIFICATES WHERE TRUCKS OF ONE MANUFACTURER ARE USED AS COMPONENT PARTS IN THE MANUFACTURE OF TRUCK SHOVELS BY A GOVERNMENT CONTRACTOR. INASMUCH AS THESE UNITS WERE CONSIDERED AS SUBSTANTIALLY SHOVELS RATHER THAN TRUCKS. THE USUAL TAX DATA SHEET WAS NOT ATTACHED TO THE INVITATION TO BID. NO MENTION WAS MADE AS TO WHETHER OR NOT FEDERAL EXCISE TAX WAS INCLUDED. IT IS OUR UNDERSTANDING THAT THE QUICK-WAY COMPANY PURCHASES THE TRUCKS ON WHICH THE SHOVELS ARE MOUNTED. FROM THE COLEMAN COMPANY AND THAT THESE TRUCKS ARE SUBJECT TO FEDERAL EXCISE TAX. THIS OFFICE IS NOT CERTAIN WHETHER THE TRUCK SHOVEL.

A-86269, MAY 21, 1937, 16 COMP. GEN. 1021

FEDERAL EXCISE TAXES NOT INCLUDED IN BID PRICE - ARTICLE USED IN MANUFACTURE BY GOVERNMENT CONTRACTOR - ISSUANCE OF TAX EXEMPTION CERTIFICATES WHERE TRUCKS OF ONE MANUFACTURER ARE USED AS COMPONENT PARTS IN THE MANUFACTURE OF TRUCK SHOVELS BY A GOVERNMENT CONTRACTOR, HIS ALLEGED FAILURE--- NOT BROUGHT TO ATTENTION UNTIL AFTER AWARD--- TO INCLUDE IN HIS BID PRICE THE FEDERAL EXCISE TAX APPLICABLE TO, AND PAID BY HIM, ON THE TRUCKS, DOES NOT JUSTIFY THE FURNISHING OF A TAX EXEMPTION CERTIFICATE.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF AGRICULTURE, MAY 21, 1937:

THERE HAS BEEN RECEIVED YOUR LETTER MAY 13, 1937, WITH INCLOSURE, AS FOLLOWS:

DURING THE LATTER PART OF LAST YEAR, THE QUICK-WAY TRUCK SHOVEL COMPANY OF DENVER, COLORADO, FURNISHED THIS DEPARTMENT WITH EIGHT TRUCK SHOVELS MOUNTED ON COLEMAN TRUCKS, UNDER FOREST SERVICE PURCHASE ORDER NUMBER W- 336-F.

INASMUCH AS THESE UNITS WERE CONSIDERED AS SUBSTANTIALLY SHOVELS RATHER THAN TRUCKS, THE USUAL TAX DATA SHEET WAS NOT ATTACHED TO THE INVITATION TO BID. THEREFORE, IN SUBMITTING THEIR BID, NO MENTION WAS MADE AS TO WHETHER OR NOT FEDERAL EXCISE TAX WAS INCLUDED.

IT IS OUR UNDERSTANDING THAT THE QUICK-WAY COMPANY PURCHASES THE TRUCKS ON WHICH THE SHOVELS ARE MOUNTED, FROM THE COLEMAN COMPANY AND THAT THESE TRUCKS ARE SUBJECT TO FEDERAL EXCISE TAX. THEREFORE, IN BILLING THE QUICK -WAY COMPANY FOR THESE UNITS, THE COLEMAN COMPANY APPARENTLY INCLUDES THE AMOUNT OF THE TAX. HOWEVER, THE AFFIDAVIT ATTACHED INDICATES THAT IN BILLING THE GOVERNMENT, THE QUICK-WAY COMPANY EXCLUDED THE TAX APPLICABLE ON THE TRUCKS. THEREFORE, IN ORDER THAT THE COLEMAN COMPANY MAY BE RELIEVED OF THIS TAX AND THE QUICK-WAY COMPANY GIVEN CREDIT BY THEM, THE QUICK-WAY COMPANY REQUESTS THAT TAX EXEMPTION CERTIFICATES BE ISSUED. THIS OFFICE IS NOT CERTAIN WHETHER THE TRUCK SHOVEL, AS SUCH, IS SUBJECT TO A FEDERAL EXCISE TAX; THAT IS, WHETHER OR NOT WE CAN ISSUE AN EXEMPTION CERTIFICATE FOR THE PART OF THE UNIT WHICH IS SUBJECT TO TAX. FURTHER, WE WISH TO BE ADVISED, IF AN EXEMPTION CERTIFICATE IS IN ORDER ON THIS POINT, WOULD THE FACT THAT THE ORIGINAL BID MADE NO MENTION OF EXCLUSION OF TAX NOW PRECLUDE THEIR BEING FURNISHED WITH CERTIFICATES.

WITH REFERENCE TO THE FIRST POINT RAISED IN YOUR SUBMISSION, THERE IS NO DOUBT THAT THE EXCISE TAX ATTACHED TO THE SALE OF THE TRUCKS UPON WHICH THE SHOVELS WERE MOUNTED, AND SINCE THE REVENUE ACT AND TREASURY DECISIONS NOS. 4604 AND 4605, NOVEMBER 12, 1935, PROHIBIT TAX FREE SALES BY A MANUFACTURER TO OTHERS THAN THOSE EXCEPTED BY THE STATUTE, DOUBTLESS, AS YOU STATE, THE COLEMAN CO. INCLUDED THE AMOUNT OF THE TAX IN ITS SALE PRICE OF THE TRUCKS TO THE QUICK-WAY TRUCK SHOVEL CO.

HOWEVER, THE TRUCKS WERE NOT SOLD BY THE COLEMAN CO. TO THE QUICK WAY TRUCK SHOVEL CO. FOR RESALE TO THE UNITED STATES AS TRUCKS, AND WERE NOT SOLD TO THE GOVERNMENT AS SUCH. THEY WERE PURCHASED BY THE QUICK-WAY CO. FOR USE AS COMPONENT PARTS IN THE MANUFACTURE OF TRUCK SHOVELS, OF WHICH THE QUICK-WAY CO. IS THE MAKER, AND THE FINISHED ARTICLES PURCHASED BY THE UNITED STATES WERE NOT ARTICLES IDENTICAL WITH THOSE SOLD BY THE COLEMAN CO. TO THE QUICK-WAY TRUCK SHOVEL CO.

SECTION 620 OF THE REVENUE ACT OF JUNE 6, 1932, 47 STAT. 267, AS AMENDED BY THE ACT OF JUNE 16, 1933, 48 STAT. 255, AND THE ACT OF AUGUST 30, 1935, 49 STAT. 1025, PROVIDES THAT NO TAX SHALL BE IMPOSED UNDER TITLE IV OF THE ACT WITH RESPECT TO THE SALE OF ANY ARTICLE "FOR USE BY THE VENDEE AS MATERIAL IN THE MANUFACTURE OR PRODUCTION OF, OR AS A COMPONENT PART OF, AN ARTICLE ENUMERATED IN THIS TITLE.' SINCE TRUCK SHOVELS ARE NOT ENUMERATED IN SAID TITLE, THIS PROVISION WOULD NOT SERVE TO RELIEVE THE SALE FROM COLEMAN TO QUICK-WAY FROM THE TAX.

THE CITED SECTION PROVIDES, ALSO, THAT NO TAX SHALL BE IMPOSED WITH RESPECT TO THE SALE OF AN ARTICLE FOR THE EXCLUSIVE USE OF THE UNITED STATES, ETC., AND SECTION 621 (A) (3) A OF THE ACT AS AMENDED AUGUST 30, 1935, PROVIDES THAT A CREDIT OR REFUND OF THE TAX MAY BE ALLOWED TO A MANUFACTURER, PRODUCER, OR IMPORTER OF AN ARTICLE WHEN SUCH ARTICLE HAS BEEN RESOLD BY ANY PERSON FOR THE EXCLUSIVE USE OF THE UNITED STATES. APPEARS PLAIN THAT THE RESALE CONTEMPLATED BY THE STATUTE IS THE RESALE OF THE ARTICLE AS MANUFACTURED BY THE PRODUCER, AND THAT THE PROVISION IS NOT APPLICABLE WHERE AN ARTICLE IS SOLD BY ONE MANUFACTURER TO ANOTHER FOR USE AS A COMPONENT PART OF A PRODUCT MANUFACTURED BY HIM AND SOLD TO THE GOVERNMENT IN ITS COMPLETED FORM.

IT WOULD APPEAR, THEREFORE, THAT THE SALE OF THE TRUCKS BY THE COLEMAN CO. TO THE QUICK-WAY TRUCK SHOVEL CO. AND THE SUBSEQUENT SALE OF TRUCK SHOVELS BY THE QUICK-WAY CO. TO THE GOVERNMENT DID NOT CONSTITUTE SUCH A TRANSACTION AS TO ENTITLE THE QUICK-WAY TRUCK SHOVEL CO. TO BE FURNISHED A TAX-EXEMPTION CERTIFICATE.

IF THE BIDDER, UNDER A MISAPPREHENSION OF THE LAW, OR FOR ANY OTHER CAUSE, FAILED TO INCLUDE THE FULL PURCHASE PRICE OF THE TRUCKS IN THE COMPUTATION OF ITS BID ON THE TRUCK SHOVELS, IT WOULD CONSTITUTE NO MORE THAN A MISTAKE IN ITS BID, AND IN THIS INSTANCE APPARENTLY WAS NOT ALLEGED UNTIL AFTER AWARD, IF NOT COMPLETION, OF THE CONTRACT. IT IS AN ESTABLISHED RULE THAT RELIEF FOR UNILATERAL MISTAKE MAY NOT BE GRANTED UNDER SUCH CIRCUMSTANCES.

THE CONCLUSION REACHED RENDERS DETAILED CONSIDERATION OF THE SECOND QUESTION RAISED BY YOU UNNECESSARY. HOWEVER, YOUR ATTENTION IS DIRECTED TO DECISION OF MAY 26, 1936, 15 COMP. GEN. 1030, WHEREIN IT WAS STATED:

* * * WHERE AN OTHERWISE ACCEPTABLE LOW BID IS RECEIVED FROM A BIDDER NOT A MANUFACTURER, PRODUCER, OR IMPORTER, NO INQUIRY AS TO INCLUSION OR EXCLUSION OF THE TAX IS NECESSARY, BECAUSE IN THE ABSENCE OF AN AFFIRMATIVE SHOWING TO THE CONTRARY, IT MAY BE ASSUMED THAT THE PRICES BID BY SUCH DEALER INCLUDE THE TAX AS A PART OF THE BID PRICE AND NO CERTIFICATE SHOULD BE ISSUED TO THE CONTRACTOR FOR THE PURPOSE OF OBTAINING EXEMPTION FROM, OR REFUND OF, THE EXCISE TAX.

WHILE THE QUICK-WAY TRUCK SHOVEL CO. IS NOT SHOWN TO BE A DEALER IN COLEMAN TRUCKS, A SIMILAR RULE WOULD BE APPLICABLE. THAT IS TO SAY, THAT SINCE THE BIDDER SUBMITTED A FLAT PRICE ON THE TRUCK SHOVELS WITHOUT REFERENCE TO ANY EXCISE TAX, SUCH BID PRICE WAS PRESUMED TO INCLUDE ALL ELEMENTS OF COST AND PROFIT. THE PRICE BID WAS ACCEPTED UPON SUCH BASIS AND BECAME THE CONTRACT PRICE. THE CONTRACTOR COULD NOT THEREAFTER BE PERMITTED TO ALTER THE CONTRACT PRICE IN ANY WAY TO THE DIRECT OR INDIRECT DETRIMENT OF THE UNITED STATES. IF, IN ANY INSTANCE, PRICES SUBMITTED CONTEMPLATE REFUND, CREDIT OR DRAW-BACK OF ANY DESCRIPTION, THE FACT SHOULD AFFIRMATIVELY APPEAR UPON THE FACE OF THE BID WHEN SUBMITTED. HENCE, THE FAILURE OF THE QUICK-WAY TRUCK SHOVEL CO. TO SHOW AFFIRMATIVELY AT THE TIME THE BID WAS SUBMITTED THAT TAXES WERE EXCLUDED, WOULD PRECLUDE THE FURNISHING OF AN EXEMPTION CERTIFICATE AT THIS TIME, EVEN IF THE CONTRACTOR MIGHT OTHERWISE BE ENTITLED THERETO.