B-133839, SEP. 26, 1957

B-133839: Sep 26, 1957

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022.58 WHICH WAS PAID ON D.O.VOU. AS AMENDED) IS ON THE VENDOR RATHER THAN THE VENDEE. THE CONSTITUTIONAL PRINCIPLE UNDER WHICH THE FEDERAL GOVERNMENT IS IMMUNE TO STATE TAXATION IS NOT FOR APPLICATION. THE QUESTION IN THIS CASE IS WHETHER THE TRANSACTION IS A "SALE OF RETAIL" AS THAT TERM IS DEFINED IN SECTION 65-1361 OF THE SOUTH CAROLINA CODE. OR IS IT A "SALE AT WHOLESALE" AND NOT SUBJECT TO THE TAX. THE TERMS "WHOLESALE SALE" AND "SALE AT WHOLESALE" ARE DEFINED IN SECTION 65 1368 OF ARTICLE 1 AS "A SALE OF TANGIBLE PERSONAL PROPERTY BY WHOLESALERS TO LICENSED RETAIL MERCHANTS. THE BEEF WAS PURCHASED BY THE COLUMBIA QUARTERMASTER MARKET CENTER FROM SINGLE MANAGER SUBSISTENCE FUNDS (21 TIMES 4991) FOR RESALE TO SHAW AIR FORCE BASE.

B-133839, SEP. 26, 1957

TO CAPTAIN O. L. HENDRY, FINANCE AND ACCOUNTING OFFICER, DEPARTMENT OF THE ARMY:

YOUR LETTER OF SEPTEMBER 12, 1956, TRANSMITTED HERE BY LETTER OF SEPTEMBER 18, FINEY 167/12, FROM THE OFFICE, CHIEF OF FINANCE, REQUESTS A DECISION AS TO THE PROPRIETY OF THE PAYMENT PROPOSED ON BUREAU VOUCHER COLSC 744-57-6 IN FAVOR OF SWIFT AND COMPANY IN THE AMOUNT OF $60.68.

THE PROPOSED PAYMENT REPRESENTS THE AMOUNT OF SOUTH CAROLINA SALES TAX ON A PURCHASE OF 5,310 LBS. OF CHILLED CARCASS BEEF IN THE AMOUNT OF $2,022.58 WHICH WAS PAID ON D.O.VOU. NO. 1162 OF YOUR SEPTEMBER 1956 ACCOUNT. THE PURCHASE ORDER INCORPORATES BY REFERENCE THE PROVISIONS OF GENERAL PROVISIONS 10, ENTITLED "FEDERAL, STATE AND LOCAL TAXES," UNDER WHICH THE CONTRACT PRICE DOES NOT INCLUDE THE TAX AND THE GOVERNMENT AGREES TO REIMBURSE THE CONTRACTOR FOR DIRECT TAXES PROPERLY PAID.

AS STATED IN THE CORRESPONDENCE, THE LEGAL INCIDENCE OF THE SOUTH CAROLINA SALES TAX (SECTIONS 65-1401 TO 65-1411 OF THE 1952 SOUTH CAROLINA CODE, AS AMENDED) IS ON THE VENDOR RATHER THAN THE VENDEE; HENCE, THE CONSTITUTIONAL PRINCIPLE UNDER WHICH THE FEDERAL GOVERNMENT IS IMMUNE TO STATE TAXATION IS NOT FOR APPLICATION. B-128720, AUGUST 7, 1956. THE QUESTION IN THIS CASE IS WHETHER THE TRANSACTION IS A "SALE OF RETAIL" AS THAT TERM IS DEFINED IN SECTION 65-1361 OF THE SOUTH CAROLINA CODE, AND THEREFORE SUBJECT TO THE TAX, OR IS IT A "SALE AT WHOLESALE" AND NOT SUBJECT TO THE TAX.

SECTION 65-1361 OF ARTICLE 1 OF THE SOUTH CAROLINA CODE DEFINES SALES AT RETAIL AS "ALL SALES OF TANGIBLE PERSONAL PROPERTY EXCEPT THOSE DEFINED IN THIS ARTICLE AS WHOLESALE SALES.' THE TERMS "WHOLESALE SALE" AND "SALE AT WHOLESALE" ARE DEFINED IN SECTION 65 1368 OF ARTICLE 1 AS "A SALE OF TANGIBLE PERSONAL PROPERTY BY WHOLESALERS TO LICENSED RETAIL MERCHANTS, JOBBERS, DEALERS OR OTHER WHOLESALERS FOR RESALE AND DO NOT INCLUDE A SALE BY WHOLESALERS TO USERS OR CONSUMERS, NOT FOR RESALE.'

THE BEEF WAS PURCHASED BY THE COLUMBIA QUARTERMASTER MARKET CENTER FROM SINGLE MANAGER SUBSISTENCE FUNDS (21 TIMES 4991) FOR RESALE TO SHAW AIR FORCE BASE. ACTUALLY, IT WAS TO BE SHIPPED DIRECTLY TO THE SHAW AIR FORCE AND THE CORRESPONDENCE ATTACHED TO YOUR LETTER STATES THAT THE ENTIRE PURCHASE WAS FOR TROOP ISSUE. EVEN THE TRANSFER OF THE BEEF FROM THE COLUMBIA QUARTERMASTER MARKET CENTER TO THE SHAW AIR FORCE BASE WOULD NOT BE A "SALE" IN A LEGAL SENSE NOR WITHIN THE DEFINITION OF THE TERM "SALE" AS THAT TERM IS DEFINED IN SECTION 65 1360 OF THE SOUTH CAROLINA CODE. THERE IS NO TRANSFER OF OWNERSHIP OR POSSESSION BETWEEN SEPARATE LEGAL ENTITIES FOR A CONSIDERATION. SINCE THE ORIGINAL SALE OF BEEF WAS MADE TO THE GOVERNMENT (COLUMBIA QUARTERMASTER MARKET CENTER) FOR USE BY THE GOVERNMENT RATHER THAN FOR RESALE TO NONGOVERNMENTAL PERSONS OR CONCERNS, THE ORIGINAL TRANSACTION MUST BE REGARDED AS A "SALE AT RETAIL" UNDER THE SOUTH CAROLINA CODE AND THE SALE IS SUBJECT TO THE SOUTH CAROLINA SALES TAX.

ACCORDINGLY, THE VOUCHER, WHICH IS RETURNED HEREWITH TOGETHER WITH THE SUPPORTING PAPERS, MAY BE PAID PROVIDED THAT THE PAYEE HAS PAID THE TAX.