B-139507, JUL. 9, 1959

B-139507: Jul 9, 1959

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO YOUR LETTER OF APRIL 30. " A SALES TAX IS IMPOSED AT THE RATE OF SPECIFIED PERCENTAGES UPON SALES AT RETAIL IN THE STATE BASED ON THE GROSS RECEIPTS FROM SUCH SALES (44-18-18). A USE TAX IS IMPOSED AT THE SAME RATES ON THE STORAGE. SECTION 44-18-25 PROVIDES THAT IT SHALL BE PRESUMED THAT ALL GROSS RECEIPTS ARE SUBJECT TO THE SALES TAX. THAT THE USE OF ALL TANGIBLE PERSONAL PROPERTY IS SUBJECT TO THE USE TAX. THAT ALL TANGIBLE PERSONAL PROPERTY SOLD OR IN PROCESSING OR INTENDED FOR DELIVERY OR DELIVERED IN THE STATE IS SOLD OR DELIVERED FOR STORAGE. UNTIL THE CONTRARY IS ESTABLISHED TO THE SATISFACTION OF THE ADMINISTRATOR. THAT THE BURDEN OF PROVING THE CONTRARY IS UPON THE PERSON WHO MAKES THE SALE AND THE PURCHASER.

B-139507, JUL. 9, 1959

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 30, 1959, REQUESTING OUR DECISION AS TO WHETHER, IN VIEW OF THE FACTS SET FORTH IN THE ATTACHED FILE, MAGUIRE HOMES, INC., THE "ELIGIBLE BUILDER" UNDER HOUSING CONTRACT NO. DA-19-016-ENG-5307 DATED APRIL 17, 1957 (FOR "CONSTRUCTION OF CAPEHART FAMILY HOUSING AND OFF-SITE IMPROVEMENTS AND UTILITIES FOR PROVIDENCE DEFENSE AREA AT BRISTOL, COVENTRY, FOSTER, NORTH KINGSTOWN AND NORTH SMITHFIELD, RHODE ISLAND"), MAY BE ALLOWED THE SUM OF $10,414.18 CLAIMED TO BE DUE IN ADDITION TO THE CONTRACT PRICE. THE AMOUNT CLAIMED BY THE ELIGIBLE BUILDER (HEREINAFTER REFERRED TO AS THE CONTRACTOR) REPRESENTS USE TAXES IN THE SUM OF $10,250.04, WITH INTEREST OF $164.14, IMPOSED BY THE STATE OF RHODE ISLAND AND PAID BY NATIONAL HOMES, INC., LAFAYETTE, INDIANA, ON PREFABRICATED HOUSES SOLD TO AND USED BY THE CONTRACTOR IN THE PERFORMANCE OF THE HOUSING CONTRACT.

UNDER THE GENERAL LAWS OF RHODE ISLAND (1956), TITLE 44, CHAPTER 18, "SALES AND USE TAXES--- LIABILITY AND COMPUTATION," A SALES TAX IS IMPOSED AT THE RATE OF SPECIFIED PERCENTAGES UPON SALES AT RETAIL IN THE STATE BASED ON THE GROSS RECEIPTS FROM SUCH SALES (44-18-18), AND A USE TAX IS IMPOSED AT THE SAME RATES ON THE STORAGE, USE, OR OTHER CONSUMPTION IN THE STATE OF TANGIBLE PERSONAL PROPERTY PURCHASED FROM ANY RETAILER BASED ON THE SALE PRICE OF THE PROPERTY (44-18-20). SECTION 44-18-10 DEFINES "USE" TO INCLUDE "THE EXERCISE OF ANY RIGHT OR POWER OVER TANGIBLE PERSONAL PROPERTY INCIDENT TO THE OWNERSHIP OF THAT PROPERTY, EXCEPT THAT IT DOES NOT INCLUDE THE SALE OF THAT PROPERTY IN THE REGULAR COURSE OF BUSINESS.' SECTION 44-18-25 PROVIDES THAT IT SHALL BE PRESUMED THAT ALL GROSS RECEIPTS ARE SUBJECT TO THE SALES TAX, AND THAT THE USE OF ALL TANGIBLE PERSONAL PROPERTY IS SUBJECT TO THE USE TAX, AND THAT ALL TANGIBLE PERSONAL PROPERTY SOLD OR IN PROCESSING OR INTENDED FOR DELIVERY OR DELIVERED IN THE STATE IS SOLD OR DELIVERED FOR STORAGE, USE, OR OTHER CONSUMPTION IN THE STATE, UNTIL THE CONTRARY IS ESTABLISHED TO THE SATISFACTION OF THE ADMINISTRATOR; THAT THE BURDEN OF PROVING THE CONTRARY IS UPON THE PERSON WHO MAKES THE SALE AND THE PURCHASER, UNLESS THE PERSON WHO MAKES THE SALE TAKES FROM THE PURCHASER A CERTIFICATE TO THE EFFECT THAT THE PURCHASE WAS FOR RESALE; THAT "THE CERTIFICATE RELIEVES THE PERSON MAKING THE SALE FROM THE BURDEN OF PROOF ONLY IF TAKEN IN GOOD FAITH FROM A PERSON WHO IS ENGAGED IN THE BUSINESS OF MAKING SALES AT RETAIL AND WHO HOLDS A PERMIT AS PROVIDED IN SECTION 44-19-2 OR SECTION 44 -19-3 AND WHO, AT THE TIME OF MAKING THE PURCHASE, INTENDS TO SELL WHAT IS SO PURCHASED IN THE REGULAR COURSE OF BUSINESS * * *" AND THAT THE CERTIFICATE SHALL CONTAIN SUCH INFORMATION AND BE IN SUCH FORM AS THE TAX ADMINISTRATOR MAY REQUIRE.

SALES AND USES BEYOND THE CONSTITUTIONAL POWERS OF THE STATE ARE EXEMPTED UNDER SECTION 44-18-30; AND THE GROSS RECEIPTS FROM SALES DIRECTLY TO THE UNITED STATES, ITS AGENCIES AND INSTRUMENTALITIES, ARE EXEMPTED FROM THE COMPUTATION OF THE SALES TAX (44-18-31). SECTION 44 18-32 DEALS EXPRESSLY WITH SALES TO FEDERAL CONTRACTORS AND PROVIDES AS FOLLOWS:

"44-18-32. SALES TO FEDERAL CONTRACTORS.--- THE SALES TAX IMPOSED BY THIS CHAPTER SHALL APPLY TO THE GROSS RECEIPTS FROM THE SALE OF ANY TANGIBLE PERSONAL PROPERTY TO CONTRACTORS PURCHASING SUCH PROPERTY EITHER AS THE AGENTS OF THE UNITED STATES OR FOR THEIR OWN ACCOUNT AND SUBSEQUENT RESALE TO THE UNITED STATES FOR USE IN THE PERFORMANCE OF CONTRACTS WITH THE UNITED STATES FOR THE CONSTRUCTION OF IMPROVEMENTS ON OR TO REAL PROPERTY, EXCEPT INSOFAR AS THE IMPOSITION OF SUCH A TAX WOULD VIOLATE THE PROVISIONS OF THE CONSTITUTION OF THE UNITED STATES.'

THE HOUSING CONTRACT WAS BASED ON AN INVITATION FOR BIDS ISSUED DECEMBER 19, 1956, WHICH CITES ,TITLE IV OF THE HOUSING AMENDMENTS OF 1955 (PUBLIC LAW 345, 84TH CONGRESS; 69 STAT. 635), AS AMENDED, ENTITLED "ARMED SERVICES HOUSING MORTGAGE INSURANCE," " AS AUTHORITY FOR THE UNDERTAKING. PURSUANT TO THIS AUTHORITY THE SECRETARY OF DEFENSE OR HIS DESIGNEE MAY ENTER INTO CONTRACTS WITH ANY ELIGIBLE BIDDER FOR THE CONSTRUCTION OF URGENTLY NEEDED MILITARY HOUSING WHICH CONTRACTS "SHALL CONTAIN SUCH TERMS AND CONDITIONS AS THE SECRETARY MAY DETERMINE TO BE NECESSARY TO PROTECT THE INTERESTS OF THE UNITED STATES.' 42 U.S.C. 1594A. THE INVITATION CONTAINED SPECIFIC PROVISIONS RELATING TO TAXES AS SET FORTH IN THE ACCOMPANYING SPECIMEN CONTRACT AND GENERAL PROVISIONS ULTIMATELY INCORPORATED INTO THE CONTRACT. UNDER ARTICLE XX, ENTITLED "SALE TO OR SALE FOR RESALE TO THE DEPARTMENT," IT WAS PROVIDED THAT SUPPLIES AND MATERIALS REQUIRED FOR THE PROJECT WERE TO BE PROCURED BY THE CONTRACTOR (ON HIS OWN ACCOUNT) FOR RESALE TO THE GOVERNMENT, AS FOLLOWS:

"ARTICLE XX--- SALE TO OR SALE FOR RESALE TO THE DEPARTMENT

"/34) NOTWITHSTANDING ANY OTHER PROVISION OF THIS HOUSING CONTRACT, AND NOTWITHSTANDING THE MORTGAGE FINANCING OF THE PROJECT, ALL MACHINES, EQUIPMENT, SUPPLIES AND MATERIALS SHOWN IN THE DRAWINGS AND SPECIFICATIONS TO BE ACQUIRED BY THE ELIGIBLE BUILDER AND THE MORTGAGOR-BUILDER, OR TO BE MANUFACTURED BY THE ELIGIBLE BUILDER AND THE MORTGAGOR-BUILDER, OR EITHER OF THEM, FOR INCORPORATION INTO THE HOUSING PROJECT, WHICH REMAIN PERSONAL PROPERTY UNDER THE LAWS OF THE STATE, SHALL, IF THEY MEET THE STANDARDS REQUIRED BY THIS HOUSING CONTRACT, BE SO ACQUIRED FOR RESALE, OR MANUFACTURED FOR SALE, TO THE DEPARTMENT.'

BY ADDENDUM NO. 3 DATED JANUARY 3, 1957, THE FOLLOWING PARAGRAPH WAS ADDED AT THE END OF THE INVITATION FOR BIDS:

" "33. EACH BIDDER SHALL INCLUDE THE FOLLOWING STATEMENT IN HIS BID:

" "THIS BID DOES NOT TAKE INTO CONSIDERATION ANY POSSIBLE STATE SALES TAX ON ANY ITEMS INCORPORATED IN THE PERMANENT CONSTRUCTION.'"

THE SUCCESSOR CONTRACTING OFFICER HAS STATED IN HIS REPORT ON THIS MATTER THAT ADDENDUM NO. 3 WAS ISSUED "IN ORDER TO PLACE ALL BIDDERS ON AN EQUAL BIDDING BASIS, IT NOT BEING KNOWN WHETHER THE CAPEHART PROJECTS WERE SUBJECT TO TAXATION * * *.' HE ALSO STATED THAT "THE PHRASE "USE TAX" WAS NOT INCLUDED IN SAID ADDENDUM NO. 3 INASMUCH AS SALES AND USE TAXES WERE CONSIDERED SYNONYMOUS IN THAT THE FUNCTION OF A USE TAX IS THE MEANS OF ENFORCING A SALES TAX ON PERSONAL PROPERTY PURCHASED IN A STATE OTHER THAN THE "SALES TAX STATE" BUT STORED, USED OR CONSUMED IN THE "SALES TAX STATE" (THAT IS, OUT OF STATE PURCHASES WHERE ITEMS PURCHASED ARE INTENDED FOR USE IN RHODE ISLAND).' THE SUCCESSOR CONTRACTING OFFICER STATED FURTHER THAT "SINCE THIS OFFICE INTENDED TO INCLUDE THE USE TAX IN ADDENDUM NO. 3, AND WHEREAS THE CONTRACTOR THOUGHT THAT THE SALES AND USE TAX WERE SYNONYMOUS, I.E. THAT THE WORDS "SALES TAX" INCLUDED USE TAXES AS WELL IT IS THE CONTRACTING OFFICER'S FINDING THAT THE SUBJECT CLAIM IS MERITORIOUS," AND HE HAS REQUESTED AUTHORITY TO REFORM ADDENDUM NO. 3 ACCORDINGLY.

COPIES OF CORRESPONDENCE FURNISHED WITH THE FILE SUBMITTED DISCLOSE THAT IN DISCUSSIONS WITH THE CONTRACTOR, ADMINISTRATIVE OFFICIALS OF YOUR DEPARTMENT CLAIMED EXEMPTION FROM STATE TAXATION RELYING ON THE PROVISIONS OF SECTION 511 (LAST PROVISO) OF THE HOUSING ACT OF 1956, PUBLIC LAW 84- 1020, 70 STAT. 1111, AND ON THE FURTHER BASIS THAT UNDER ARTICLE XX OF THE CONTRACT THE CONTRACTOR MIGHT BE CONSIDERED AS ACTING AS AN AGENT IN PROCURING MATERIALS AND SUPPLIES FOR RESALE TO THE GOVERNMENT. THE FILE ALSO DISCLOSES THAT THE CONTRACTOR ADVISED ITS SUBCONTRACTORS AND SUPPLIERS THAT THEY WERE NOT TO TAKE INTO CONSIDERATION SALES OR USE TAXES ON ITEMS FURNISHED BY THEM IN CONNECTION WITH THE CONSTRUCTION OF THE PROJECT. THE RHODE ISLAND TAXING OFFICIALS TOOK THE POSITION THAT UNLESS THE CONTRACTOR "HAD BEEN APPOINTED AND WAS ACTING AS AGENT FOR THE GOVERNMENT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6 (B) OF REGULATION C GOVERNING CONTRACTORS AND SUBCONTRACTORS" THE CONTRACTOR WOULD BE REGARDED AS THE PURCHASER AT RETAIL AND WOULD BE LIABLE FOR THE SALES AND USE TAXES, AND ADVISED THAT IT WAS THEIR UNDERSTANDING THE CONTRACTOR HAD NOT BEEN SO APPOINTED OR AUTHORIZED TO ACT AS AGENT FOR THE GOVERNMENT. THEREAFTER, THE ADMINISTRATIVE OFFICIALS SUGGESTED THAT EXEMPTION FROM THE USE TAX ONLY BE CLAIMED ON THE BASIS THAT THE RHODE ISLAND USE TAX PROVISION DID NOT APPLY TO PERSONAL PROPERTY PURCHASED FOR RESALE, OR OPERATE SO AS TO MAKE THE USE TAX APPLICABLE TO OUT-OF-STATE PURCHASES BY A CONTRACTOR OF PROPERTY INTENDED SOLELY FOR RESALE TO THE UNITED STATES WITHIN THE STATE. NATIONAL HOMES CORPORATION SUBSEQUENTLY RECEIVED FROM THE STATE TAX ADMINISTRATION OFFICER A "NOTICE OF DEFICIENCY DETERMINATION UNDER THE SALES AND USE TAX LAW" SHOWING THE AMOUNT OF THE TAX, INTEREST AND PENALTY DUE, AND THE CONTRACTOR HAS NOW REQUESTED "THAT THE CONTRACT PRICE BE INCREASED BY THE AMOUNT OF $10,250.04 AND INTEREST OF $164.14, WHICH SUM REPRESENTS THE AMOUNT RHODE ISLAND SALES TAX PAID BY NATIONAL HOMES CORPORATION ON PREFABRICATED HOUSES SOLD BY THAT CORPORATION TO MAGUIRE HOMES, INC. AND USED BY IT IN THE PERFORMANCE OF THIS CONTRACT, AND HAS BEEN BILLED TO MAGUIRE HOMES, INC.'

THE LAST PROVISO IN SECTION 511 OF THE HOUSING ACT OF 1956 (NOTE 42 U.S.C. 1594) PROVIDES IN MATERIAL PART THAT "PROPERTIES LEASED PURSUANT TO THE PROVISIONS OF SECTION 805 OF THE NATIONAL HOUSING ACT, AS AMENDED, ON OR AFTER AUGUST 11, 1955 (SECTION 1748D OF TITLE 12), * * * SHALL BE EXEMPT FROM STATE OR LOCAL TAXES OR ASSESSMENTS.' THIS PROVISO CONSIDERED WITH THE OTHER PROVISIONS OF THE LAW, ITS LEGISLATIVE HISTORY AND PURPOSE REASONABLY CONSTRUED REFERS TO PROPERTY TAXES UPON LEASEHOLD INTERESTS, AND NOT TO TRANSACTIONS UNDER CONSTRUCTION CONTRACT OPERATIONS SUCH AS HERE INVOLVED. SEE APPLICATION OF S. S. SILBERBLATT, INC., DECIDED DECEMBER 2, 1958, BY THE APPELLATE DIVISION, SUPREME COURT OF NEW YORK, 180 N.Y.S.2D 210, 213, WHERE THIS STATUTE WAS CONSIDERED AND THE AUTHORITIES CITED. IN OTHER WORDS, THE STATUTORY AUTHORITY FOR THE HOUSING CONTRACT DOES NOT CONTAIN A GENERAL EXEMPTION FROM STATE TAXATION SUCH AS WAS CONSIDERED IN CARSON V. ROANE-ANDERSON CO., 342 U.S. 232 (JANUARY 7, 1952) WHERE IT WAS HELD THAT THE BROAD LANGUAGE OF SECTION 9 (B) OF THE ATOMIC ENERGY ACT OF 1946, 60 STAT. 765, PROVIDING THAT "THE COMMISSION, AND THE PROPERTY, ACTIVITIES, AND INCOME OF THE COMMISSION, ARE HEREBY EXPRESSLY EXEMPTED FROM TAXATION IN ANY MANNER OR FORM BY ANY STATE,COUNTY, MUNICIPALITY, OR ANY SUBDIVISION THEREOF" (WHICH SECTION WAS REPEALED FOLLOWING THE COURT'S RULING INDICATING A CONGRESSIONAL RECOGNITION OF THE FEDERAL GOVERNMENT'S OBLIGATION TO SHARE THE BURDEN COVERED BY SUCH TAXATION), EXEMPTED CONTRACTORS WITH THE ATOMIC ENERGY COMMISSION FROM SALES AND USE TAXES IMPOSED BY THE TENNESSEE RETAILERS' SALES TAX ACT. FURTHER, THE CONTRACT PROVISIONS HERE INVOLVED DO NOT PURPORT TO NAME THE GOVERNMENT AS THE REAL PURCHASER, WHICH WAS THE SITUATION CONSIDERED IN KERN-LIMERICK V. SCURLOCK, 347 U.S. 110 (FEBRUARY 8, 1954) WHERE THE COURT HELD THAT THE ARKANSAS GROSS RECEIPTS TAX LAW OF 1941, IMPOSING AN EXCISE TAX ON THE GROSS RECEIPTS FROM ALL SALES IN THE STATE, WAS UNCONSTITUTIONAL AS APPLIED TO THE PURCHASE OF TRACTORS FOR USE IN PERFORMING A GOVERNMENT CONTRACT WHICH EXPRESSLY PROVIDED THAT THE CONTRACTOR SHOULD ACT AS A PURCHASING AGENT FOR THE GOVERNMENT. AS A MATTER OF FACT, THE INFORMATION FURNISHED SHOWS THAT AS EARLY AS MARCH 1, 1954, MORE THAN TWO YEARS PRIOR TO THE DATE OF THE HOUSING CONTRACT INVITATION, IT WAS THE ESTABLISHED POLICY OF THE DEPARTMENT OF DEFENSE GOVERNING PROCUREMENT CONTRACTS (WITH THE EXCEPTION OF CERTAIN NAVY COST- TYPE CONTRACTS) THAT CONTRACTORS WOULD NOT BE DESIGNATED AS AGENTS OF THE GOVERNMENT FOR THE PURCHASE OF SUPPLIES. THIS POLICY APPARENTLY WAS IN EFFECT WHEN THE HOUSING CONTRACT WAS MADE, AND IT SEEMS ABUNDANTLY CLEAR FROM THE FOREGOING THAT THERE WAS NO INTENTION ON THE PART OF THE STATE TAXING AUTHORITIES TO FOREGO THE COLLECTION OF SALES AND USE TAXES ON TRANSACTIONS INCIDENT TO THE PERFORMANCE OF CONSTRUCTION CONTRACTS WHERE THE CONTRACTORS WERE NOT AUTHORIZED AGENTS OF THE GOVERNMENT UNLESS, OF COURSE, SUCH TRANSACTIONS WERE OTHERWISE EXEMPT UNDER THE CONSTITUTIONAL IMMUNITY OF THE UNITED STATES OR UNDER THE PROVISIONS OF THE STATE STATUTES.

STATUTORY PROVISIONS FOR SALES AND USE TAXES SIMILAR TO THOSE OF THE STATE OF RHODE ISLAND WERE CONSIDERED BY THE SUPREME COURT OF THE UNITED STATES AND FOUND TO BE A VALID EXERCISE OF THE STATE TAXING POWER IN HENNEFORD V. SILAS MASON CO., 300 U.S. 577 (MARCH 29, 1957), UPHOLDING A USE TAX IMPOSED BY THE STATE OF WASHINGTON ON PROPERTY BROUGHT INTO THE STATE FOR USE OF CONTRACTORS IN THE CONSTRUCTION OF GRAND COULEE DAM. THAT THE CONSTITUTION DOES NOT EXTEND SOVEREIGN EXEMPTION FROM STATE TAXATION TO CORPORATIONS OR INDIVIDUALS CONTRACTING WITH THE UNITED STATES MERELY BECAUSE THEIR ACTIVITIES ARE USEFUL TO THE GOVERNMENT, OR BECAUSE THE ECONOMIC BURDEN IS SHIFTED TO THE GOVERNMENT THROUGH OPERATION OF THEIR CONTRACTS, IS WELL ESTABLISHED. JAMES V. DRAVO CONTRACTING CO., 302 U.S. 134, 153 (DECEMBER 6, 1937); ALABAMA V. KING AND BOOZER, 314 U.S. 1 AND CURRY V. UNITED STATES, 314 U.S. 14 (NOVEMBER 10, 1941); AND ESSO STANDARD OIL V. EVANS, 345 U.S. 495 (MAY 4, 1953). RECENTLY THE COURT REVIEWED AND APPROVED THE RATIONALE OF THESE CASES IN UNITED STATES V. CITY OF DETROIT, 355 U.S. 466, 469, SUSTAINING A TAX IMPOSED BY THE STATE OF MICHIGAN AGAINST A LESSEE OF GOVERNMENT PROPERTY, AND IN CITY OF DETROIT V. MURRAY CORPORATION, 355 U.S. 489 (MARCH 3, 1958) SUSTAINING A PERSONAL PROPERTY TAX IN THE NATURE OF A USE TAX IMPOSED BY THE CITY OF DETROIT AND WAYNE COUNTY, MICHIGAN, AGAINST A GOVERNMENT CONTRACTOR, WHERE IT IS STATED AT PAGE 494,"THE ONE PRINCIPLE IN THIS AREA WHICH HAS HERETOFORE BEEN CLEARLY SETTLED IS THAT THE IMPOSITION OF AN INCREASED FINANCIAL BURDEN ON THE GOVERNMENT DOES NOT BY ITSELF INVALIDATE A STATE TAX.'

MANIFESTLY, SALES TAX AND USE TAX ARE NOT SYNONYMOUS PHRASES. HOWEVER, A USE TAX MAY BE IMPOSED IN CONJUNCTION WITH A SALES TAX AND OPERATE AS A "COMPENSATING TAX" AS EXEMPLIFIED IN THE HENNEFORD CASE, AND IT IS APPARENT THAT THE "SALES AND USE TAXES" IMPOSED UNDER CHAPTER 18 OF THE RHODE ISLAND STATUTES HAVE BEEN SO CONSTRUED AND APPLIED BY THE STATE TAXING AUTHORITIES. FURTHERMORE, IT SEEMS CLEAR FROM THE TERMS OF THE CONTRACT REQUIRING THE CONTRACTOR TO "FURNISH ALL LABOR, MATERIAL, TOOLS, PLANT AND EQUIPMENT, AND PERFORM ALL SERVICES AND WORK NECESSARY TO CONSTRUCT THE HOUSING PROJECT" (ARTICLE I) AND PROVIDING FOR PERIODICAL PAYMENTS TO THE CONTRACTOR BASED UPON "THE TOTAL OF THE PURCHASE PRICE OR THE ESTIMATED COST, WHICHEVER IS LESS, OF UNINSTALLED ACCEPTABLE MATERIALS SUITABLY STORED ON THE MORTGAGED PROPERTY IN A MANNER ACCEPTABLE TO THE CONTRACTING OFFICER, PLUS THE COST OF THE PORTIONS OF THE WORK ACCEPTABLY COMPLETED" (ARTICLE IV), CONSIDERED WITH THE OTHER CONTRACT PROVISIONS AS A WHOLE, THAT THE TRANSACTION INVOLVED--- A PURCHASE OF PREFABRICATED HOUSES FROM NATIONAL HOMES, INC.--- WAS NOT A SALE AT RETAIL TO THE CONTRACTOR FOR RESALE IN THE REGULAR COURSE OF BUSINESS WITHIN THE MEANING OF THE STATUTORY DEFINITION 44-18-10 AND THE PROVISIONS OF SECTION 44-18- 25 OF THE RHODE ISLAND STATUTES SO AS TO BE EXEMPTED FROM THE USE TAX IMPOSED. ON THE CONTRARY, THE RECORD REASONABLY ESTABLISHES THAT THE CONTRACTOR PURCHASED THE PREFABRICATED HOUSES ON HIS OWN ACCOUNT FOR USE IN PERFORMANCE OF THE CONTRACT; THAT TITLE TO THE ITEMS PURCHASED PASSED TO THE CONTRACTOR ON DELIVERY IN THE STATE OF RHODE ISLAND; AND IN THE ABSENCE OF AN APPROPRIATE RESALE CERTIFICATE FROM THE PURCHASER, THE SELLER BECAME LIABLE FOR COLLECTION OF THE USE TAX IN QUESTION. CF. AVCO MANUFACTURING CORPORATION V. CONNELLY, 140 A.2D 479, AND UNITED AIRCRAFT CORPORATION V. CONNELLY, 140 A.2D 486, BOTH DECIDED MARCH 25, 1958, WHERE THE SUPREME COURT OF ERRORS OF CONNECTICUT CONSIDERED AND CONSTRUED SALES AND USE TAXES ASSESSED AGAINST FEDERAL CONTRACTORS UNDER STATUTES EMPLOYING LANGUAGE ALMOST IDENTICAL WITH THE RHODE ISLAND STATUTES, AND THE AUTHORITIES THERE CITED. SEE, ALSO, CUSTOM BUILT HOMES CO. V. KANSAS STATE COMMISSION OF REVENUE AND TAXATION, 334 P.2D 808, REHEARING DENIED MARCH 11, 1959, WHERE THE SUPREME COURT OF KANSAS SUSTAINED A TAX ASSESSMENT AGAINST A CONTRACTOR BASED, AS HERE, UPON THE USE OF PREFABRICATED HOUSE UNITS PURCHASED FROM AN OUT-OF-STATE MANUFACTURER.

HENCE, IN VIEW OF THE SUCCESSOR CONTRACTING OFFICER'S REPORT TO THE EFFECT THAT IT WAS THE INTENTION OF THE CONTRACTING PARTIES TO EXCLUDE FROM THE CONTRACT PRICE "USE" AS WELL AS "SALES" TAXES UNDER THE LANGUAGE "ANY POSSIBLE STATE SALES TAX" APPEARING IN ADDENDUM NO. 3, UPON RECEIPT OF SATISFACTORY EVIDENCE OF PAYMENT THEREOF TO NATIONAL HOMES, INC., REIMBURSEMENT OF THE AMOUNT CLAIMED BY THE CONTRACTOR MAY BE MADE.