B-148332, MAY 1, 1962, 41 COMP. GEN. 719

B-148332, MAY 1, 1962, 41 COMP. GEN. 719

TAXES - STATE - GOVERNMENT IMMUNITY - MEALS FURNISHED BY COMMON CARRIERS ALTHOUGH THE SOUTH CAROLINA SALES TAX IMPOSED ON ALL RETAIL SALES, INCLUDING MEALS FURNISHED BY A RAILROAD TO MILITARY PERSONNEL TRAVELING ON OFFICIAL BUSINESS WITHIN THE STATE, IS A TAX ON THE VENDOR SO THAT THE FEDERAL GOVERNMENT'S CONSTITUTIONAL IMMUNITY FROM STATE TAXATION IS NOT FOR APPLICATION AND DOES NOT EXEMPT THE UNITED STATES FROM LIABILITY TO THE CARRIER FOR THE TAX, THE TAX ON THE MEALS CONSTITUTES A PORTION OF THE COST OF THE MEALS OBTAINED FROM THE CARRIER BY THE USE OF MEAL TICKETS, WHICH SPECIFY THE MAXIMUM COST PER MEAL, SO THAT THE GOVERNMENT'S LIABILITY FOR THE TAX IS SUBJECT TO THE LIMITATIONS ON THE MEAL TICKET; THEREFORE, IF THE TAX CAUSES THE MAXIMUM AMOUNT TO BE EXCEEDED, PAYMENT FOR SUCH EXCESS IS NOT AUTHORIZED BUT IF THE TAX DOES NOT CAUSE THE MAXIMUM TO BE EXCEEDED, PAYMENT FOR THE MEALS INCLUDING THE TAX IS PROPER.

TO LIEUTENANT COLONEL A. G. PERRY, DEPARTMENT OF THE ARMY, MAY 1, 1962:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 9, 1962, FILE FINCS-FD, TRANSMITTED HERE BY ST ENDORSEMENT OF MARCH 1, 1962, FROM THE OFFICE CHIEF OF FINANCE, REQUESTING A DECISION AS TO WHETHER PAYMENT IS AUTHORIZED ON A VOUCHER TRANSMITTED THEREWITH IN FAVOR OF THE SEABOARD AIRLINE RAILROAD COMPANY.

THE VOUCHER IS IN THE AMOUNT OF $125.23 FOR 54 MEALS AT $2.25 PER MEAL ($121.50) FURNISHED BY THE RAILROAD COMPANY TO MILITARY PERSONNEL TRAVELING OVER THAT PORTION OF THE CARRIER'S LINES WHICH LIE WITHIN THE BOUNDARIES OF THE STATE OF SOUTH CAROLINA PLUS A THREE PERCENT SOUTH CAROLINA SALES TAX ($3.73). THE VOUCHER IS SUPPORTED BY THE INVOLVED MEAL TICKETS, FORMS DD 652, WHICH AUTHORIZE THE FURNISHING OF SPECIFIED NUMBER OF MEALS IN RAILROAD TRAINS AT A COST PER MEAL OF NOT TO EXCEED $2.25. THE REQUEST FOR ADVANCE DECISION QUESTIONS THE PROPRIETY OF THE PAYMENT OF THE STATE SALES TAX.

THE SOUTH CAROLINA SALES TAX IS AN IMPOSITION UPON THE PRIVILEGE OF THE BUSINESS OF SELLING AT RETAIL AND MEASURED BY THE AMOUNT OF BUSINESS DONE. STATE V. BYRNES, 66 S.E.2D 33. IT IS COMPUTED AT AN AMOUNT EQUAL TO THREE PERCENT OF THE GROSS PROCEEDS OF SALES OF THE BUSINESS OF "EVERY PERSON ENGAGED OR CONTINUING WITHIN THIS (THE) STATE IN THE BUSINESS OF SELLING AT RETAIL ANY TANGIBLE PERSONAL PROPERTY WHATSOEVER, INCLUDING MERCHANDISE AND COMMODITIES OF EVERY KIND AND CHARACTER * * *.' 65-1401, SOUTH CAROLINA CODE OF LAWS 1952 ANNOTATED, 1960 CUMULATIVE SUPPLEMENT. SECTION 65-1407 OF THE SOUTH CAROLINA CODE PROVIDES IN EFFECT THAT THE VENDOR MAY ADD TO THE SALES PRICE THE AMOUNT OF THE TAX AND SECTION 65- 1409 PROVIDES THAT THE FAILURE TO PASS ON TO THE PURCHASER THE AMOUNT OF THE TAX IN NO WAY SHALL RELIEVE THE VENDOR FROM PAYING THE TAX. UNDER SUCH SECTIONS, WHILE THE VENDOR MAY PASS ON THE TAX TO THE VENDEE, THIS IS NOT MANDATORY AND THE VENDOR'S FAILURE TO DO SO DOES NOT AFFECT HIS LIABILITY FOR THE TAX. THUS, IT IS CLEAR THAT THE LEGAL INCIDENCE OF THE TAX IS ON THE VENDOR. NO PROVISION HAS BEEN FOUND IN THE SOUTH CAROLINA STATUTES SPECIFICALLY EXEMPTING FROM THE TAX AMOUNTS OF SALES TO THE UNITED STATES.

WHERE THE LEGAL INCIDENCE OF A STATE TAX IS ON THE VENDOR OF GOODS OR SERVICES TO THE UNITED STATES GOVERNMENT, THE CONSTITUTIONAL PRINCIPLE UNDER WHICH THE FEDERAL GOVERNMENT IS IMMUNE TO STATE TAXATION IS INAPPLICABLE. 24 COMP. GEN. 150; 32 ID. 423 AND 33 ID 453. HENCE, THE UNITED STATES IS NOT CONSTITUTIONALLY IMMUNE FROM THE ECONOMIC BURDEN OF SUCH TAX, IF BY CONTRACT OR OTHERWISE IT IS LIABLE TO THE VENDOR FOR THE AMOUNT OF THE TAX. HOWEVER, SUCH AMOUNT, TO THE CONSUMERS OR THE GOVERNMENT, NO DOUBT, CONSTITUTES A PORTION OF THE COST OF THE MEALS.

THE INVOLVED MEALS WERE OBTAINED FROM THE CARRIER BY USE OF A MEAL TICKET ( DD FORM 652) WHICH IS A DULY AUTHORIZED AND WRITTEN REQUEST UPON A RAILROAD OR STEAMSHIP COMPANY, HOTEL RESTAURANT, OR EATING HOUSE FOR FURNISHING OF A MEAL OR MEALS. THE MEAL TICKETS STATE THAT THE COST PER MEAL IN DINING CAR OR RAILROAD TRAIN SHALL NOT EXCEED $2.25, WHICH IS THE MAXIMUM RATE PRESCRIBED BY PARAGRAPH 5, ARMY REGULATIONS NO. 55-65, DATED JULY 7, 1960. THAT REGULATION PROVIDES THAT, PAYMENT FOR MEALS PROCURED BY USE OF MEAL TICKETS WILL BE MADE TO THE CONCERN FURNISHING THE MEALS UPON PRESENTATION OF THE MEAL TICKET OR TICKETS TO FINANCE CENTER, U.S. ARMY, ATTENTION, CHIEF, TRANSPORTATION DIVISION, INDIANAPOLIS 49, INDIANA, AND THAT " THE PAYMENT WILL NOT EXCEED THE NUMBER OF MEALS NOR THE PRICE SET FORTH ON THE MEAL TICKET.' PARAGRAPH 21, AR 55-65, JULY 7, 1960 ( ITALICS SUPPLIED.)

AS MENTIONED ABOVE, THE INVOLVED MEAL TICKETS EACH SPECIFY THAT THE COST PER MEAL IS NOT TO EXCEED $2.25 AND THE INSTRUCTIONS TO THE VENDOR ON THE RESERVE OF THE TICKET STATE THAT " THE PERSON WHO FURNISHES MEALS ON THIS TICKET MUST SEE THAT THE NUMBER AND THE VALUE OF THE MEALS DO NOT EXCEED THAT AUTHORIZED ON THE TICKET * * *.' THE MEAL TICKETS ALONE CONSTITUTE THE BASIS OF THE GOVERNMENT'S OBLIGATION TO THE RAILROAD COMPANY AND PAYMENT PROPERLY MAY NOT BE MADE OF AN AMOUNT IN EXCESS OF THAT STATED THEREIN.

ACCORDINGLY, THE VOUCHER, WHICH TOGETHER WITH THE ATTACHED MEAL TICKETS, IS RETURNED HEREWITH, MAY BE CERTIFIED FOR PAYMENT NOT IN EXCESS OF THE MAXIMUM AUTHORIZED ON THE MEAL TICKETS, $121.50. SINCE THE AMOUNT BILLED ON ACCOUNT OF TAX CONSTITUTES A PART OF THE COST OF THE MEAL AND CAUSES THE MAXIMUM AMOUNT AUTHORIZED AND PROMISED TO BE PAID BY THE GOVERNMENT TO BE EXCEEDED PAYMENT OF SUCH EXCESS IS NOT AUTHORIZED. HOWEVER, IN THE EVENT INCLUSION OF THE AMOUNT FOR THE TAX WOULD NOT CAUSE THE MAXIMUM COST PROMISED BY THE GOVERNMENT TO BE EXCEEDED, WE PERCEIVE NO PROPER BASIS FOR OBJECTION TO THE PAYMENT BY THE UNITED STATES OF THE AMOUNT OF THE TAX PROVIDED SUCH TAX IS UNIFORMLY PASSED ON TO OTHER CONSUMERS.