B-35084, JULY 15, 1943, 23 COMP. GEN. 27

B-35084: Jul 15, 1943

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THE CONTRACTOR IS ENTITLED TO REIMBURSEMENT OF SUCH AMOUNTS REPRESENTING THE SAID TAX AS IT WAS REQUIRED TO PAY ON TRANSPORTATION CHARGES INCIDENT TO DELIVERY OF STEEL SHIPPED AFTER THE EFFECTIVE DATE OF THE TAX. 22 COMP. 1943: I HAVE YOUR LETTER OF JUNE 10. REQUESTING DECISION AS TO WHETHER PAYMENT IS AUTHORIZED TO THE REPUBLIC STEEL CORPORATION OF THE AMOUNT OF $25.97 REPRESENTED AS BEING THE FEDERAL EXCISE TAX IMPOSED BY THE TERMS OF SECTION 620 OF THE REVENUE ACT OF 1942. IT BEING UNDERSTOOD THE STEEL WAS NOT SHIPPED UNTIL AFTER DECEMBER 1. - THE CONTRACT SPECIFICALLY PROVIDING THAT: THE PRICES QUOTED HEREIN ARE NOT IN EXCESS OF THE CURRENT MAXIMUM PRICES ESTABLISHED BY THE OFFICE OF PRICE ADMINISTRATION.

B-35084, JULY 15, 1943, 23 COMP. GEN. 27

FEDERAL TRANSPORTATION-OF-PROPERTY TAX - CONTRACT PRICE ADJUSTMENT WHERE A CONTRACT FOR STEEL AT SPECIFIED DELIVERED PRICES, NOT EXCEEDING CURRENT MAXIMUM PRICES ESTABLISHED BY THE OFFICE OF PRICE ADMINISTRATION, PROVIDES FOR AN ADJUSTMENT OF THE CONTRACT PRICES ON SHIPMENTS MADE ON AND AFTER THE EFFECTIVE DATE OF ANY MAXIMUM PRICE CHANGES, AND THE APPLICABLE PRICE REGULATIONS AUTHORIZE MAXIMUM DELIVERED PRICES TO BE INCREASED BY THE AMOUNT OF THE PROPERTY TRANSPORTATION TAX IMPOSED BY SECTION 620 OF THE REVENUE ACT OF 1942, THE CONTRACTOR IS ENTITLED TO REIMBURSEMENT OF SUCH AMOUNTS REPRESENTING THE SAID TAX AS IT WAS REQUIRED TO PAY ON TRANSPORTATION CHARGES INCIDENT TO DELIVERY OF STEEL SHIPPED AFTER THE EFFECTIVE DATE OF THE TAX. 22 COMP. GEN. 13 AND IBID. 915, DISTINGUISHED.

ACTING COMPTROLLER GENERAL YATES TO THE CHAIRMAN, NATIONAL ADVISORY COMMITTEE FOR AERONAUTICS, JULY 15, 1943:

I HAVE YOUR LETTER OF JUNE 10, 1943, WITH ENCLOSURES, REQUESTING DECISION AS TO WHETHER PAYMENT IS AUTHORIZED TO THE REPUBLIC STEEL CORPORATION OF THE AMOUNT OF $25.97 REPRESENTED AS BEING THE FEDERAL EXCISE TAX IMPOSED BY THE TERMS OF SECTION 620 OF THE REVENUE ACT OF 1942, 56 STAT. 979, ON THE TRANSPORTATION CHARGES ON CERTAIN STEEL SUPPLIED BY IT TO THE UNITED STATES UNDER THE TERMS OF NEGOTIATED CONTRACT NO. NAW-1709 DATED JUNE 17, 1942, IT BEING UNDERSTOOD THE STEEL WAS NOT SHIPPED UNTIL AFTER DECEMBER 1, 1942--- THE EFFECTIVE DATE OF SUCH TAX.

BY THE TERMS OF SAID CONTRACT THE REPUBLIC STEEL CORPORATION AGREED TO FURNISH AND DELIVER THE VARIOUS QUANTITIES OF STEEL DESCRIBED IN THE CONTRACT "F.O.B. MOFFETT FIELD OR MOUNTAIN VIEW, CALIFORNIA" AT THE PRICES SPECIFIED THEREIN--- THE CONTRACT SPECIFICALLY PROVIDING THAT:

THE PRICES QUOTED HEREIN ARE NOT IN EXCESS OF THE CURRENT MAXIMUM PRICES ESTABLISHED BY THE OFFICE OF PRICE ADMINISTRATION. IN CASE SUCH OFFICE SHALL AT ANY TIME PRIOR TO THE COMPLETION OF THE AGREED DELIVERY LAWFULLY ESTABLISH DIFFERENT MAXIMUM PRICES, THE PRICES TO BE CHARGED AND PAID HEREUNDER SHALL BE SUCH DIFFERENT PRICES IN RESPECT OF SHIPMENTS MADE ON AND AFTER THE DATE ON WHICH SUCH DIFFERENT PRICES BECOME EFFECTIVE.

PRICES QUOTED HEREIN ARE FOB MILL AT ALABAMA CITY, ALA., WITH PRESENT ALL RAIL C/L FREIGHT OF .0117 PER LB. ALLOWED * * *.

ALSO, IT IS NOTED YOU STATE IN YOUR LETTER THAT "SINCE THE PURCHASE OF STEEL IN THE INSTANT CASE WAS DIRECT FROM A PRODUCER, THE OPA MAXIMUM PRICE IS ESTABLISHED BY PRICE SCHEDULE NO. 6" AND THAT , APPENDIX A, SECTION (A), OF THAT SCHEDULE ESTABLISHES THAT THE CEILING DELIVERED PRICE IS THE AGGREGATE OF: (1) THE BASING POINT BASE PRICE * * *, (2) APPLICABLE EXTRAS * * * (NONE IN THIS CASE) AND (3) TRANSPORTATION CHARGES IN EFFECT AT THE TIME OF SHIPMENT * * * AS CUSTOMARILY COMPUTED.' SEE IN THIS CONNECTION PART II OF FEDERAL REGISTER DATED FEBRUARY 21, 1942, 7 F.R. 1201, 1217.

IT APPEARS THAT THE APPLICABLE OPA PRICE SCHEDULE IN EFFECT AT THE TIME OF THE EXECUTION OF THE SUBJECT CONTRACT PROVIDED THAT THE AMOUNT CHARGED A SHIPPER FOR THE TRANSPORTATION OF A PARTICULAR SHIPMENT OF MERCHANDISE OF THE TYPE HERE INVOLVED WOULD BE A FACTOR IN DETERMINING THE MAXIMUM DELIVERED PRICE OF SUCH SHIPMENT; THAT THE PRICES SPECIFIED IN SAID CONTRACT FOR FURNISHING THE MERCHANDISE COVERED THEREBY WERE QUOTED AND ACCEPTED ON A DELIVERED PRICE BASIS; AND THAT THE CONTRACTOR AND THE CONTRACTING OFFICER CONTEMPLATED THAT IF THE OFFICE OF PRICE ADMINISTRATION SHOULD ESTABLISH DIFFERENT MAXIMUM PRICES PRIOR TO THE TIME THAT ALL SHIPMENTS WERE MADE UNDER THE CONTRACT THE CONTRACT PRICES, SO FAR AS SHIPMENTS MADE ON AND AFTER THE EFFECTIVE DATE OF THE DIFFERENT PRICE WERE CONCERNED, WOULD BE CHANGED ACCORDINGLY. HENCE, THE SITUATION HERE PRESENTED CANNOT PROPERLY BE REGARDED AS COMING WITHIN THE SCOPE OF THE DECISION OF JULY 9, 1942, TO THE POSTMASTER GENERAL, 22 COMP. GEN. 13, WHERE THE GOVERNMENT CONTRACTS INVOLVED DID NOT CONTAIN A PROVISION AUTHORIZING AN ADJUSTMENT OF THE CONTRACT PRICES BECAUSE OF CHANGES IN THE ESTABLISHED MAXIMUM PRICES, OR THE DECISION OF MARCH 25, 1943, TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, 22 COMP. GEN. 915, WHERE THE QUESTION WAS WHETHER AN EXISTING GOVERNMENT CONTRACT PROPERLY COULD BE AMENDED SO AS TO RELIEVE THE CONTRACTOR OF ITS LIABILITY FOR PAYMENT OF THE APPLICABLE FEDERAL PROPERTY TRANSPORTATION TAX.

AS STATED BY YOU, SUPPLEMENTARY ORDER NO. 31 DATED NOVEMBER 26, 1942, OF THE OFFICE OF PRICE ADMINISTRATION, 7 F.R. 9894, PROVIDES, IN PERTINENT PART, THAT:

NOTWITHSTANDING THE PROVISIONS OF ANY PRICE REGULATION, THE TAX ON THE TRANSPORTATION OF ALL PROPERTY (EXCEPTING COAL) IMPOSED BY SECTION 620 OF THE REVENUE ACT OF 1942 SHALL, FOR PURPOSES OF DETERMINING THE APPLICABLE MAXIMUM PRICE OF ANY COMMODITY OR SERVICE, BE TREATED AS THOUGH IT WERE AN INCREASE OF 3 PERCENT IN THE AMOUNT CHARGED BY EVERY PERSON ENGAGED IN THE BUSINESS OF TRANSPORTING PROPERTY FOR HIRE. IT SHALL NOT BE TREATED, UNDER ANY PROVISION OF ANY PRICE REGULATION OR ANY INTERPRETATION THEREOF, AS A TAX FOR WHICH A CHARGE MAY BE MADE IN ADDITION TO THE MAXIMUM PRICE.

MOREOVER, THERE IS FOR CONSIDERATION THE STATEMENT ISSUED BY THE OFFICE OF PRICE ADMINISTRATION TO ACCOMPANY SUPPLEMENTARY ORDER NO. 31 WHEREIN ARE SET FORTH THE REASONS FOR THE ISSUANCE OF SUCH ORDER. SAID STATEMENT PROVIDES, SO FAR AS HERE MATERIAL, AS FOLLOWS:

MANY OF THE PRICE REGULATIONS HERETOFORE ISSUED BY THE OFFICE OF PRICE ADMINISTRATION CONTAIN A PROVISION SIMILAR TO SECTION 7 OF THE GENERAL MAXIMUM PRICE REGULATION. UNDER SUCH PROVISIONS, WHEREVER AN EXCISE TAX IS IMPOSED AFTER THE EFFECTIVE DATE OF THE REGULATION, ANY SELLER PAYING THE TAX MAY, IF HE IS PERMITTED TO DO SO BY THE TAXING STATUTE, STATE THE TAX SEPARATELY AND COLLECT IT FROM THE BUYER IN ADDITION TO THE MAXIMUM PRICE. REGULATIONS NOT CONTAINING SUCH PROVISIONS HAVE BEEN INTERPRETED SO AS TO ALLOW THE SAME RESULT.

SUPPLEMENTARY ORDER NO. 31 SPECIFICALLY PROVIDES THAT THE PROVISIONS OF SECTION 7 OF THE GENERAL MAXIMUM PRICE REGULATIONS AND SIMILAR PROVISIONS IN OR INTERPRETATIONS OF OTHER PRICE REGULATIONS SHALL NOT APPLY TO THE THREE PERCENT TRANSPORTATION TAX. ON THE CONTRARY, THE SUPPLEMENTARY ORDER REQUIRES THAT THE TAX BE TREATED AS THOUGH IT WERE AN INCREASE OF THREE PERCENT IN THE AMOUNT CHARGED BY EVERY PERSON ENGAGED IN THE BUSINESS OF TRANSPORTING PROPERTY FOR HIRE. THIS WILL MEAN THAT WHERE THE PRICE REGULATION ESTABLISHES THE MAXIMUM PRICE ON A DELIVERED PRICE BASIS WHICH REMAINS CONSTANT DESPITE VARIATIONS IN TRANSPORTATION COSTS, THE SELLER WILL BE REQUIRED TO ABSORB THE TAX. $ $ $ AND WHILE NO SPECIFIC MENTION IS MADE THEREIN OF THE SITUATION WHERE, AS HERE, THE MAXIMUM DELIVERED PRICE VARIES WITH A CHANGE IN THE AMOUNT OF THE TRANSPORTATION CHARGES THE ONLY REASONABLE CONCLUSION TO BE DRAWN FROM THE LAST ABOVE QUOTED LANGUAGE IS THAT SUPPLEMENTAL ORCDER NO. 31 WAS INTENDED TO AUTHORIZE AN INCREASE IN THE MAXIMUM DELIVERED PRICE IN SUCH A CASE BY THE AMOUNT OF THE TRANSPORTATION TAX HERE INVOLVED.

IN VIEW OF THE FOREGOING, IT APPEARS THAT SUPPLEMENTAL ORDER NO. 31 EFFECTED AN INCREASE IN THE MAXIMUM PRICES APPLICABLE TO THE STEEL COVERED BY THE SUBJECT CONTRACT; AND, SINCE THE TERMS OF SAID CONTRACT PROVIDE THAT THE PRICES SPECIFIED THEREIN SHOULD BE ADJUSTED SO AS TO ACCORD WITH SUCH DIFFERENT MAXIMUM PRICES AS MIGHT BE ESTABLISHED BY THE OFFICE OF PRICE ADMINISTRATION, IT MUST BE HELD THAT THE REPUBLIC STEEL CORPORATION IS ENTITLED TO BE REIMBURSED FOR SUCH AMOUNT REPRESENTING THE FEDEEAL PROPERTY TRANSPORATION TAX AS IT WAS REQUIRED TO PAY ON THE CHARGES FOR THE TRANSPORTATION OF THE STEEL HERE INVOLVED.

ACCORDINGLY, YOU ARE ADVISED THAT, IF IT BE FOUND THAT $25.97 IS THE CORRECT AMOUNT OF THE FEDERAL PROPERTY TRANSPORTATION TAX REQUIRED TO BE PAID BY THE REPUBLIC STEEL CORPORATION IN THE INSTANT CASE, PAYMENT OF SAID AMOUNT TO THE CORPORATION IS AUTHORIZED.