B-68874, SEPTEMBER 30, 1947, 27 COMP. GEN. 179

B-68874: Sep 30, 1947

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THE LEGAL INCIDENCE OF WHICH IS ON THE VENDOR. MAY BE REIMBURSED TO POST OFFICE DEPARTMENT CONTRACTORS FURNISHING GASOLINE UNDER CONTRACTS PROVIDING THAT THE TAX- EXCLUSIVE CONTRACT PRICE BE INCREASED BY THE AMOUNT OF STATE TAXES FOR WHICH EXEMPTION IS NOT GRANTED. WHERE THE GASOLINE IS USED FOR PURPOSES NOT WITHIN THE EXEMPTIVE PROVISIONS OF THE TAXING STATUTE. 1947: REFERENCE IS MADE TO YOUR LETTER OF AUGUST 18. - THE POST OFFICE DEPARTMENT IS REQUIRED TO PAY FOR GASOLINE PROCURED IN CALIFORNIA AT A PRICE INCLUSIVE OF THE GASOLINE TAX IMPOSED BY THAT STATE AND. SECTION 7401 WAS AMENDED. AS YOU WERE ADVISED IN THE DECISION OF AUGUST 23. LEAVES NO ROOM FOR DOUBT THAT A PERSON WHO SELLS SUPPLIES TO THE UNITED STATES IS NOT.

B-68874, SEPTEMBER 30, 1947, 27 COMP. GEN. 179

TAXES - STATE - GASOLINE - PURCHASES IN CALIFORNIA GASOLINE TAXES IMPOSED BY THE STATE OF CALIFORNIA, THE LEGAL INCIDENCE OF WHICH IS ON THE VENDOR, MAY BE REIMBURSED TO POST OFFICE DEPARTMENT CONTRACTORS FURNISHING GASOLINE UNDER CONTRACTS PROVIDING THAT THE TAX- EXCLUSIVE CONTRACT PRICE BE INCREASED BY THE AMOUNT OF STATE TAXES FOR WHICH EXEMPTION IS NOT GRANTED, WHERE THE GASOLINE IS USED FOR PURPOSES NOT WITHIN THE EXEMPTIVE PROVISIONS OF THE TAXING STATUTE, AND THE DEPARTMENT MAY DISCONTINUE USE OF TAX EXEMPTION CERTIFICATES ( STANDARD FORM 1094--- REVISED) IN CALIFORNIA WITH RESPECT TO SUCH PURCHASES.

COMPTROLLER GENERAL WARREN TO THE POSTMASTER GENERAL, SEPTEMBER 30, 1947:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 18, 1947, IN WHICH YOU REQUEST A DECISION AS TO WHETHER--- IN VIEW OF THE PROVISIONS OF SENATE BILL NO. 15, ENACTED BY THE LEGISLATURE OF THE STATE OF CALIFORNIA, FIRST EXTRAORDINARY SESSION, 1947--- THE POST OFFICE DEPARTMENT IS REQUIRED TO PAY FOR GASOLINE PROCURED IN CALIFORNIA AT A PRICE INCLUSIVE OF THE GASOLINE TAX IMPOSED BY THAT STATE AND, IF SO, WHETHER THE USE OF TAX EXEMPTION CERTIFICATES MAY BE DISCONTINUED WITH RESPECT TO SUCH PURCHASES.

IT APPEARS FROM YOUR SUBMISSION THAT THE CONTRACTS OF YOUR DEPARTMENT COVERING THE PROCUREMENT OF GASOLINE IN THE STATE OF CALIFORNIA PROVIDE FOR AN INCREASE IN THE CONTRACT PRICE BY THE AMOUNT OF THE STATE GASOLINE TAX IN THE EVENT THE STATE TAXING OFFICIALS SHOULD AUTHORITATIVELY REFUSE TO ACCEPT EXEMPTION CERTIFICATES IN LIEU OF PAYMENT OF THE TAX.

SECTION 7351 OF DEERING'S CALIFORNIA REVENUE AND TAXATION CODE IMPOSES UPON DISTRIBUTORS OF MOTOR VEHICLE FUEL A LICENSE TAX OF $0.03 FOR EACH GALLON OF FUEL DISTRIBUTED BY THEM IN THE STATE OF CALIFORNIA FOR THE PRIVILEGE OF DISTRIBUTING SUCH FUEL WITHIN THE STATE. SECTION 7401 (C) OF SAID CODE PROVIDES THAT THE PAYMENT OF LICENSE TAXES DOES NOT APPLY TO:

MOTOR VEHICLE FUEL SOLD FOR THE EXCLUSIVE USE OF THE UNITED STATES TO THE UNITED STATES OR ANY AGENCY OR INSTRUMENTALITY THEREOF, BUT THIS EXEMPTION SHALL NOT APPLY TO ANY CORPORATE AGENCY OR CORPORATE INSTRUMENTALITY UNLESS WHOLLY OWNED BY THE UNITED STATES OR BY A CORPORATION WHOLLY OWNED BY THE UNITED STATES.

HOWEVER, BY SENATE BILL NO. 15, REFERRED TO ABOVE, SECTION 7401 WAS AMENDED, EFFECTIVE JULY 10, 1947, TO READ:

THE PROVISIONS OF THIS PART REQUIRING THE PAYMENT OF LICENSE TAXES DO NOT APPLY TO ANY OF THE FOLLOWING:

"/D) MOTOR VEHICLE FUEL SOLD TO THE UNITED STATES ARMED FORCES FOR USE IN SHIPS OR AIRCRAFT, OR FOR USE OUTSIDE THIS STATE.

AS YOU WERE ADVISED IN THE DECISION OF AUGUST 23, 1944, 24 COMP. GEN. 150

* * * THE LANGUAGE USED BY THE SUPREME COURT OF THE UNITED STATES IN ITS DECISION IN THE CASE OF ALABAMA V. KING AND BOOZER, 314 U.S. 1, LEAVES NO ROOM FOR DOUBT THAT A PERSON WHO SELLS SUPPLIES TO THE UNITED STATES IS NOT--- MERELY BECAUSE OF THE IMMUNITY OF THE FEDERAL GOVERNMENT FROM STATE TAXATION--- EXEMPT FROM THE PAYMENT OF AN OTHERWISE APPLICABLE STATE TAX WHERE IT APPEARS THAT THE LEGAL INCIDENCE OF THE TAX RESTS UPON HIM AS THE VENDOR AND NOT UPON THE UNITED STATES AS THE VENDEE. HENCE, PAYMENT PROPERLY MAY BE REQUIRED BY A STATE FROM A VENDOR OF A TAX OF THAT TYPE IN THE CASE OF SUCH SALES TO THE UNITED STATES AS ARE CONSUMMATED WITHIN THE TERRITORIAL JURISDICTION OF THE STATE UNLESS THE STATE LAW OR THE REGULATIONS PROMULGATED BY THE STATE TAXING AUTHORITIES WITH RESPECT THERETO EXCEPT THE TRANSACTIONS FROM THE OPERATION OF THE TAXING STATUTE INVOLVED.

IT IS AT ONCE APPARENT FROM A CONSIDERATION OF THE PROVISIONS OF SECTION 7351 OF THE CALIFORNIA REVENUE AND TAXATION CODE THAT THE LEGAL INCIDENCE OF THE LICENSE TAX IMPOSED THEREBY RESTS UPON THE DISTRIBUTOR OR VENDOR OF GASOLINE AND NOT UPON THE CONSUMER OR VENDEE AND, WHILE SECTION 7401 (C), AS ORIGINALLY ENACTED, EXCEPTED ALL GASOLINE SOLD TO THE UNITED STATES AND THE AGENCIES AND INSTRUMENTALITIES THEREOF, SENATE BILL NO. 15, SUPRA, LIMITED SUCH EXCEPTION TO MOTOR VEHICLE FUEL SOLD TO THE ARMED FORCES OF THE UNITED STATES FOR USE IN SHIPS OR AIRCRAFT, OR FOR USE OUTSIDE THE STATE.

ACCORDINGLY, YOU ARE ADVISED THAT, UNDER THE PROVISIONS OF THE CONTRACTS INVOLVED, THE POST OFFICE DEPARTMENT IS REQUIRED TO PAY AN AMOUNT EQUIVALENT TO THE STATE TAX ON GASOLINE PROCURED IN THE STATE OF CALIFORNIA, AND THAT THE USE OF TAX EXEMPTION CERTIFICATES--- STANDARD FORM 1094/REVISED--- WITH RESPECT TO SUCH PURCHASES MAY BE DISCONTINUED.