                                                                            296



        OFFICEOFTHEATTORNEY            GENERALOFTEXAS
                              AUSTIN




Xoaorable Deoego 8. Sheppard
Coslj7troll~r Of F-liblio Ao00unta
Austin, Texas

Dear sir;                      OplJaLon Bo




                                             LOthe Tedsral    Qorernmoat,




              *This dapartnmnt  has dirsated  Joeke -08.
       Co. that they are llabla   0az the tar."
             Joske Eros'.   letter   sontalas,   in part,    t-ho follow-
ing faotat
                                                                                 297




Bonmabla         Gaorgs   9. Sheppard,      png8 2


               *We are oontinulng  to sxpexlenoe   a ipeat
       deal of difficulty    In ooansatioa  ulth the ool-
       leatlon   or tares due under Artiols    X of Houaa
       Bill 8 on aeles we mskr to the Uhited Statsa
       GorernReu t .
               *The Gorarnment ordara are aubmittsd        to
       ua, me Pill them, end bill them for the amount
       of the male lnoludiq      ths tax.     In erexy lnatanoe
       they Zomnrd us a oheok In payment for the bill
       leas the amount of thn tax and snoloae with their
       aheck a tax exsnqtlon     oertifloata.     iEe repaatadlp
       adrlsed   them that we hare eeoured Srom you l rul-
       Ilya. to the affeot  that the atato oannot aoeept these
       tax exemption oertiiioatsth
                   “Wo hav4    a vary      axtsaclive file of oorreapond-
       oaoa on Wia aubjrot.                 The paeition takea br the
       Oorornmsnt in all of thare lattara    la the eama.
       llany of there matter8 are aOil    unaottled. Wa are
        &ill   malntafning ths poaitlon that the anount or
        the tax mat be paid, ainaa WI cannot aubdb the
       t8~ 0Ortiri0at08            $0 YOW     0rrie8.

                   "At the    mu&g*stion      or ca taia   IL Q. Brom,
       Flaaaaa       Offlcrar far Randolph Ir9 old a lotter    waa
       wxlttan       by him to the Comptrollsr    8anrral   of thr
       United States   on this aub eat.      I aa anoloalng   a
       copy of ths lqtter    nhlah daptBl.8 Brom #ant to
.      mo aa I&aroh 18th advising that the nattsr       had baa
       refcmod   to the Ooeaptrollar GUXar81, and, ala@,
       hia 1aOter of April llrt addreaasd to ma adVia
       ma of thb daaisian    reaahed after hs had rsOa%V    3
       hia reply from tha Cantptroller     tinera   Of the
       United Statas."
                   Captain    Brown*s letter      of April   1, 1943,    Le 88
sollow8r
              *'WI,th refsrenoe   to our trl~phoflo eOntOrM-
       tlon today,    we  will  proaeed with paymat   of YQUr
       lnvoiat under date of 1Pebruary 16, 1943, for the
       .aJnouJlt
              of fnvoloe leas tax.
                                                                     298   -




Honorable   George T?. Sheppard,     page 3


               ‘Tour attention 18 invited    to deoieion
      A-51249,~ Octobe     4, 1?3.3 ot Vbl. 13, pees 91
      of Oeaisions     of Comptroller  General, whI&
      provides    thst any atate ‘. . , la wft,hout
      authority    to tax the United   Stetoa on auah
      purohaseo as may be nsoaaarrg fo? tha oonduot
      of the buainosa     of the Fedwal    Oavermaat.*~

              SeatIOn 1 Chapter 184, Artlola  X Aota 1 4l,
47th Legislature    (Oodkd  by Vernon aa Artlola 70471 ? prolPidd#t
             w’RadIoa, oomnetloa,      oardm;   luxury sxolra
      tax;   penalty ror nmking      if3180 rspert   0r railura
      to report.
              ~SeotIon 1. Baoh eraon, partnerahlp,
     assoaIetlon,     or oorjeat     f on rellisf    at  rrtall
     new radio8 OF now oommtloa,            &ml1 maka quart-
     erly on the flrst      &ape of January, Aprll,          Jull
     and Ootobar of saoh fear,          a report to the tip-
     troller,     under oath of the owner,, manager, or
     li h aorparatlou,a~ ofiieer Ohsrroi,               #horIng
     the aggregate     igrcw raoaipts      f’rarp the anla ob
     MY o? the aborwmmd           Iteas    fOr thaw quarter
     next preceding;       and shall     at the sane tine pay
     to tha Comptroller      a luxury asoise tsx equal to
     two (2) per aant of aaId gryoaa reoeipte             as shorn
     by said report.
             *Every pmson, partnership,    l880oiatIon,    or
      oarporatIon,   selling at retail, playing oaram
      ahall make quarterly   report ae provided abovo
      showlug the total number of pas&! or daaks o? auah
      aarda sold during the preaedlng   quarter, and ahall
      at ths gsnrr t Ine ,m to the Comptrollar    a luxury
      EXIST tax or rlvs f 5) aenta per raak or de& of
      euah ylaying   cards 80 sold.
             *Hothing her&n   ahall bs oonetrued a0 aa to
     require   p,aymsnt of the tax on I;ross r*aeipta    hma-
     In levIad 4ozce than o$los cm the jzoaesde     of the
     sals of the sam artlole      of ,mrohar;dls@.   A retall
     aale a8 used herein,    mmns a SS~S to 0~1s W.hQbws
         fw une or oonsu?optlon,   and not for rarele.
         Croae readpts   of n nelai mea8 tha rumwhloh
         the pumhaser   pay8 or agram to pey for an
         ertfols  or o-mdfiy   bought et rats11  .aala.”
                The o~inlor. of ths Caarptrollu     Oennrel, rr~tomod
to in Captain Brown’a letter,        wa8 datsd Ootobar 4, 1933, and
altad ee autharltg      Panhandle 011 Goixpaaf T. State oi Miaoiro-
I.#,   277 0. 5. 218, 72 L. M. 857, 48 3. Ct. 451, 56 A. L. R.
       Ths oQrrucJtnssaOf the Pen&and14 oeau “14 nom opan to
aeriaua qucstlon.m The tax imolted           tn Coeyltrolles   tknsrrl*a
&eolalon wes e retell       sales tax on the eonawar       or purohaaa
-not   e vendolp'8 ker (es WI hate bsrcl), neeeure4 by &roe8
r@oaipt&      Thlr, r)e&mrkowrt hold in o&tion      O-4403A that $h.
ter in qusetion     wan a ro8s rs99ipta      tax, not a sales     tsr,
end was riot lrriod     a&a f nrt the retail   pwahamr.
                Tuhen4l.r    Oil away        0. Nlaaiani~pl     9upra, la-
volvs4 lelu dfreatly         to the Vnltad $lataa       f9r t&a nra of its
Coast me:-4 PIret ia aerrfcs          in tha (lulf of Yaxleo an4 ita
Veterans* Xou ltel       at (irrrlipmt.    ft awae under a law at the
mete ot N&u e rasppi whi9h proli6ad            the8 'any p6raon
in cha buauinear of diatrlbutly           feaolior,   or rotall   4%%
gasoline,    a!mU pay r0r~ the pr T loge or aJlga&lag in lloah
buaineee u1 nxoiao tax ot ld (on4 oeat)              er gnllaa u       oh*
aale of gaaolino.      . .*    We oil cmapauy1 id not gay r a%oa on
ru4h 44144 to tia t&alto4 Ststrr,          an4 tha State brought 8ulb
Tha aorrgarrr 4@mUo4 011 ti~a e.rwn4 that Phi8 statute,             an4 it8
eaendaents,it aoastrurd          to lx oaa taxes m ruoh aal~a, wao
?4pU@lSUt to thu F.U.ral conllt E tut%oa. That 4Qat4nblon w44
sustain64 in the trial        4emt,     4n4 tb,4 @tat6 4p oa,le4.     %a
&pram9    CttUrt of thr fraiOed 8Eat68 bald that t Rb f3Wta We8 l!Ot
math4      to wlleot      the kx from tha mnhanar4          Oil Wwm        UP=
the garrolias arrld by It to tha Federal Covnrnasat~
                   f,@. Jurrtioc, Butler,   who wrota   the me3OT%tF optaim
of the    Court,      aaidr
               *me rieht of ths ~bited Stat68 to nak0
         suoh pup&asses is 4eriVud frQlr tih4 &WI8titUtio:~.
Ronorabla   Deor(;e Xi. Sheppard,    pa{;9 5


      The petitioner’s ri&t to itake sales            to the
      United Litatas was not &Pen by the atnts and
      doea ilat depend on stats         laws;   it reaulta
      iron   t,h6 aut!lorfty   of the national     govern-
      ment under the Oonetitution          to ohooae its
      own means end 8ouraetb of supply.           While
      Zdlesiaa~ppi may impose obar~ss upon patitloasr
      for the privilege       of oarrying on tra4e that is
      aubjsot    to the newer of the ntmts,        it  nay not
      lay eny tax upoa trfmaactions           by whioh ths
      Wit&4 States SSSUTSIIIthe things desired             for
      its governmantel       purpoclea.
              The validity     oi the taras alalum           la
      to be determinati by the praotiral           eftoat    of
      Unforaemsnt in respeot        of sales to the &svarn-
      ment . w3gi.m v. Covington,          251 c. s. 9,5, 192,
      64 L. 24. 157, 167, 40 Sup. DC. Rap. 93.                 I.
      ohares st the prescribed        rat6 is tie&a, QD a@OwDt
      at wary gnllon aoqulred by,tha Vnitsd Statas.
      It la lmmtsrlal      that the sellas        an4 r.ot the
      puroheaa+ is required       t3 report    an4 m-&a payment
      to tha state.     Sale 6nd ;urahase         oouatituta      a
      trenaaotlan by whiah the tax is suaaaureO aad on
      whlah the burdau~ smite.        Thr ualount     of Awlmy
      llairaad b the stete      rises    at4 falls     praalaaly
      as doer t iia quantity    of gaaollna       so scoured by
      tha Covommut.        It depsnda ioaebiately           upon
      tha nuaber 05 gallons.         The nuoeaaery       opsretlon
      of there enaatmuta       when so omrbrua4          is dirsotly
      to retard,    iapede emd burden the erertiou            bg tha
      &itm4 Statm       of Its aonstltutlonal          powers to
      oparata the fleet      and haa;ital.        N*Cullooln 12
      -%arylsnd,supra, 436 ( L. 3%. 608); Glllaepf~~*~
      Oklahom     aupra, 505 ( if6 L. M. 3&O, 42 Sup..Ct.
      Rep. 17lj;   Jaybird Min. Co. v. i;‘eir, 271,Ui 8.
      tW&, 613, 70 L. ~4,. lU2,        lU4r 46 SUP. Ct. Rap.
              To use the number of ~;alloaa @Old th*
      Unlkd States     CLBtn aearmre of the pTiVilS6S             tax
      1s In substencs     and legal    effaot     to tax the @al*.
      :Ie8tarn U. ‘felrg. Co. V. Texas, 105 IL 8. 260,
      26 L. Ea. 1067; Frlok v . Pennsylvania,              268 v. 80
      473, ~94, 69 L. ~a. 1058, 1064, 42 A. L. R. 316.
                                                                           301




            &fi Sup. Ct. Rep. 603.   And that is to tax
            the tilted  StnCes--‘bo 6xaot tribute on Its
            tramactlone   and rpply the aame to the sup-
            port Of the- Ptfit@.
                   Vhs exsatlonlr doarnded from gwtltloaer                       i
           lnfrlr&w   it8 right to have th8 ooa8titutloaal
           lndapandenoe   09 thr United State8 in rsapsot
           Of SU&I ~xuoha668 re&8ia    untramwlcd.     Oeborn
           v. Bank of UnlteQ Statea, 9 ‘wheat. 736, 867,
           6 L. Ed. 204, 2345 Western U. Pole&. Go. t.
           Texas, rupra.     Cf. Twraoo v. Thompson, 263
           U. S. 197 216, 6 L. lw. 255, 274, u sup.
           Utr Rap. is.    ketitiOU@W im not liabls    far
           the taxes olnlnmd.*




out ltce aotlrltlcs      in the      Rats   02 :?orth Dakota.
                  ThQ lhnk contended tlmt Ihs tax 0wa    not be
sonstltuthxmllg        fitqmeod upan thn daalsr far any o&or vehlolr
rue1 whlob it pnrehaaod frost bin for tha ppTpo8* or oarrglng
PII It3 a~thorlzed'aotlritlo~        *rlthln the Stats,   and that ~onw-
qusntly the dealer @@it oat ChrZEg9 the amunt ai rush tar aa
a part of the prlae.         Ths uefentbuha    ihRoehfor&‘cnb 6ho State
Auditor   on the other hmd; oox-hssde        d %it the zotor rshialo
fuel soid by DqRaohfmd to the PbdadL Land pknlf au6t be ln-
aJ,uded in co+&&&         the tax a&d OOSl8iBqUUltl#’   DeEoohford a&&t
i,nO1ti8 th elmo o nt   of suah tnx in. the p?IOiL
                  The Court   mfdt
Honorable   George H. Sheppard,      pa&e 7


      of North Dekota hae the right        to legoee upm
      e licensed     dselsr   in motor vehlole   fuel 8
      lloaaee    tax or thrae oante per fgarlan upon
      motor vehlole      fuel eold by such dealer     to a
      Paderal land Bank foi UN In autolnoblles          owned
      by eeld Bank and opsrattwl by it inold8ntel          to
      its eetlrltise       in the State."
              II. . . .

              Tfhe dealelona       of the Unit&    States Supraae
      Court are bFndine upon thie Ooctrt a114 definitely
      eetablleh,     (1) that 8 Federal Land Bank is an
      inetrumantality        oi the national   eovernncnt,    areated
      by Oongrtaes, aoti8g within         its oonetltutlanal     powers
      to pertom      8uthorlmd      governmen      funotlone,   aa4 (21
      that 8u8h bank 18 oonetltutlonall~           endowed with the
      eaae inaunity       frora etatA kx~tion,     that the national
      gorarnmnt      itself    weuht hate b a en  ladowed~rith,    if
      it had enmged in euah satirity           dlreatly.*
               I. . . .

            “Jh the Aot proHdfag for the eetabltehaent
      oi 1Cedrral Lead Beak8 (?e&oral Farm Loan Act)
      t&me Ia a alwx       intiootfon     that   ma1 eetetr *a-
        u&ad by a Federe:l Land Bank ln the oouree o?
      Pte operation8        wd+r th8 Aat eh8ll be eubJeot
      to taxationi       and thsro Is a epeolfla     doolarrtlon
      that    *otery Federal land bask . . . ln8ludlng           the
      capltel     end reeerve    or 8urpJ.w therein    and t&
      lnotxae d6rlrad therclrxom,       . . . flmt    kwrtgagee
      ersuutetl    to Federal. land benka, . . . an& fum
      loan bonds . . . end th6 laoom derlvwl thsre?rom
      ohall be exempt troa . . . State,           mwfOlpa1     aud
      lwal     taxation.'
              *It 18 reaeonstle  to amew      th8t rhsn GOn-
      grew eald that a etats     iol.ght not tax a Poderal
      Lend Bank, its oapital,    rewrve o? ewplw,        or
      the lncocue derived therefmsi,     or tiret  .~QY%W”ee
      sxecutsd   to ths Benk, or ?am loen bond8        or &-
      00x0 derived   therefro-r, it had in rnlnd &act       and
Honorable   Gsorga IL Sheppard,       pa&a 8


      dlsoemibls       tazcea, end that It did not have
      in mind taxes imy:osed upon arid oolleoted             rrom
      other persons with whom the Bmk might tram+
      eet buslnsue,      whtah night lndireatly        result
      In mme sllghht inoreaea in the operating               er-
      penees of the Bank.         The tox in question        here
      is not a fat upon a Fedora1 Iand Bank, or upan
      its Oadtal,       r eser ove   r lurplua     or the lno~sls
      derived    therefrom.     fIelther    14 it a tax upon
      mortgagee exaouted to such Rank, or upon farm
      loan bonda, a~ upon th6 inoom derlted               thera-
      tl-OS.   The tax i% ore upon a dealer la motor
      vehicle    fuel, who hne applied         for, and who haa
      barn granted,      a lbmsr        under the laws of this
      State, to engage In bnske#a as II dealer la
      aotor vehlole      fuel.
             The       tax involvrsd hrre Is a tax irnpocred
      on dealers       for t-56 privilege       of engaging In tha
      burlnem       of selling      motor vahiole      fuel,    and the
      amount ai the tax lo measured by the nuaher ot
       gallons     *used and sold’ by the dealer.               It 1s
      not a tax upon a Pederal Land &mk or upon any
       function     *hioh laoh Bati ie authorlaad              to per-
      iOtm.      It irr not a tax upm any ot the powera
      with which the Bank is vented.                The i&u& nay
      exsreias      every ftanatlon and feriorm           every rot
      that it wau orsated to 8xaarc ae en4 perform
      without cne cent of lte fuade belag expended or
      one sent of its prorita            be1n.g taken away hauau~s
      of this tax.         The tax oamot be laid directly
      upon    asp   aetlvity     0r the Bank     unlesr      it ansagem
      in business       aa a lieeared       dealer of lootor vrhlola
      fuel in this State,           aad the Bank was not Or8atad
      for the purpose of en(ga@9gln rash buainrso.
      ‘f7ha only Way In whleh the funds of the Bank iitrrp
      ba ~expended, even indtreotly,             ln the paymsnt of the
      tax will be if the Bank puroba8~                 motor v@hiola
      rue1 from a dealar wha lnoludee               the anowt       of the
      tar in the salea prlae.              But ii the operating        ex-
        onsea of the Bank are inorsaeaa              beoauae of the
      L npositi05      of the    tax up05 a dealer        Wan oboe the
      ~hnlr purchases        sotor   vehlcl4d fwl,      that    effect  la
      0~1~ inoldentel         nn& remote end cannot be aaid to
                                                                   ““Y




Honorable   George ii.Bhsppard, pge      9


      be a tax upon the Barik, Its oapital,     remwva
      or 6lurplus, or upon any of tho opsrationm     of
      the Benk.     %sry  tax laid upon l dealer will,
      of oourse,    to some extent be reilected   in
      the    rice whloh he ohargas for the co.moditp
      nhlo Ii he aella.
      =. . . .
               " . . . the Buprwnr Court of the Unite6
      State6 hen held that en ooonpatlcan tax m~asursa
      by &roam inown@, rhero Inpo8ed by 8 &ate            upon
      a aontraotor      with the Uhitad EJtates, I# mot
       intall     a m l tax apen the Taaerrl    Goveracat
      aad its oporatlonr, eta        UrorrQa the lqw~sItioa
      of the tax MT lntwoasr the 0-t          to the      V-a-
      Mate      Jamar t. EZOTOUontrqatlng       Co., 3r 2 I?. 8.
      ix,     160, 56 s. ut. 2~8, 62 L.~ Ed. 155, 172, u
      A* t. R. 318         atma  ** Johnurn, 282 a. 8. 509,
      51 8. Uc. 27 I , 75 L. Rd. 496, 75 A. L. R. 9.
             *. . . .

             The tax is geeoral qnd non4ircrrldaatory.
      Thr law lcapomr the sama llmnnre tax upon all
      motor  vehiole fuel mid by l UOU.W~ deeloa
      without regardto whom the puraheaormay bo.




             Tn this oem the doelet   (DoRoahfcsrd) ?Ixad
      the prioe whioh he charged for the gaaollar   that
      he mold to the Luxl I&nk wf# ths tax in ralnd,
      that is, Ln Siting  the priae hs added the abuut
I
lio,norable   George 11. Shepporti,
                                  paw      13


        absolut% immunity) the proposition    that,
        although the federal  tar map inoreese    ooot
        of state gov%xnm%nt%, it may be lmpossd      Lt
        It does not curt.aIl fun&Ions    s%o%ntIal to
        their sxI%t%no%. Expre%ol9 or lub oIl%ntIo,
        it orsrrulsa a a%ntury o? preaedento.(      304
        0. 8. at page 429, 430, 58 EL Ct. at pago
        980, 82 L. Fd. at peg% l&42.
               *aTha sw%%pJng ohang* of ooaotruotIon        of
        th% oonstltution’     , and’ th% applioatlon   o? the
        ooatrollIng    prlnolpler,     rnnounoed la Oh% deslo-
        Ione that deorasd suoh %h%ngo, 049~1 to 08 to
        leave. no subetantlal      baaia for th% iul% an-
        nouuoed In Panhandle Oil Company v, Mleolooip          1
        ex ml,    Knox. It o%%m%to u% rather that tha 4
        deoIoIon,   In effaat,     hse been overruled.
               1. . . q

                "ZZm Isposition       or the taz,Is     not an
       ereroise     or ari attempt to exismiee by ths o.tktcC.
       es any power *by taxation            or bt erwlae, tocr%-
       tara, impsde, bwdbn,           or In cuiy.,~pepnbl
                                                  P        oontrol
       the operation8       ot’ (4 Wheat. $t pages &2+437,
       4 L. Isa. at pages 607-609)           The Foboral Farm
       Loan Aaa. If regard *b% ha8 to rabatanas                and
       dlreat    effeoiys’,    and ‘m%rel9 th%orsti%al       eon-
       0egtlons     of iatt3rffmmab       rfbh tha tuno0fono     of
       i30~4m~iaent'    be lafd %%I&,%‘theq% Lo no wSilb:mt
       ground for holding that the d$$ct              upua the gorsrn-
       m4nt is other than ixidfreot           aniLrsm6tr2
       at pages 386, 387, 5S.S. ct. at               gee 62,,3w*si
       L. .Fid. at page 914.        Ths   Imp001 tp”on of the tut*upon
       a dealer for @aaollns mold by hfa to a Fedora1
       Land Ban&c *nsither.preoludm            nor thrsatans    unr%d-
       sonrbly to obatruot         any funotloa     e%e%ntl~al to th6
       eontimed      slfatenas’     a? the Bank.      ETsIth%r doe%
       It operste      to oontrol,     hlndlbr, or Impedo the Bank
       In lit;9 psrZormfmo6 of an9 ~e%r*la% that It *8%
       %at&blIIshed to psrform ror th* govwm3ntc                 If
       any of tha burdem oi the tax that I8 l.mpfkti upon
       the d%al%r indirectly         reaehee the Land Bank that
Honorable   George Ji. Sheppard,     pags   15


       and consequently       reduce that government’s
       revenues    to a proportionate       extent.    ThlS
      view is in harmony with the oases herein-
      abovs ofted which reaognlze          and define     the
       inherent    ltitations      or the ,dootrine of
       iamuIl~ty,    and r0ii0ws    the pronouno4m4nts
       OF the Supreme aourt of the Unltad States
      la its more reoent decisions           formulating     It4 oon-
      .oluslons    on the epplloebllity        of the prlnolplo
      anU Its limitations        In relation     to other taxing
                       James P. Dravo Contraotlng        Go. 302
      %.Ut:;i          58 S Ct 206 211 82 L Ed i55
      14 A. L, ‘R. ,G, r~ir0Ga ingsilae’Mas&                  co: ‘
      3no*, v, Tax Commlselon..of Washington,             302 0. 9.
      186, 58 S. Ct. 233, 82 L. Ed. ‘187, and Atkinson
      vr Stat4 Tax Commlssfon or Oregon, 393 U. S. 20,
      jta.     Ct. Q9, 82 La Ed. 321, Jan. 31, 1938.
              “We are awar that statements        *oh     night
      be said to support a oontrary 4oaolaelon           have
      b44n +ade in the oases of Panhandle Oil Co. v.
      Misalsalppl     ex rrl. Wnox, 277 0. 8. 218, 48
      S; Ot. 151, 72 L. Ed. 857, 56 A. Lv R. 583,
      fadian Motooyol4 Co. v. Unltail SOates,         283 0. 8.
      570, ‘51, 0. Ot. 601, 75 L, Etli 1277, and Graves
      v. Texas Uo., 298 U. 9. 393, 56 S.-t%.          818, ‘80
      L. IL 1236.       Those oas*a involved,     respeotlvely,
      alar    or )d[issisaippi imposing    an exoia4 tax 0r
      one o4nt par gallon upon the sale of gaaollne,
      a statutr    of Maasaohueetts   Z4vging an exoisa
      tax on sales and a gasoline       tax aot of Alabama.
              *In the ease of Je~31esv. Dravo (Iontraating
      oompsny, supra, the oourt had beroro it ror oon-
      sldaration   the Gross Sales and Inoome Tax Law of’
      Weat Virginia,   Code W. va. 1931, ‘11-13-l 8t sap.,
      as amended dots 1933, let Ex. Seas.,     o. 33, whfoh
      provided   ror annual privilege  taxes on ao~oount or
      ~bueFnae4 and other activities.’      ~That law imposed
      upon the oontraotlng   oompanr a tax equal tom 2 per
      cent. or the grost inoome from Its bueinees.        The
                                                                                312




Honorable   George H. Sheppard,       page 17


      and further     that theretofore        thoee oame
      had been distlngulehsd         and must be deeaed
      limited   to their partloular        islots.   Notwith-
       standing   the holdlnge      or exprearsious     in the
      oases distinguishad,        it must here be eonolud~
      tbnt a proper OOllStrQctiOnof the Ratail                Sales
      Pax Aot of Callrornla         18 that tha tax IS not ill
      the rale,    but rather that it 1s a tax in the sama
      aategory aa property and oxoise taxes payable by
      an lndapsndent      oontraator     engaged in the buslneaa
      of retail    sales whlah, although they am reileotad
      in the higher aost of the produot or oommditg
      offarad,   must be aonsidered         msralp as a neoessary
      expense of aonduotlng the business.               St is a tax
      oouiputsd on the gross rscelpt,s frwn thp~:oonduct
      of the. bnsinesa     at the retail       merahiquti,:, Eaaan-
      tially,   as intimated     fn Metaa1.i k E$‘dp v, Mitchell,
      supZa there does not appear to be ruiy sound basis                  for
      a di&otlon        beoaans the reosiptr         affording      the
      nieasure of the fax are derlred from thr rstafl
      business   oonduoted by an indspendent            ocrlltraator
      or aerohemt,     rather than from tbo nrle of 8ervlo68,
      where otherwiee       the larpblrltioa %r nonriienrkmlnat~y.
      Clearly the icnpo8ltion Of a prirllage         tax an the
      retailer    of ooaooditlslr    doe8 not Intartar      with the
      pewer of the garernamt        to borrowmoney; nor doas it
      aiteot    in any eubstautlal      siannor ths eftiolanoy     aI
      itrr agenog in the psrtomumae          of Its dutielr, nor
      the ability     of the persona taxed to dlsoharge         their
      oontraotual      obligations    to the gooarnmant,    nor the
      ability    of’ t+he government to proomre the sqloes
      of private     individuals    to aid theat la their under-
      talringa*
               Tollowlng     the path pointed by tha oourt in
      thr Dravo Case, uu conolude that the tax on the
      retailer     unds~ the Rata11 Sales T!ax Aot Of this
      stata lmposad on the basis          of a return   whiah in-
      alludes receipts      dsrlred  from salea of tangible
      personal     property to ths bank, a fe4dsral instru-
      mantallty,     doas nat unduly burden the Saileral
      government nor intsrfere         with the axarOi60 Ol’ th6
      governmental      t unotiona Alelagated    to ita instruman-
      tality,    and was therefore      Yalidly   ilapoSa.”
                                                                  314




Haaornbl~Gborgo p..Shwpatd, pa@* 19


not in tact the *purahars?’
                          within  &ha meaal~ of thr tex
stntute.w Soo l&C A. L. R. 621 itw a! uxod.leclt Mnotatioa.
           In rlar or the above la 8h o r rro
                                          ity,lr* o? #a.
opinionthat you carisot1y8dVti6d;loalcr
                                      3x08. CO. that it
ra6 liableimp the tax. ‘84am further ot tha o&ion tk8t
the Comptrol~et c?ensrel~a 4edlalon is nrrt arpllanblo   to thd
tads involved tn your o~lnioa nqaert.
            Ruimag    thst   the above fully
