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                   T~EAYTORNEY                              GENERAL
                                     OFTEXAS                            ~--."".l..-L
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                                          January     20,   1953.

       Hon. Robert S. Calvert                   Opinion      No. S-02
       Comptroller   of Public Accounts
       Austin, Texas                            Re:     Legality    of refunding
                                                                               mo-
                                                        tor fuel tan payments   to
                                                        persons supplying sand,
                                                        gravel, and ready mixed
                                                        concrete to highway con-
                                                        struction contractors,   in
                                                        reconsideration   of Opinion
       Dear     Mr. Calvert:                            No. V-1496.

                     Your     request for .a reconsideration        of Opinion No.
       V-1496     (1952)    reads in part as follows:

                       “On August 7, 1952, you rendered the above
              numbered opinion in response to our request re-
              garding the legality of refunding motor fuel taxes
              to,, persons supplying sand, gravel and ready mixed
              concrete to highway construction    contractors  who
              are paid for such construction   and maintenance
              work from State funds to which motor fuel tax col-
              lections are allocated.     ‘,

                     “For ready reference    we quoted from Section
              13(b), Article  7065b, Vernon’s  Annotated Civil’Stat-
              utes, as follows:

                          ‘Provided,  however, no tax refund shall
                     be paid to any person on motor fuel used in
                     any construction    or maintenance    work which
                      is paid for from any State funds to which mo-
                     tor fuel tan collectionsare   .allocated or which
                      is paid jointly from any such State funds and
                     Federal funds.’

                      “After a rather comprehensive       survey  and analy-
              sis of the business operations      of persons engaged in
              the business    of processing   sand and gravel and ready
              mixed concrete, we are forced to the conclusion         that
              the facts submitted to you in our original request were
              somewhat inconsistent       with the factual conditions that
              actually exist.
Hon. Robert   S. Calvert,   page 2 (S-02)




           “We shall, therefore,   appreciate it if you
    till reconsider   the opinion request in connection
    with the following fact conditions which we have
    now found to exist generally.

            “--1.    Persons  engaged in sand and gravel
    and in ready mired concrete business        usually
     process    large stock piles of crushed rock, gravel
    and sand as their stock in trade, which materials
    ares thereafter    sold and offered for sale in their
    natural state or mixed according to specifications
     in any quantities desired to the general public for
     use in the construction    of buildings, foundations,
    dams, terraces,,floorings,       sidewalks, streets,
     roads and highways.

            “The refund motor fuel consumed in machin-
     ery and equipment used in crushing, screening,
     mixing, moving and handling such materials    off
     the highway is generally  consumed before the
     materials  are sold and as a rule refund claims
     are filed before the materials  are sold.

             “The processors    of such materials  usually
     sell a part of such materials     ranging from small
     quantities to a substantial part of their output, to
     contractors   who purchase and use the materials      in
     constructing   and maintaining highway projects in
     which the contractors    are paid for such work from
     State funds to which motor fuel tax collections     are
     allocated,  but in our survey we were unable to find
     any case in which the sand, gravel and concrete
     suppliers   participated  in the actual construction
     work, They merely sell and deliver the materials
     and dump it at the places on the highway project         :
     designated by the contractors.

             “Prior to your opinion this department had
     paid tax refunds to sand, gravel and ready mixed
     concrete suppliers on motor fuel used off’the high-
     way in the processing,     mixing and handling of such
     materials    on the premise   that such suppliers are
     merely sellers    of the materials    and that motor
     ~fuel used%r processing     materials   to be wereafter
     sold or delivered    to highway contractors    for use
     in construction-and    maintenance work by said con-
     tractors would not constitute use of motor fuel in
     construction    and maintenance work as contemplated
     by the law.
.
    Hon. Robert   S. Calvert,   page 3 (S-02)




               “--2. The only exception to the methods of
        supplying materials  from stockpiles, as described
        above is as follows:

                “On some rare occasions     a contractor  en-
        gaged in the construction    of highway projects paid
        for from State funds containing motor fuel tax col-
        lections will lease gravel pits or deposits from
        land owners, and will thereafter     contract with a
        rock and gravel processor      to move his rock crush-
        ing and loading machinery     to the pit to crush and
        load such products.    In this case the rock and gravel
        processor   does not sell the product to the highway
        contractor,   he merely crushes and prepares      the
        rock and gravel for the contractor     for which he is
        paid a fixed price pvgquare       yard of crushed rock
        and gravel prepared.     The only claim filed under
        these circumstances     is being held in suspense
        pending your study of the question.

                “Will you please advise this department whether
         or not, under the new and corrected set of facts sub-
         mitted herein, the Comptroller   may pay tax refunds on
         motor fuel used off the’highway in processing    rock,
         sand,and gravel and ready mixed concrete which is
         thereafter  sold and delivered by the processors   to
         highway contractors   who pay them for the materials
         so purchased out of funds received by the contractor
        from State funds to which motor fuel tax collections
         have been allocated?

                “Will you likewise advise us whether the Comp-
         troller is precluded by law from paying a tax refund
         to a rock and gravel crusher who is paid by a high-
         way contractor    on a yardage basis for crushing rock
         and gravel for him to be used by said contractor     in
         the construction    of a highway project for which the
         contractor   is paid out of a state fund to which motor
         fuel tax collections   are allocated?  ”

                It is our opinion under the facts presented herein that
    processors    using motor fuel in processing    and delivering  rock,
    gravel, sand and ready mixed concrete to highway contractors
    and rock and gravel crushers    paid on a yardage basis by highway
    contractors    are engaged in preparing.   selling  and furnishing
    materials   and are not engaged in construction    or maintenance
                                                                           1   .




Hon. Robert   S. Calvert,   page 4 (S-02)




work within the meaning of Section 13 (b) of Article   7065b. V.C.S.
You are therefore  respectfully,advised,that  such processors    and
rock crushers  are entitled to a refund of the tax on motor fuel
used or consumed in such operationsprovided      that the require-
ments of the refund section are met.

            It should be,pointed out that a claimant for a tax re-
fund has the burden of satisfactorily     showing that the motorfuel
was not used by him in highway constr.uction or maintenance
work as a contractor     or subcontractor   while. fulfilling or carry-
ing out a highway construction     contract within the provisions     of
Section 13 (b) of Article   7065b.  Att’y Gen. Op. V-1379 (1951).

           Attorney General’s   Opinion V-1496 (1952), is recon-
sidered in view of the additiondi facts submitted and is hereby
modified to conform to the holding in this opinion.

                             SUMMARY

            Persons  using motor fuel in processing     and
     furnishing sand, gravel and ready mixed concrete
     to highway contractors   and rock and gravel crushers
     paid on a yardage basis’by    highway contractors    are
     not engaged in construction    or maintenance   work
     under the provisions   of Section 13 (b) of Article
     7065b. V.C.S.,  and are entitled to a refund oft the
     motor fuel taxes.   Att’y Gem Op. V-1496 (1952) re-
     considered, and modified.

                                         Yours,very   truly,’      ~:

                                    JOHN BEN SHKPPERD
APPROVED:                              Attorney General ‘,

C. K. Richards
Reviewing Assistant
                                    By     A?++-=+
Robert S. Trotti                         W. V. Geppert          .:‘.
First Assistant                                    Assistant


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