Honorable Robert S. Calvert        Opinion No. C- 47
Comptroller of Public Accounts
Capitol Station                    Re: Under the submitted
Austin, Texaa                          facts, whether the
                                       Qross Receipts Tax
                                       provided for by Arti-
                                       cle 11.03, Taxatlon-
                                       General, Is due by
                                       the stated corpora-
Dear Sir:                              tlons.
        This Is In answer to your request for an opinion con-
cerning the above subject matter and in connection therewith
you have given us the following facts:
            "Qross Receipts Tax audits have been
            made of the records of Caruth Corpora-
            tion and Hillside Corporation,both of
            Dallas, Texas. Caruth Corporation owns
            and operates the Inwood Shopping Village,
            Dallas, Texas, and Hillside Corporation
            owns and operates Hillside Shopping Cen-
            ter in Dallas, Texas.
            "Caruth Corporationpurchases electri-
            city from Eellas Power and Light Com-
            pany, gas from Lone Star Gas Company,
            and water from the Dallas City Water
            Works, and resells same to Its tenants
            in the shopping center through lndl-
            vldual meters and at a profit.
            "HIllside Corporationpurchases electri-
            city from Dallas Power and Light Company
            and resells same through individual
            meters to Its tenants In the shopping
            center at a profit.
            "The Gross Receipts Tax is paid by Lellas
            Power and Light Company, and by Lone Star
            Gas Company, based on their charge to the
            corporations.


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Honorable Robert S. Calvert, Page 2 (No. C47)


           'The Dallas City Water Works, being munl-
           clpally owned, Is not required to pay
           Qross Receipts Tax."
                 "The'HillsideCorporation
           "Sells electricity only
           (1) E,',';sPower & Light owns Master
           (2) Hillside Corporationowns trans-
               mission lines from master meter to
               tenant's store.
           (3) Hillside Corporationowns meter at
               tenant's store.
           (4) Hillside Corporationserves approxl-
               mately 30 tenants.
              "Caruth Corporation (InwoodVillage)
           "Sells gas, electricity,and water to
           tenants.
           Lone Star Gas, Dallas Power & Light and
           Dallas City Water Works owns Master Meter
           at Caruth Corp. property line.
           (1) Caruth Corporationowns all laterals
                and lines which furnish utilities to
                tenants.
           (2) Caruth Corporationowns all meters at
                tenant's store.
           (3) Caruth Corporation serves approxi-
                mately 40 tenants or customers."
        The question to be determined Is whether or not the
business or operation conducted here constitutesa gas,
electric light, electric power, or water works, located
within any incorporatedtown or city In this State, and
used for local sale and distributionIn said town or city,
as provided by Article~l1.03,Title 122A, Taxation-General,
Vernon's Civil Statutes,the pertinent part of which reads
as follows:
              "(1) Each Individual,company, corpora-
           tion, or associationowning, operating,
           managing or controllingany gas, electric
           light, electric power, or water works, or
           water and light plant, located within any
           incorporatedtown or city In this State,
           and used for local sale and distribution
           in said town or city, and charging for
           such gas, electric lights, electric

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Honorable Robert S.,Calvert,Page 3 (No. C-47)


          power, or water, shall make quarterly,
          on the first day of January, April,
          July, and October of each year, a
          report to the ~Comptrollerunder oath
          of the individual,or of the president,
          treasurer or superintendentof such
          company, or corporation,or assocla-
          tlon, showing the gross amount received
          from such business done In each such
          Incorporatedcity or town within this
          State In the payment of charges for
          such gas, electric lights, electric
          power,,or water for the quarter next
          preceding. Said Individual,company,
          corporation,or association,at the
          time of making said report for any
          such incorporatedtown or tit of
          more than one thousand (1,000T inhabl-
          tants and less than two thousand, five
          hundred (2,500) inhabitants,according
          to the last Federal census next pre-
          ceding the filing of said report,
          shall pay to the Treasurer of this
          State an occupationtax for the
          quarter beginning on said date equal
          to .581$ of said gross receipts, as
          shown by said report; and for any lncor-
          porated town or city of more than two
          thousand, five hundred (2,500) lnhabl-
          tants and less than ten thousand (10,000)
          inhabitants,according to the last Fede-
          ral census next preceding the filing of
          said report, the said individual, com-
          pany, corporation,or associationat
          the time of making said report shall
          pay to the heasurer of this State an
          occupation tax for the quarter begin-
          ning on said date an amount equal to
          1.07% of said gross receipts, as shown
          by said report; and for any Incorporated
          town or city of ten thousand (10,000)
          Inhabitants or more, according to the
          last Federal census next preceding the
          filing of said report, the said individual,
          company, corporation,or association,at
          the time of making said report, shall
          pay to the Treasurer of this State an
          occupation tax for the quarter beginning
          on said date an amount equal to 1.997%
          of said gross receipts,as shown by said
          report. Nothing herein.shallapply to
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Honorable Robert S. Calvert, Page 4 (No. C-47)


          any such gas, electric light, power or
          water works, or water and light plant,
          within this State, owned and operated
          by any city or town, nor to any county
          or water ~lmprovementor conservation
          district.
             "(2) Nothing herein shall be con-
          strued to require payment of the tax
          on gross receipts herein levied more
          than once on the same commodity,and
          where the commodity Is produced by
          one individual, company, corporation,
          or association,and distributed by
          another, the tax shall be paid by
          the distributor alone,"
        The Supreme Court In Eddlns-WalcherButane Co. v.
Calvert, 156 Tex. 587, 298 S.W.2d 93 (1957) Art. 7060
V.C.S. (now codified as Art. 11.03. Title 62A. Taxa&-
General; V.C.S.), was held not to-apply to numerous sales
of butane gas which was stored in two storage tanks within
the town and was transferredby truck from the place of
storage to the tanks of the consumers In and around town.
       The Court in its opinion defined "gas works" In the
following words:
                     We hold, therefore, that the
           term'lgas works' means either: (1) an
           establishmentIn which gas is manufactured,
           produced or processed, or (2) a dlstribu-
           tlon system consistingof pipes through
           which the gas flows and is delivered to
           the premises of consumers. This con-
           struction gives effect to the leglsla-
           tive Intent as revealed by the language
           of the entire statute."
        In your opinion request you have stated that the
Caruth Corporation,which owns and operates the Inwood Shop-
ping Village located in the city limits of Dallas, purchases
electricity from Dallas Power & Light Company, gas from Lone
Star Gas Company, and water from the Eallas City Water Works,
and resells same to Its tenants in the shopping center through
Individual meters and at a profit. It Is further stated that
Caruth Corporationowns the pipe lines and electric wires or
cables used for delivering electricity,gas and water from
the master meter where the utilities are received by Caruth
Corporationto the premises of the tenants where the utllltles

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Honorable Robert S. Calvert, Page ~5 (No. C47)


are dellvered.tothe-.:oonsumer. ThIsoperatIon seems to meet
all the requirementsnecessary to c~onstltute gas, electric
light, electric power and water works ae defined by the
Supreme Court of Texas In the case above cited.
        Hillside Corporationpurchases electricity from Dallas
Power & Light Company and.resells same through Its individual
electric,cables and meters to Its tenants In the shopping cen-
ter at a profit. This corporatlontsmethod of operation appears
to constitutean electric light or electricpower works and It
Is therefore cur opinion ~thatboth of these corporations are
operating In a manner so as to be subject to the gross receipts
taxes levied by Chapter 11, Title 122A, Taxation-General,V.C.S.
        It Is provided by Article ,11.03,above quoted, that It
shall not be construed to require payment of the tax more than
once on the same commodity.
        You have stated that electricityIs purchased from
Lellas Power & Light Company and the gas Is purchased from
Lone Star Gas Company, both of which pay the gross receipts
tax provided above on the amount of money for which they sell
the electricityand gas to the two corporationshere Involved.
In this case the two corporationswhich are reselling the
utilities at a profit would owe the tax on the money received
for sale of the products which is in excess of the purchase
price paid by the two corporations. Caruth Corporationpur-
chases water from the Dallas City Water Works which Is munl-
clpally owned and no gross receipts tax is paid by the city
on water sold to Caruth Corporationbecause the statute pro-
vides that this tax shall not apply to city-ownedwater plants.
When the private corporationpurchases water from the city and
resells the water as in this case, then the water Is subject
to the tax for the entire amount of the sale price received
by Caruth Corporation.


                       SUMMARY

                Under the stated facts the Caruth
        Corporationis operating gas, electric light,
        power and water works within the meaning of
        Chapter 11, Title 122A, Taxation-General,
        V.C.S., and is subject to the gross receipts
        taxes provided therein.
               Under the facts stated the Hillside
        CorporationIs operating an electric light

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Honorable Robert S. Calvert, Page 6 (No. C-47)


         works within the meaning of said Chapter 11
         and is subject to the gross receipts taxes
         therein levied.
                             Yours very truly,
                             WAGGONER CARR
                             Attorney General of Texas




JRB:pw
APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
Cecil Rotsch
Robert Lewis
Joe Long
Marietta Payne
APPROVED FORTHEATTORNEY GENERAL
By: Stanton Stone




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