         THE     ATTORNEY            GENERAL
                      OF    TEXAS




Hon. Geo. H. Sheppard
Comptrollerof Public Accounts
Austin, Texas
Dear Mr. Sheppard:         Opinion No. O-5214
                           Re: Liablility of Defense Supplies
                                Corporation for tax imposed upon
                                the use of motor fuel in Texas
                                by Chapter 184, Article XVII,'
                                Acts 1941, 47th Legislature, and
                                related questions.
        In your letter of April 10, 1943, you submit the fol-
lowing facts:
         "The Defense Supplies Corporation, a sub-
    sidiary of the Reconstruction Finance Corporation
    created pursuant to the provisions of Section 5(d)
    of the Reconstruction Finance Corporation Act, as
    amended , for the purpose of aiding the Government
    in Its National Defense Program has entered into
    contract with the Shell Oil Company and various
    other major refiners of motor fuel to purchase
    their output of high octane aviation gasoline which
    said purchases. . . .are made In order to assure
    that the United States Government will have suf-
    ficient supplies of such aviation gasoline to serve
    the Army, Navy and lease-land requirements.
        "The Defense Supplies Corporation after ac-
    quiring the motor fuel or title thereto will fol-
    low a planned program of distributing the gasoline
    in a manner that will best serve the war efforts.
    Part of the gasoline will be sold and dellvered by
    the Defense Supplies Corporation to the Army and
    Navy, part to fill lease-land requirements and part
    will be resold to Texas distributors to fulfill
    their contracts with the Army, Navy and commercial
    aviation companies.
        Under the above factual conditions, the Texas dlstri-
butors have asked: (1) may they sell aviation gasoline tax-
free to the Defense Supplies Corporation? and (2) may they
repurchase such part of the gasoline as is allotted to them
from the Defense Supplies Corporation without paying the State
Hon. Geo. H. Sheppard, page 2             O-5214


tax?
        Apparently the Defense Supplies Corporation was author-
ized under Section 606b, 15 U. S. C. A., and created "In order
to aid the Government of the United States in its national de-
fense program. . .'~ It is a Federal agency, or instrumental-
ity.
        Section 610, 15 U. S. C. A., expressly exempts such
corporation from taxation, including sales, use, storage, and
purchase taxes.
        The legal incidence of our motor fuel tax is upon the
ultimate user or consumer of the motor fuel for the propulsion
of motor vehicles upon the highways of the State of Texas, and
nbtupon the seller or vendor of motor fuel. Article 7065b-2
(a), V. A. C. S.
        Since this is a federal instrumentality, performing a
federal function in insuring an adequate supply of high octane
gasoline to aid the war effort, not using but storing gaso-
line, and expressly exempt from State taxation, we are of the
opinion that both of your questions should be answered in the
affirmatlve.
        Nothing hereln should be construed as holding, however,
that motor fuel purchased from the Defense Supplies Corpora-
tion and subsequently sold or used by a "distributor" is tax
exempt.
                                 Yours    very truly
                                ATTORNEY GENERAL OF TEXAS

                                 By s/Thos. B. Duggan, Jr.
                                      Thos. B. Duggan, ~JP.
                                                Assistant
TBD:AMM:wc

APPROVED APRIL 28, 1943
s/Gerald C. Mann
ATTORNEY GENERAL OF TEXAS
Approved Opinion Committee By s/Bm       Chairman
