                                  October   20,   1955


      Hon. Robert S. Calvert                Opinion      No. S-178
      Comptroller   of Pubiic Accounts
      State of Texas                        Re:   Interpretation of Chapter
      Austin, Texas                               522, Acts of the 54th Legis-
                                                  lature, 1955, levying excise
                                                  taxes and requiring permits
                                                  in connection with the sale
      Dear Mr.   Calvert:                         of radios and television  sets.

                 You have directed our attention to House Bill No. 630
      (Ch. 522, Acts 54th Leg., R.S., 1955, p. 1607). stating that your de-
      partment is having difficulty in interpreting Sections l(e) and 2(a),
      and have submitted to us for our opinion the following questions:

                 “Will a Distributor   be required to qualify as a
            Retailer and be liable for the tax herein provided
            for a Retailer  if said Distributor  shall sell a radio
            or television  set to any person not, holding a valid
            permit as required by this Act?

                  “Section 2(a) provides:   ‘that the tax imposed
            herein shall not apply to radios installed in new mo-
            tor vehicles    upon which a tax imposed by Chapter
            184, Article VI, Acts of the Regular Session of the
            Forty-Seventh     Legislature, as amended, has been
            paid or is required to be paid.’ Will this tax app!y
            to Radios sold to be installed in New Cars or Used
  r         Cars?      Will Car Dealers be required to secure a
 .          retailer’s    permit?
i
                  “A concern manufactures    and sells a bicycle
            with a radio attached.   This bicycle and radto are
            sold as a single unit. Would this sale be taxable?
            If so, would the tax be based on the value of the
            radio or on the total value of the sale? ”

                 Section    l(e) of H. B. No. 630 reads       as follows:

                 ” ‘Distributor’ shall mean and include every
            person other than a retailer who engages in the
Hon. Robert    S. Calvert,   Rage 2   (Opinion No. S-178)



       business of distributing    or selling radios and/or
       television sets within this State.     If any distributor
       shall sell, use or distribute a radio or television
       set as a gift, award or reward to any personnot
       holding a valid permit as required by this Act,
       said distributor   shall qualify as a retailer arid be
       liable for and shall be requ’ired to pay over to the
       State of Texas, at the time ‘and%in the manner here-
       in provided for a retailer,    the tax on such radio
       and television   set.”                                          .’


             A careful reading of this section gives the interprTetati&
that the words “gift, award or reward” limit or restrict       the mean-.
jng of the word “sell” to apply only where the sale was made for
the purpose of a gift, award or reward.      Therefore,  it is our opin-
 ion that% distributor  who sells, uses or distributes   a radio or
te~levision set to any person not holding a retailer’s   permit for use
as a ~glft, award or reward, and not for resak,     must qualify as a
retailer and be liable for the tax thereon, but s\rchTrequirement
does not apply in the case of a distributor    who sells to any person
for the purpose of resale.

              Chapter 184, Article VI, Acts of the Regular Session of
th   47th. Legislature,    as amended, has been codified as Article
 704R.    Vernon’s   Civil  Statutes.   Section la of Article   7047k pro-
vides for a tax upon every retail sale of every motor vehicle sold
in this State,    such ta% to be equal to 1.1 percent of the total,con-
sideration    paid or to be paid to the seller by the buyer, which con-
sideration shall include the amount paid or to be paid for said
motor vehicle and all accessories,          iuhicb would include radios,
attached thereto at the time of sale.          Section 2a of H. 8. 630 ex-
empta from taxation radios installed ln new cars on which a motor
vehicle retail sales tax has been OF is required          to be paid. It is
our opinion that the tax levied under H. B. 630 applies to retail
Saks of uninstalled car radios which are sold for installation           in
a’motor vehicle aft er the time of the first retail sale of the vehi-
cle.   It is our further opinion that car dealers who make such
retail   sales of car radios will be required to secure a retailer’s
permit under the provisions         of Section 5(a) of H. B. 630.

            You point out that a concern is manufacturing   a bicycle
with a radio attached and that the bicycle and radio are sold as a
single unit. It is our opinion that the value of the radio separate
and apart from the value of the bicycle should be ascertained     and
the tax provided for in H. 8. 630 should be levied on the ascer-
tained value of the radio alone.
Bon. Robert    S. Calvert,   page 3   (Opinion NO. 8-178)
                                                                1



                                SUMMARY
                                                             ..
              A distributor  who seils, uses or distributes   a
        radio or television   set to any person not holding a
        retailer’s   permit for use ‘asa gift, award or reward,
        and not for resale,   must qualify as a retailer and be
        luble for the tax thereon, but such’requirement
        does not apply in the case of a distributor    who sell,
        to any person for the purpose of resale.     B. B. 630,
         Ch. 522, Acts 54th Leg., R.S.‘, 1955, p. 1607.

             ~The tax levied under the provisions     of H. B. 630
        applies to retail sales of uninstalled car radios which
        are sold for installation  in a motor vehicle after the
        time of the first retail sale of the vehicle.    scar dealers
        who make such retail sales of car radios will be re-
        quired to secure a .retailer’s  permit under the provi-
        sions of Section 5(a) of H. .B. 650.~

             The tax-levied by H. B. 630 would,apply                only to
        the value of the radio attached to a bicycle,

   I’
                                       Yours    very   truly,
APPROVED:
                                       JOHN BEN S,+PPERD
L. P. Lollar
Taxation Division

Mary K. Wall
Reviewer                                       L. W. Gray
                                               Assistant
William W. Guild
Reviewer

‘Davis Grant
.Special Reviewer

Will D. Davfs
Special Reviewer

Robert S. Trotti
First Assistant

John Ben Shepperd
Attorney General
