                 A                   EiWERAL.




Honorable Robert S. Calvert    Opinion No. M-141
Comptroller of Public Accounts
State Capitol                  Re: Whether under Article 6.03,
Austin, Texas 78711                 Section B, Taxation-General,
                                    V.C.S., a car dealer loses
                                    his right to tax exemption
                                    when he uses a vehicle for
                                    other than "demonstration"
                                    purposes to a specific
                                    prospective customer and
                                    related question concern-
                                    ing definition of "demon-
Dear Mr. Calvert:                   stration."
       You have requested an opinion from this office regarding
the above captioned matter and a related question.
       The facts which you have furnished are quoted below,
in part:
         "Attorney General's Opinions wW-338 and
         WW-390 serve to support this Department's
         determination that while motor vehicles
         used by automobile agencies solely for
         the purpose of demonstration should be
         exempt from the Motor Vehicle Sales and
         Use Tax, we do not believe that this
         exemption can be legally extended to
         include vehicles that are used for any
         other purposes. It is our thought that
         the tax is due to be paid on any vehicle
         that the automobile dealer, any member
         of his family or any of his employees may
         use for any other reason whether it be
         for personal or business reasons. It
         has come to our attention that many
         dealers operate motor vehicles, bearing
         dealer licenses, in the same manner as
         the average citizen would operate his



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Honorable Robert S. Calvert, Page 2 (M-141)


          personal family car. Are we correct
          in assuming that the dealer loses his
          right to the exemption for the Motor
          Vehicle Sales and Use Tax when the vehi-
          cles are used for any other purpose
          than to demonstrate it to a specific
          prospective customer? We frequently
          find cases of where a dealer will
          operate several automobiles on dealer
          licenses and will allow all members
          of his family to use these vehicles
          with no restrictions of any kind. The
          dealer's wife may drive one vehicle in
          her shopping and to her clubs, and
          cases have been known where his chil-
          dren will drive other tax exempt vehi-
          cles to out of town colleges. We
          request that you give us a clear-cut
          definition of the word 'demonstration'
          as it applies to automobile dealers,
          and inform us of the extent of the
          rights of both the automobile dealers,
          and the State of Texas, with respect
          to a tax exemption based on the 'demon-
          strator' status of the motor vehicle."
       The pertinent provisions which govern these matters
read as follows:
      Article 6.01(1.)which imposes the tax states:
         "There is hereby levied a tax upon
         every retail sale of every motor
         vehicle sold in this State, such tax
         to be equal to two per cent (2%) of
         the total consideration paid or,!to
         be paid for said motor vehicle.
      Article 6.03, Section (B) states:
         "Retail Sale. The term 'retail sale'
         as herein used shall include all sales
         of motor vehicles except those whereby
         the purchaser acquires a motor vehicle
         for the exclusive purpose of resale and
         not for use." [Emphasis added,)



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        We hold that these articles are clear, unamibiguous and
not subject to construction. Thus contrary opinions of the
Attorney General and departmental constructions must yield.
Calvert v. Thompson, 339 S.W.2d 685 (Tex.Civ.App. 1960, error
ref.)    A revenue law is to be liberally construed to effec-
tuate'the expressed legislative intent and objective of the
law and to promote justice if it be subject to any interpre-
tation. 54 Tex.Jur.2d 165-166,   Taxation, $ 41; Article 1.01,
Taxation-General; Article 10, subdivision 8, V.C.S. When the
statute is subject to construction and the question is one of
exemption from taxation, the law is construed liberally in
favor of the taxing authority and strictly against the taxpayer.
Where the question is whether the person on whom the tax is
sought to be imposed comes within the statutory provision impos-
ing the tax, the statute must be construed strictly against the
taxing authority and liberally in favor of the taxpayer. Texas
Unemployment Compensation Commission v. Bass, 137 Tex. 1, 151
 .W .2d 5b7 (19411   However, since the statute is clear, it is
not subject to construction and rules of statutory construction
need not be employed.
       Article 6.01 levies a tax on “every retail sale" of
motor vehicles. Article 6.03 defines "retail sale" as all
sales except where the purchaser acquires a vehicle for the
exclusive purpose of resale and not for use. The transaction
between the manufacturer and the dealer is unquestionably a
sale. Article 6.03(A). The question is therefore whether
vehicles in the hands of a dealer were acquired for the exclu-
sive purpose of resale and not for use. The answer must lie
in the facts involved, i.e., what the dealer does with vehicles
acquired from the manufacturer and whether these facts are
consistent with having acquired the vehicle for the sole pur-
pose of reselling it. Based on the facts known to us, we
conclude:

          1.   If the vehicle is acquired to be used as
               a demonstrator to sell other vehicles, it
               was acquired for use, i.e., to sell other
               vehicles and is taxable. (Attorney General
               Opinions Nos. O-3742 and WW-338.)

         2.    Vehicles purchased as service or work vehi-
               cles or for other use in the business are
               acquired for use and are taxable.




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Honorable Robert S. Calvert, Page 4 (M-141)


          3.   A fortiori, vehicles purchased for
               i&e by dealers, their families or
               employees as personal automobiles
               are taxable.
         4.    If a vehicle is acquired for the
               exclusive purpose of resale and is
               driven by a prospective purchaser
               with the idea of buying that vehicle
               there is no tax. The fact that the
               prospect ends up purchasing another
               vehicle from the inventory of the
               dealer, or orders a vehicle from the
               manufacturer, not in inventory, would
               not alter the result.

         5.    Similarly, a vehicle acquired for the
               exclusive purpose of resale may be
               driven by a dealer or his employees
               in connection with an attempted sale
               to a particular prospect and there
               is no tax.
         6.    Some incidental personal or business
               use of a vehicle in the status mentioned
               in 4 or 5 above would not change the tax
               status, as in this circumstance the rule
               of de minimis would apply. However, any
               extensive personal or business use will
               cause the tax to be payable. This would
               include salesmen working strictly on a
               commission basis. Attorney General
               Opinion WW-390 is overruled to the extent
               of any conflict with the holding herein.
       All of the above situations necessarily turn on the
facts involved. Many varied fact situations will be faced
and there are practical limitations on the acquisition of
complete facts involving any one vehicle. Thus you may deter-
mine that enactment of regulations under Article 6.04 will
best provide certainty in the minds of both the taxpayers and
the tax collectors as to when a tax is due and permit its
efficient collection. Also, in response to your request for
a definition of "demonstration" or "demonstrator," we should
point out that these terms do not appear in the statute and




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Honorable Robert S. Calve&,      Page 5 (M-141)


have no legal significance except insofar as they indicate
the facts involved in a particular situation. To the extent
that these terms are employed in this area they should be
given their common ordinary meaning attributed to them in
the trade. Being terms in common use, they should be read
according to their natural ordinary and proper meaning unless
a contrary intention is clearly apparent from the context or
there is some necessit.yin a particular case for adopting a
particular construction. Board of Insurance Commissioners v.
Duncan, 174 S.W.2d 326, 328(Tex.Civ.App. 1943, error ref.).
       A demonstrator is commonly understood to be a motor
vehicle used for the business purpose of "demonstrating'lor
advertising the type of vehicle which the dealer has for sale
to the public, and not itself being exhibited for immediate
sale, although nevertheless held to be resold ultimately at
a lower figure than similar cars which have not been so used.

                    SUMMARY
          The Motor Vehicle Sales Tax applies to all
       sales of motor vehicles to a dealer where the
       vehicle is extensively utilized for the per-
       sonal or business purposes of the dealer, his
       family or employees, including use of the vehicle
       as a demonstrator to effect the sale of other
       vehicles. The tax does not apply where the
       vehicle is driven in connection with an attempted
       sale to a prospective purchaser; nor to other
       incidental use in connection therewith.
                                         Yojd$svery truly,



                                         Attbney   General of Texas
Prepared by Kerns Taylor
Assistant Attorney General
KT/fb




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Honorable Robert S. Calvert, Page 6 (M- 141~)


APPROVED:
OPINION COMMITTEE
Hawthorne Phillips, Chairman
Roger Tyler
Hamld Kennedy
Marietta Payne
Dyer Moore
STAFF LEGAL ASSISTANT
A. J. Carubbi, Jr.




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