Honorable Robert S. Calvert       Opinion NO. ~~-810
Comptrollerof Public Accounts
Capitol Station.                  Re:    Appllcabllltyof then
Austin, Texas                            Gross Receipts Tax pro-
                                         vided for by Art. 11.03, ii'.
                                         Title 122A, R.C.S., to
                :-                       certain operations of
                                         the IndustrialGas Supply
Dear Sir: ,,,                           .Corporatlon.
     Byletter dated,.J&nuary~5,  1960, you advise that the
Indus$rialGas Supp&9 Corporation 1s~a .dlatrlbutor  of gas to
a n ber of customerstithin the Incorporatedarea of Houston,                   .
Texi?
    8. and that one Of their customers is thenCity of Houston's
Epagnolla Park.GaiiDistributionSystem, tihelatter being the
final distributor  of the gas It receives. In'referenoeto
these facts,-y&zask whether'the gross rebeipts tax.provided
for by Artlc,ge11.03, Title 122A, Taxation-General;Tex.Rev.
Clv.Stat.(~1925)(formerly codified as Art. 7060, V.A.C.S.)
Is due on the receipts from the sales by Industrialto the                t
City df *uston.
     l$? pertinent pr&lsSons of thenArticle   .ln question are
as follows:
                                                                    ._
           "(1)~ Each lndivlduil, company, corporation,            *’    .:
         or associationowning,.0peratlng;mana~lng
         or con$rolllngany gas, eleotric Ught,
         electric power, or water'uorkib.;'.or‘:.titer
         and light plant, .locatedwithin atiyln-
         corporatedtown or city lnthls State, Andy
         useh for.local sale anh diitrlbution~~in~
         said townq$rmTcharglng          for euch
         gas, electric lights, ,electr.ic
                                        power; or .'
         water, shall .makequarterly,-onthe first
         day of January, April,:July and October of
         each year, a report to the Cwptroller under
         oath ,of the Individual.,,
                                 or'of the president,
         treasureFor superlntendent~ofsuch company,
         or corporation,or aasoolatlon showing the
         gross amount recclvdd from auoh,b.uslnessdone
         in each such incorporatedcity ort@vn within
         thi8 State in.the payment pi char&a ~forsuch
         gas, electric lights, electric power, or iZXr
    Hoporable Robert S. Calvert, Page 2   OpiilionNO. W&810
I
                                                                       :*
            Sor the quarter next preceding . I-. Nothing              .a-
            herein shall apply to any such gas, el'ectrlc
            .llght,power or water works, or water and
            light plait, within this State, owned and
            operated by any city or town, notito an&:
            county or water lmprovem&ntor oonservatlon
            district. . ."
              "(2) Nothing herein shall'be co&wed     izti
            require payment of the tax on gross receipts
            herein levied more than once on~the suae                          *
.           commodity, and where the commodity lg produced
            by one Individual, company, corporation,or
            association,and distributedby another& the tax
            shall be paid by the distributoralone;-
                                                                     :
         Note that the article Imposes the tax on gas works used
    for,loctilsale and distribution,and 1s measured by 'the.
              --.
    amount received from such business "In the pajment"of charges
,   for such as " The terms "local ,sale"and~.Rdi.@trlbutlqh" are
    not -gc
        alterna lve, but cumulative. See Utilities Natural Gas
    Com~~an~v. State, 133 Tex. 313, 128 S.W 2d.1153 (1939)' In
    the case just mentioned, "dlstrlbution"*washeid ~tor&Ire
    more than an Isolated 'salewithin the corporate limits-of a     .I
    c.lty
        . In ao holding, the,Court stated at page 1155:             *..
                                                                     ..!
                                                  \   ‘,



            -.'"This term as utiehdoes not mean the
             tr'ansferof the possession~ofgas, by means
             of the pipe line, to a single purchaser                      .
            .nhere,snchpurchaser Is th; only cust'omer~
            .to whom.the gas cozn~anysells gas In the,."
            'city. It means the ~transferof posses+?n               _.:
             of gas to various individualsor concern&
             In the city. Any~*otherconstruct$onof
             the term ~would,In our opinion,,lnvolve'a
             departure from the~legl~l'atlve~lnte~t.~
 The deflnltlqnof "dlstrlbutlbn"was added to b Eddins-Walcher
 Butane Conipanyv. Robert S. ,CalveFt,'l56Tei.,&&~'.S.W;.2d~
 93 (1957) In an opinion ~byJustice Walker,,'~the  Texas~Supreme
 Court hela that the'tew.*gas works", as uaed:.Zn~,Alrt~.'7060~*
 V.A.C.S.;-meant(1) an es'ttabllshnient
                                      In which-gas Id manufacturedi:
 producedorprocessed, or (3).a~distrlbutlon~~~~y~tem~~,~nsi~tlng ~.'
*of plpes through whic&.the gas flows.,and~ls.$el$ver&dto the
 premisesof consumer8. In lightof these'two cases, It Is
 submittedthat~"dlstrib~tlob"means transfer or possesslon~of
 gas to various consumer,ln&l@duals or concerns +an     in-
 corporatedcity or town...merefore; 'you.a~e~:advised  that the
 tern %harges'for such gas?k which modlfle~s."@?oss::,amount
 re+dyhJ from such buelnesr.',which inturn refers:'to"local
 s+le aid dlstrlbutlori,"-
                         does not Include the"ie&lpts from.the
 sale of the gas.to the City of Houston's Magnolia  Park:Gas
 DistributionSystem.
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                                                                                     .’


  Honorable Robert S. Calvert, Page.3            Opinion No. WW-810
                                                   .~
                                               ...
       This conclusion 16 rcllnforcedby an examinationof the                         .
  mesklng and lntent.~ofsection (2) of Article      11.03. In
  reference to the same provision in Art.    060 V.A.C.S., the.
  Court in the Eddlns-Walchercase atated T p. 45):
               “It ie expressly provided that the tax
             shall be levied only once on the same
             commodity,and that where the commodity :. ;,
             Is produced by one.person and distributed

                                                                .
  The City of Houston Is the actual dlstrlbutor'of~thegas in
  question. The fact that the city Is expressly exempted by the
  Act oannot operate to shift the legal Incidence of the tax.
                           SUMMARY
                  The IndustrialGas Supply Corporation
             lb not,iequlred'toInclude receipts from the
             sale oi gas to the.Clty of Houston for
             distributionby the cl$y's Magnblla P-k
             Gas DistributionSystem In calculatinggross
             receipts taxable uwler ArtXcle 11.03, Title
             122A, Tax&Ion-General, Tex.Rev.Clv.Stat.
             (1925)*
‘.,’                               Yours very trulg,~
                                                          i.
                                   WILL WILSON                 _~~


                                   Bv..96
  APPROVED:
  OPINIblP.coHMITTsB:          ~
  Y. y: Geppt,r't,
                C~lxmti
  ~Marlet
        tr.,
           McGre&r Payne
  Howard.Slays
  3era H; Roberta
  RBBfEwBD   FCR~THE   AT’I’OEWRY GENERAL
  By: &eona$dPawnore




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