                     E              TC GENERAL            .‘.
                            OF      XAs


                            December 6, 1962


Honor&&e ~Jim U, Thompson           Opinion No, WW-1489
County Attorney
Lamar County                        Ra:   Whether paragraph (H) of
Paris, Texas                              Article 20.04, Chapter
                                          2O;Title 122A, Taxation
                                          General (the aales tax),
                                          exsmpts both the seller
                                          and ths purchaser from
                                          all the taxes of Chapter
                                          20 undsr the submitted
Dear Mr. Thompson:                        fact6.
        You requested the opinion of this office upon the following
question:
              *Down paragraph (HI of Article 20.01,of
        Chapter 20,,Title 122A, Vernon's Texas Civil
        Statutes (the-Texas Limited Salee, Excise and
        Use Tax Act),   exempt both the seller and the
        purchaser OF consumer from all of the taxes      '
        imposed by that Act where tangible personal
        property to be used in this State is purchased
        at retail and delivered by ths seller to the
        puraha8er pursuant to a valid   written contract
        executed prior to September 1, 1961, the contract
        being a contract of sale of tangible personal
        property in a certain fixed quantity at a certain
        fixsdiprice with delivery to be on certain fixed
        datea after   September 1, 1961, and notice of such
        contract and the exclusion claimad under paragraph
        (HI having been duly given by the taxpayer to the
        Comptroller on or before the lapse of one hundred
        and twenty (120) days from the date of the passage
        of the Act?"
          The Texae Limited Sales, Excise and Use Tax Act is, of
course, new to the law of Texas and we are not aware of any reported
case8 construing the effect of paragraph (H). The question presented
is entirely   one of statutory construction. Therefore, we muat use
the rules of statutory   construction.epplicable.to taxetion statutes.
                                                          .-   -




   .

Hkmorablo Jim N: Thompson, Page 2        ,(W'ft-1'+89)

        Article 1.01, Title 122A, Taxation General, Vernon's
Civil Statutes, states that:
            "Unless specifically altered by this Act or
       unless the context,requires,otherwise, the pro-
       vision8 of Article8 10, 11, 12, 14, 22 and 23,
       Revised Civil Statute8 of Texas, and of Acts,
       Fiftieth Legislature, 1947, Chapter 359, compiled
       as Texae Civil Statutes, Article 23a (VernonJs
       1948) apply to this'Act.*
Article 10, Vernon’s Civil Statutes, provides general rules for
statutory construction and directs the courts to look diligently
for the intention of the Legislature with a view to the old law,
the evil and the remedy. It further directs that-statutory pro-
visions,shall be liberally construed with a view to effect their
objects and to promote justice. The provisions~of.Articles 11,
12, 14, 22 and 23 are not applicable.to the present question,
        It is well settled,that,the.intention of the Legislature
is the paramount conaiderationinconstruing a statute, because
such intention is the law itself.                   5 Tex. 566,
                                                   , 58 Tex. 334
                                                    50 Tex. 18,
                                                     from,the words,
phrase or paragraph under consideration, rules of construction
become unnoceseary. The word8 of paragraph (H) are sufficiently
clear to reveal the,intent of the Legislature.~
            "(HI Writtencontracts and Bids Executed Prior
       to the Effective Date of this Chapter. There are
       exempted from the taxes imposed by this Chapter the
       receipts from the sale, use or rental of, and the
       storage use or other consumptionin this State of,
       tangible personal property (i3 used for the performance
       of a written contract entered~into prior to the
       effective date of this Chapt.er~or.
                                         (ii) pursuant to the
       obligation of a bid or bids uubmitted prior to the
       effective date of thisChapter,which bid or bids could
       not be altered or withdrawn on or after that date and
       which bid or bids and contract entered into pursuant
       thereto are.at a fixed prioe not subject to change or
       edification by reason of a tax imposed by this Chapter.

               ."Provided, however, that.notice of such contract
        or bid by reason of which an,exclusionis claimed under
       ,thi8    paragraph (H) must .be given by the taxpayer to the
iionorabloJir N. Thompson,   Page.3     (WW-ls89)
                                      -f
                    on or bsfore tha'~'lapse
        ,COarptroller                      of ,on,e hundred
   :    and twenty (120) days from.the~.dateof passage
        of this Chapter."

        The requirement,of notice.to the Comptroller within one
hundred and twenty (120) days is met in the situation posed by your
question and its effect need not be considered.
        We believe that-paragraph (H) exempts both the seller and
the purchaser or consumer from all the-taxes imposed by Chapter 20
where tangible personal pro erty to.be Used in this~state i?
purchased at retail and de1Evered.by the seller to the purchaser
pursuant to a velid written contract.exeouted prior to,September
1, 1961, with delivery to be~on certain,fixed dates after September
1, 1961, ina certain fixed quantity at a certain fixed price.
         While we believe that the plain,words of paragraph (HI are
sufficiently clear to reveal the intention.of,the Legislature, it
must be remeabered  tha? wevery word of 6 statute is presumed to have
been used for a purpose and a cardinal rule of statutory   construction
requires that each~swOmice,    clause, phrase and word be given effect
if reasonably possible." Eddins-Walche Butane Co. v. Calvert, 156
Tex. 507, 298 S.W.ld 93, 96 (1967)     iti     39 T .    208
Statptes, Section 112, and authori&        c%ed thi%itf' Fur;hermore,
a likrsl oonstruction, as directed by Article 10, Vernon's Civil
St&tUtOSi means to give to the words of.6 statute their generally
accopted waningi    Maryland Cas. Co, v. Smith, 40 S.W.2d 913 (Civ,
App; 19311,
         Paragraph (R) begina, "There hre exempted from the taxes
imposed by this Chaptar e a ." It will be noted that the wr
*taxer" IB used in tns plural form, and must therefore relate to
all taxes irapossdby Chapter 20..namsly the sales, excise, and use
taxes a If the exuption had been meant~to apply to lea8 than all
taxes, limiting terms would have beenused,    The language "by this
Cha term is obviously broad and lpplies.to any tax imposed by any
artf cle within Chapter 20. Ths exemption then is from,all- taxes
imposed by any mrt of Chaptar 20.
                                      ;-.
        This broad sxamption. 6pplia&%     "the receipt8 from the sale,
use or rental of, and the storage use or other consumption in this
State of, tangble rrsonal property D 0 0: Th$a languagon:zc;i;;;
wise broad.    l se ler is exempted from liability on his
from tha sale, usa OF rental  of" tangible   personal~property, and
the buyor or oomsoyr ir sxeaptmd from a-use-tax on "the storage
use or other aoammptioa-bt this State~of, tangibls personal
ProwW   Q. To s6y that ths buyer or consumer is not exempted from a
Honorable Jim N. Thompson, Page 4    (WW-1489)

use tax,ir to insert restrictive.or limiting language in the statute
where, none actually existso Tbe.words "storage use or other con-
rurption" are vew broad and are in,no way limited by the plain
(~otisof.the statute to-certain types-of~use or particular types of
consumption,
        The language,exanined above is broad and general. The limita-
tions imposed in paragraph (Ii)are'categorized in twosconditions.
The first is that the property must be "used for the performance of
a written contract entered into prior tomthe.effective date of this
Chapter . , . and whach       contract entered into pursuant thereto
are at's fixed.~pricenot's;bject to,change or modification by reason
of a tax imposed by this Chapter." The second condition pertains to
bids and does not concern us here, It is readily apparent that this
limiting clause is both narrow and precise, and we must assume that
if further limitations were intended they would be equally explicit,
To qualify for the exemption from the taxes of Chapter 20, one must
have entered into a-contract concerning the-tangible personal
property in question prior to the effective date of the Chapter,
September 1; 1961, and the contract price must not be subject to
change because of taxes levied by this Chapter 20. These requisites
have.apparently been met by the contract,described in your question.
        There appears to beno-official record of the intent of
Legislators in wording paragraph (Ii)as they did, other than the
words of thp statute itself,
        An examination of a contrary construction of paragraph (H)
proves the,correctness of our conclusions, The Texas Supreme Court
has stated that in the event that Yhe.intention of the Legislature
is so inadequately or vaguely expressed that the court must resort
to con8truction, it is prosperto considsr~the results and consequences
of any proposed constructioni and the,court will, if possible, place
upon the statute a construction which will not result in injustice,
oppression) hardshipi or inconvenience, unreasonableness, prejudice
to public,antere8t, or absurd coneequences,n National Suret
Corporation.v. Ladd, 131 Tax. 295, 116 S,W,2d 600, 603 (1936 9
eating 59 Corpus JUris. 969.
         The sale8 tax is~imposed by Article 20.02 on retail sales.
The responsibility for paying the tax,to~the State is that of the
retailer, but Article 20.02, Section (A) states that the tax is to
be collected fqom the.consumer. If.para   raph (Ii)is to relieve any
tax burden at all by the exceptionconta Bned,therein, it will
eliminate the tax paid by the consumer-rather than merely eliminate
the aollection  of the,tax by the~retailer. If paragraph (HI is
construed to exempt,property from only the~sales tax and~not exempt
it from a use tax on the consumer; the.effect.is to give.no~relief
Honorable Jim 1. Thompson, Page 6                tWW-1489)


et all. Rather, tha same amount of tax would be paid by the
consumer and the only effect would be to call the tax by another
name, i.e., a use tax rather than l~ealee tax. Therefore, if
paragraph (Ii)is to be,given effect ae~an exemption from “the
tax88 imposed by this Chapter," the proper interpretation, in our
opinion, of the Legislature's intent is that both the seller and
the purtihaeeror consumer are to be exempt from all taxes imposed
by Chapter 20 when the limiting requirements of magraph    (H) are
met. To construe paragraph (Hl otherwise would be to ignore the
rule quoted above from Eddins-Walchsr Butane Co. v. Calvert,
eupra :
                                                ‘,


                                 SUMMARY
                Paragra   (Ii)of Article 20.04, Taxation General,
          Varnon’s Civp"1 Statutes, exempts both~the seller and
          purchaser orooneumer from all the taxes imposed by
          Chapter 20, when tangible 'personal property is sold
          pursuant to a written.contruct,entered into prior to
          S*ptember,l,1961, provided that the express conditions
          of paragraph   (H)   are   met.
                                             Youra very truly,
                                             WILL WILSON
                                             Attor ey General of Texas

                                                  4zuQYPq*
                                      By:9    e Albert Pruett, Jr.
                                             Assistant Attorney General

JAP:ca
APPROVED:
OPINION COMMITTEE
Y. V. Oeppert, Chairman
Bill Allen
Arthur Sandlin
L. P, Lollar
Thou8 H. Peterson
REVIEWED FOR THE ATTORNEY GENERAL
BY: Leonard Passmore
