Honerrble Gee. H. Sheppard
Comptroller   of Public Accounts
Austin, Texas                        Opinion   No. V-665

                                     Re:   Whether foreign corpora-
                                           tion is liable fer Motor
                                           Vehicle Use Tax on buses
                                           purchased     out of state and
                                            to be used in Texas only
                                           in interstate commerce.

Deer Mr. Sheppard:

           You request our opinion as to whether the Transconti-
nental Bus System, Inc. should pay the Motor Vehicle Use Tax
on ten buses to be used only in interstate commerce.     You en-
closed a letter to you from the corporatidn   which reads, in part,
as follows:

          “We will have ten buses based in the State of
    New Mexico which will operate under interstate
    rights from Albuquerque,    New Mexico to El Paso
    end return to Albuquerque.    Interstate passengers
    enly will be handled and no local passengers    will
    be taken on the buses or discharged     from these
    buses at any points between the state line and El
    Paso.

          “These buses were originally    purchased in
    the State of Kansas on which Kansas sales tax
    and license fees were paid. At the time they were
    trenderred    to New Mexico, New Mexico license
    ices were pid.    We new propose to license these
    buses in the State of Texas and pay the Texas mo-
    tor bus license fees; however, we feel that these
    buses should be exempted from payment of the Mo-
    tOr Vehicle Sales and Use Tax due ta the fact, that
    they ore to be ulssd exclusively  for interstate pur-
    poses atld no intra-state  passengers   are to be han-
    dled.

         “We feel that payment of the Motor Vehicle
    Sales and Use Tax would constitute &n undue bur-
-z-able     Gee. H. Sheppard,    Page 2 (V-665)



          We have been ahired    by the Secretary ef Stats that the
Trurcentinental    Bus System i* incerporated under the laws af
Delaware 8ad ia operating in Texas u nder l permit te do hrsi-
n4#8 in tbie State. This c4rpor4tien is enpled,    in bddition to
it4 iaterst4te business, in intrastate business in Tene end h40
l hu$~@r,    &ice in J&Us, frem which meat 4 its Texas busi-
wsn is ceaducted.

          Tti   perhnt    eectfonr   lf Article   7047k, V.C.S. are   le
feU4wo;

             ‘Seottm 1. (4) There io hereby levied l ~$4~
      upoa every retail rale ef every meter vehicle sold
      in this State, euuh tax tm be equel te one (I) per cent
      4f the ktdcadlere~r           p4id or to k paid to *a
      rre4ler by the buyer, wYch ceneideratien       ihll in-
      cluU4 the amount     paid lr to be p&id for acid mater
      vehicle and all lc c 4 sr 4 r ies
                                      attached ther4t4 et the
      tin&o d the able, what&r eutih censideretieh        be in
    ,,,th8 nture of cae,h, credit, w exchn#e ef ether
      prep4rty, Q r:r~~!rllttru4.,~‘~‘~.,rr*cnt
      aw+8a*ew8            r44*tlmep*        ‘se&f&T includes
     w      tea8 wd       by tJa&,Federai Government, then
      lm& F-86         tax s+aU ba d&acted frem .4ui;h c+
      ru4rdda       br an pirp4sr 4f c~pt6lz#       ;q4 mwDt
      d Car. lw48d by *i4 Artlels upen iuch rbt&tl 8414.
.      .




    Hamerable Geo. H. Sheppard,     Page 3 (V-665)



                “When a tax becomes due on a motor vehicle
           purchased outside of this State and brought into
           this State for use upon the highways, the person,
           firm, or corporation operating said motor vehicle
           upon the public highways of this State shall pay
           the tax imposed by Section 2 to the Tax Collector
           of the county in which such motor vehicle is to be
           registered.   The tax ahall b4 paid at the time ap-
           plication is made for registratien ef said motor
           vehicle, and the Tax Collector ah11 refuse to is-
           me the registration licenre until the tax is paid.”
           (Emphasis ours)

              Section 2 4f the l bev4-quoted article levies a u*4 tax
    upon every metor vehicle purchased at retail sale outside of
    this State and brought into this State for use upon the public
    hiphways ef this Stat4 by . , . corpordioas   domiciled or doing
    business in this State. A corporation, although incorporated by
    one state, may have a “commercial domicile        in another. See
    Wheeling Steel Corp. v. Fox, 298 U.S. 193, 56 S. Ct. 773. Even
    though under tbc facts the Transcontinental may not have a com-
    mercial domicile in Texas, it is doing an intrastate business in
    Texas and comes clearly within the taxing statute. It will thee-
    fore be required to pay the use tax, unless such tax amounts to a
    regulation of or a burden on interstate commerce.      This tax is
    an excise tax; and if it effecta interstate commerce indirectly,
    incidentally, or remotely, it will be valid unless it actually dis-
    criminetrq against such cemmerce.        Hump Hairpin Mfg. Go. v.
    Eknmerson, 250 U.S. 290, 42 S.Ct. 305. Here we have a tax not
    directed at or discriminating   lgain4t interstate commerce, It
    is not directly imposed upon it or those engaged in it. It only
    affects such commerce, as any tax will affect it, by adding to
    the uxpeaec af huainetir.

              While a 4tat4 may n4t directly  burd4n interstate com-
    merce bg taxatia, it may require all who 1~44 her reada to make
    reanonabla campeneation    therefer.   WcCarroll v. Dixie Grey-
    hound Lirue, Inc., 309 U.S. 176, 60 S.Ct. 504; Hendrick v. Mary-
    land, 235 U.S. 610. By the t4rms of the statute there is no use
    tax levied unless the rnet4r vahicle in purchaatd and brought in-
    ts this State for use upon the public highway6 of this State. It is
    also significant that th4 use tax must be paid before the Tax Col-
    lector is authoriced to registar the motor vehicle end issue a li-
    cense for itr use upon the highways. Thus it ia seen that the pay-
    ment of this tax is a prerequisite to the us4 of th4 motor vehicle
    upon the highway8 in that it is unlawful to operate such vehicles
    upon public highways of this Stat4 without registration.   In other
    worde. the privilege of operating such m4tor vehicles upon our
    highways is conditioned upon the payment of th4 tax.
Honorable       Gee. H. Sheppard,      Pale   4 (V-665)’



           It is true that thu revenue derived from this tax is
not allecatcd    to the use or maintenance  of the public highways
af this State. We do nit believe that the use to which the funds
are allocated i$ controlling.     The United States Supreme   Court
kr D&O OUm ICkpress Co, v. State Revenue Cammission, 306
U.S. 72, 59 6. Ct. 435 in upholding a state tax on motor vehicleo
maa~ed in interstate      cemmerce,   used the following language:

            “Thescope and laagua&e of the challenged en-
    actment   unmistakably    disclose    intention of the State
    to require payment of compensation          for tha privi-
    lele of operating over its roads the specified ve-
    hicles for the transpertatfon      ef property. It cen-
    taino no hint of hostility to interstate commerce or
    of purpose to imporc a charge on the privilege          or
    basinesr   af interstate traraportation.       The exaction
    ie not to be deemed Jfenpive        ti the commerce     clause
    merely because the State, in the conduct of its fiscal
    affairs, chooses to use part or all of the psocoeds
    for purposes    other than the construction,      improve-
    ment. or maintenance      ot its
    Poor,       supra,   pale   557   *7 S
    Bingaman, supra, 412,‘56            S.‘Ct. page 758. I( (E
    phasis added )

            The Supreme Court ef New Mexico in Gso. E.            Breece
Oumber      Co. v. Mirabal, 287 Pac. 699, in construing a        statute
                                               all *asoline      and mo-
                                             , in upholdin        the tax


           < * . Much effort
            u
                                is made in the argument and
    brief of c-al        fox apjcllees   to convince us that
    this ie a special privilege ax upon users af the pub-
    lic ruds of the state by means ef automobiles           in
    trawling    upar   such hithways.      If we understand the
    argument, it is as follows:        Tke tax is a tax upen
    the use of the public hi@ways         by gasoline prepelied
    vehicles;   lppellees di not use tbe public, highrays
    in the censumption      of gasoline in their qserations;
    therefore,    they canrqt legally be charged with the
    tax. If both of appollees’ premises         were true, their
    cwelusion      would inevitably follow.     The treuble is
    with the m8jir premise,         In the first place, as we
    have hereMore assumed,           tba tax ia tiot laid on the
    use ef the public bi#hways.        The statute dees not say
    so, and nowhere in the statute can such a conclusion
Wbnorable        Geo.   H. Sheppard,         Page     5 (V-665)



    oroceeds
     r~----~--
                of the tax are devoted. bv statute. to the
                         ---~   ~~~-~~-   ~~~--~~-.     ~~,   --~~--~~,   -~   --~-

       yment ti such bon%s and debentures      as may have
      een msutd by the state to secure a fund with
    which to build and improve thehighways        of the
    B,at e. But this has nothing to do with the matter.
    This is merely a imancial arrangement        of the state
    to make sure provision     i,or the prompt payment 61
    its obligations   when they become due,. . . ” (Km v
    *asis    added)

           Furthermore,     this tax is levied upon the privilege  of
purchasing at retail a motor vehicle out of the State and bring-
ing it into this State for use upon the highways of this State.
The tax is not a cha<ge upon the use of the highways and is due
and payable before the vehicle is used in either intra or inter-
state commerce.      The mere fact that the motor vehicle is used
subsequent to the incidence      of the tax as an instrument of inter-
state commerce     does not make such tax a forbidden burden on
inter state commerce.      The tax is on a privilege    secured before
interstate commerce      begins.    See Nashville C. & St. L. Ry. V.
Wallace,   288 U.S. 249, 53 S.Ct. 345. Also see Edeiman et al v.
Boeing Air Transport,      Inc., 289 U.S. 249. 53 S.Ct. 591 wherein
the Court said:

          “As the statute has been administratively       con-
     strued  and applied    the tax is not levied upon the
    consumption     of gasoline in furnishing motive power
    for respondent’s     interstate planes,    The tax is ap-
    plied to the stored gasoline as it is withdrawn from
    the storage tanks at the airport and placed in the
    planes. No tax is collected for gasoline consumed
    in respondent’s    planes either on coming into the
    &ate or on going out. It is at the time of withdraw-
    al atone that ‘use’ is measured      for the purposes of
    the tax.   The stored gasoline is deemed to be ‘used’
    within the, State end therefore    subject to the tax,
    when it, is withdrawn from the tanks.        Compare
    Nashville,   Chattanooga 6 St. Louis Ry. v. Wallace,




          “A State may validly tax the ‘use’ to which gas-
    *line is put in withdrawing it from storage within
    the &ate, and placing it in the tanks of the planes,
    notwithstanding   tNt its ultimate   function is to gen-
    erate motive power for carrying        on interstate com-
    merce.     Such a tax cannot be distinguished     from that
    considered    and upheld in Nas*ville,   Chattanooga    81
Honorable   Geo. H. Sheppard,   Page   6 (V-665)



    St. Louis Ry. v. Wallace,    supra.   There it was
    pointed out that ‘there can be no valid obiection
    io the taxation of the exercise    of any right or
    power incident to . . . ownership     of the gasoline,
    which falls short of a tax directly imposed an
    its use in interstate  commerce,     deemed forbid-
    den in Helson v. Kentucky,’ 279 U.S. 245. As
    the exercise   of the powers taxed, the storage
    and withdrawal fro&r storage of the #asolin&,
    was complete before interstate commerce           be-
    gan, it was held that the bu,rden of the tax was
    tom indirect and remote from the function of in-
    terstate commerce,     to transgress    constitutional
    limitations,.  , .”

         It is therefere our opinion that the Tax Collector
should not register the ten buses in question 6ntil tire Motor
Vehicle Use Tax is paid thereon.

          We affirm the holdins in Attorney General’s    Opinion
No. .O-6529, written during a prior administration,   on the sole
ground that the corporation  in question in that opinion was nei-
ther domiciled   in Texas nor doing an intrastate business     in
Texas.   Ail language used in such opinion that is in conflict
with this lpiaion is hereby expressly   overruled.

                         SUMMARY

          A use tax is due upon ,motor vehicles,     pur-
    chased out of Texas by a foreign corporation        that
    is either domiciled     in Texas or doinS an intrastate
    business in Texas, if brought into Texas for use
    uRen the highways of this SCte, even though such
    metor vehicles will be used only in interstate com-
    merce.     Art. 704lk, V.C.S.; Edeltnrn v. RoeinS Air
    Transport,     Inc., 219 U.S. 249; 53 S. Ct. 591; Dixie
    O&o Express Co. v. State Rev. Corn... 306 U.S. 72,
    59 8, ct. 435.

                                        Yburs      very truly

                                ATTORIVEYGENERALOFTEXAS



                                By
                                          W. V, Gcppert
                                            Assistant
