Honorable George H. Sheppard
Comptroller-'ofPublic Accounts
Austin, Texas
Dear Sir:           Opinion No. O-5468
                    Re: LiabilLty of a motor carrier for
                         tax imposed by Article XIV of
                         Hduse Bill No. 8, Acts 47th Legis-
                         lature, Regular Session.
         Your letter of July 20, 1943 relating to the above
captioned subject reads as follows:
        "Article XIV~of House Bill No. 8 of the 47th
   Legislature provides a tax of 2.2s on receipts
   earned by Motor Contract Carriers.
        "There is an operator in Houston, Texas who
   operates under Interstate Contract Motor Carrier's
   permit issued by the Railroad Commission of Texas.
   He is also operating under I.C.C. permit formerly
   issued to another operator but purchased by the
   subject concern and approved by the Interstate Com-
   merce CommFsslon on September 23, 1941 in MC-FC
   15542, and by the Railroad Commission of Texas on
   September 27, 1941, Motor Carrier Docket, C-34.
        "The concern In question hauls food products
   for a nationally known distributor, the merchan-
   dise is shippea in carload lots from a point out-
   side the State of Texas to Houston, Texas where
   the products come to rest, being unloaded in ware-
   hous,esand later assigned and delivered to stores
   in incorporated towns within the Houston territory.
   In some instances the merchandise is loaded onto
   the trucks from the warehouse platform and delivered
   direct to the merchants within the incorporated towns.
        "This concern, in February, 1936, applied to
   the Interstate Commerce Commission for a Contract
   Carrier permit to distribute merchandise out of the
   Houston, Texas warehouse of the food distributor to
   their retail stores within the Houston territory.
   The Commission denied the application on the grounds
Hon. Geo. H. Sheppard, page 2         f3-5468



    that the transportation from the warehouse to the
    retail stores was intrastate traffic and not inter-
    state traffic. It was in September, 1941 that the
    Houston Contract Motor Carrier purchased the I.C.C.
    permit referred to above from another Motor Carrier,
    which he claims gives him the authority to trans-
    port the merchandise as interstate.
        "'Pleasetell me if the above concern is liable
   for the gross receipts tax under Article XIV in
   House Bill No. 8 of the 47th Legislature."
         From the several conferences that we have had with
your department, we understand that a large chain store cor-
poration operates a number of retail stores within the City
of Houston, Texas and In other cities in that area. Said
corporation maintains a warehouse in the City of Houston from
which merchandise is distributed to its retail stores in ac-
cordance with their requfrements.
         It appears that the carrier in question was refused
an Intrastate permit by the Railroad Commission of Texas to
transport merchandise for the above mentioned corporation.
Later, the Interstate Commerce Commission, hereinafter refer-
red to as I.C.C., refused the carrier an I.C.C. permit for
the same transportation on the grounds that said transporta-
tion was intrastate. See I.C.C. Reports, Motor Carrier
Cases, Vol. 4, page 488.
         Thereafter, the carrier 1n question purchased an
I.C.C. permit from another individual which was,the exact
type of permit which he had theretofore been unable to obtaln
from the I.C.C. and the Railroad Commission of Texas. As to
this particular permit, it appears that the I.C.C. found that
the particular transportation was interstate and it also ap-
pears that the Rallroad Commission issued a permit to use the
highways 1n connection therewith upon the same basis.
         As is clearly pointed out in the aecislon of the
I.C.C., supra, the transportation in questlon is Intrastate
in character and.not interstate. It remains however that
said transportation IS done under au,thorltyof an I. C. C.
permit and it appears that the Railroad Commisslon has rec-
ognized such transportation as Interstate.
         It seems to us that the answer to your question de-
pends upon this issue, to-wit: Is a motor carrier subj'ect~to
the tax imposed by Article XIV, House Bill No. 8, supra, on
Intrastate business transacted under authority of an I.C.C.
permit notwithstandlng that the I.C.C. and the Railroad Com-
Hon. Geo. H. Sheppard, page 3    .'   o-5468



mizssionhad issued orders, alleged to be,final orders, to the
effect that such transportation was interstate and had issued
permits accordingly?
         Article 14, Section.1 (a), H. B. No. 8, Acts 47th
Leg., Regular Session, imposes,the following tax:
         "Section 1. (a) Each Individual, partner-
    ship, company, association, or corporation doing
    business'as a 'motor bumscompany' as defined in
    Chapter 270, Acts Regular Session of the Fortieth
    Legislature, as amended by the Acts of 1929, First
    Called Session of the Forty-first Legislature,
    Chapter 78, or as 'motor carrier' or 'contract car-
    rier' as defined in Chapter 277, Acts Regular Ses-
    sion of'the Forty-second Legislature, over and by
    use of the public highways of this State, shall
    make quarterly on the first day of'January, April,
    July, and October of each year, a report to the
    Comptroller, under oath, of the individual, part-
    nership, company, association, or corporation by
    its president, treasurer, or secretary, showing
    the gross amount received from intrastate business
    done within this State in the payment of charges
    for transporting persons'for compensation and any
    freight or commodity for hire, or from other
    sources of revenue received from intrastate busi-
    ness within this State during the quarter next
    preceding. Said individual, partnership, company,
    association, or corporation at the time of making
    said report, shall pay to the State Treasurer an
    occupation tax for the quarter be inning on said
    date equal to two and two tenths 7 2.2) per cent
    of said gross receipts, as shown by said report.
    Provided, however, carriers of persons or property
    who are required to pay an Intangible assets tax
    under the laws of this State, are hereby exemptec
    from the provisions of this Article of this Act.
         In order to clarify the scope and meaning of the
above Section, the~same Legislature enacted H.B. No. 1039
which provides as follows:
          "Section 1. The term 'intrastate business' as
    used in Article ,XIV. Section 1 (a) of House Bill
    No. 8, Acts of the Regular Session of the Forty-
    seventh Legislature shall mean and apply Only to
    that portion of revenues derived from transportation
        iect t the r     ation of the Railroad Commission
    &.'          (UndZoring    ours).
Hon. Geo. H. Sheppard, page 4        o-5468


         By the express terms of House Bill No. 8, supra, the,
tax is imposed on each individual, partnership, company, as-
sociation or corporation doing business as a contract car-
rier as defined in Chapter 277, Acts 42nd Leg., Re ular Ses-
sion. The definitions referred to are as follows 7codified
in Section 1, sub-sections (g) and (h), of Article~gllb,
V.A.C.S.):
         "(g) The term 'motor carrier' means any per-
    son, firm, corporation, company, co-partnership,
    association or joint stock association, and their
    lessees, receivers or'trustees, appointed by any
    Court whatsoever owning, controlling, managing,
    operating or causing to be operated any motor-
    propelled vehicle used in transporting property
    for compensation or hire over any public highway
    ln this State, where in the course of such trans-
    portation a highway between two or more incorpor-
    ated cities, towns or villages is traversed; pro-
    vided, that the term 'motor carrier' as used in
    this Act shall not include, and this Act shall not
    apply to motor vehicles operated exclusively with-
    in the incorporated limits of cities or towns.
         "(h) The term 'contract carrier' means any
    motor carrier as hereinabove defined transporting
    property for compensation or hire over any highway
    in this State other than as a common carrier. As
    amended Acts 1931, 42na Leg., p. 480, ch. 277, R 1."
         It is clear to us that the transportation in question
is intrastate 1n character. It is equally clear to us that
at least the intercity part of such transportation comes with-
in the purview of Chapter 277, Acts 42n8 Leg., supra. Looking
only at the provisions of Article XIV of House Bill NO. 8,
supra, the gross recipts derived from such transportation WOUla
be included in measuring the amount of tax due. The confusion
results because of the language contained in House Bill No.
1039, supra. This Act in effect defines "intrastate business',
as used In Article XIV of House Bill No. 8, supra, as that
transportation subject to the renulatlon of the Railroad Com-
mission of Texas. (Underscoring ours).
           In determining the meanlng of House Bill NO. 1039,
         we wish to first point out that Article XIV of House
i?gaEjo.   8 supra provided that the tax should be measured
not only f;om grois receipts derived from transportation but
also included gross receipts from other intrastate business.
It followed that if the carrier also received revenue from
the operation of a storage warehouse or from some other source,
Hon. Geo. H. Sheppard, page 5         O-5468


this revenue would also be included in determicing ;;l!~:
amount of tax due according to the literal language of
the Act.

         It is our opinion that the only meaning and effect
of House Bill No. 1039, supra, is to limit the application
of the tax imposed by Article XIV of House Bill No. 8, supra,
to those gross receipts derived only from that transportation
which the Legislature, by statute, authorized the Railroad
Commission to regulate.  See our Opinion No. O-5335.

         We do not believe that the tax liability of any
motor carrier is contingent upon any action or non-action
taken by the Railroad Commission of Texas. For example, we
do not believe that interstate receipts could legally 'be ir:-
eluded In determining the amount of tax due even though the
Railroad Commission thought that the transportation was i;itrz
state and issued an order to that effect nor do we believe,
as in this case, that intrastate receipts should be excludai
in determining the amount of tax even though the Railroad
Commission had years ago issued a permit based upon an order
finding the transportation to be interstate. Going a step
further, suppose a situation where a carrier was regularly
transporting merchandise intercity for hire and had never ob-
tained any kind of a permit from the Railroad Commission.
Notwithstanding the lack of any actual regulation, the car-
rier, in our opinion, would clearly be liable for the tax.

         Irrespective of the order issued by the Railroad
Commission to the motor carrier in question and irrespective
of whether such order may be said to be final or otherwise,
we are of the opinion that said carrier is subject to the tax
imposed by Article XIV of House Bill No. 8, supra.

                                Yours very truly

                             ATTORNEY GENERAL OF TEXAS



LS:fo:wc                        By s/Lee Shoptaw
                                     Lee Shoptaw,
                                       Assistant
APPROVED AUG 24, 1943
s/Gerald C. Mann
ATTORNEY GENERAL OF TEXAS

Approved Opinion Committee By s/RWF Chairman
