                                                             2917




     Mr.ReaganHuffmsn               ~&ion   No. W-   598
     Chairman Liquor Regulation
       Coinmltlree                  Re:   ConstitutionalityOf
     House of Representatives .~          H.B. 57, 56 Leg., re-
     Austin, Texas                        latlng to whether or
                                          not the State may tax
                                          beer sold to and oon-
                                          sumed on MllltsrgRe-
                                          servatlonswithin-the
     Dear Mr. Huffman:                    State.
              We quote from your opinion request as follows:
                "Pursuantto'.amotion duly.made and.passed
              by the Liquor RegulationCommittee, I am
              herewith submittingto you the original
              H.B. 57 for'an opinion as to its constltu-
              tiona1ity.
                "The specific question involved.is whether
              or not the State of Texas may tax beer whloh
              Is sold to and consumedon Military Reserva-
              tlons within this State."
               Section 1 of B.B.'57 amends Article 667-2&(d)
      V.P.C. to omit the exemptionand refund provision pertaining
     'to beer "shipped to any installationof the National Military
      Establishment,wherein the State of Texas has ceded police
      jurlsdlctlon,for consumptionby military personnel within
     'said installation." Section 2 omits the exceptlon.of."mllltary
      beer consigned to military installations"from the requirement
      that all beer shipped into this State be consignedto.the holder
      of a Manufacturer's,,General DIstrIbutorIs,Branch Distributor's
      or Local Distributor'slicense, and adds the sentence2
                "Nothingin this seotlon Bhall prohlbit'the"
              holders of a Manufaoturerls,General Dlstrl-.
              'butor.'s.
                       Branch Dlstrlbutor+s.or Looal Dls-
              trlbutor's Lloense to sell beer, on whloh the
              tax 'thereonlevied In Seotlon 2 F    sio mlole
              raf'the Te~q~~l%~~en                        rid,
              EEdKlqrnmen           Iiiiin~l~slnte. --
~.
:             Sta~.phasls        added)
2918
 Mr. Reagan Huffman, page 2      (OpinionNo. w-598)


          Article 667-23, V.P.C., provides:
           "There is hereby levied and assessed a tax
         at the rate of $1.37 per barrel on the first
         zhof    all beer manufactured&Texas and
                lmwrW-A2n -- mall       imported into
         this Setate." (Emphks adm
          Title 4, U.S.C.,A.,Section 105 grants to the States
 the power to levy and collect sales and use taxes within
 Federal.areas. S.ection107(a) states that this shall not
 be deemed to authorize the levy or collectionoffw    tax o-n
 or from the United States or any Instrumentalitytherz.
 or the,levy ar collectionof any tax with respect --
                                                   to &
                   or u   of tangible personal.property sold
                      orany instrumentality.thereof  to,any
 authorlzed~~purchaser.(Section 107(b) defines "authorized
 purchaser.")
          The foregoing provisionsare controlling. The state
 may not tax importations~ofbeer by any Federal Government
 Instrumentality;nor.may It tax "first sales" of beer to,.ang
 Government instrumentality,or by such.Instrumentalityto
 "authorizedpersons." See Attorney General's Opinion No.
 w-582. The State has the authority to tax all other "importak~
 tlons'.and'first sales," regardless of whether such "importa-,.~
 tions" and "first sales" occurred within Federal areas. For
 the reasons stated In the Attorney General's Opinion cited,
 supra, no issue of constitutionalityis raised by repeal of the-
 exemption and refund provisions regarding beer shipped to Mill?
 tary Establishments.
          .The specific question ig~your opinion request was
 whether or not the State may tax beer which Is sold to and
 consumed on Military Reservations. However, Section 2 of
 H.B. 57 raises another issue so intimatelyrelated to this
 problem ,thatIt must.,alsobe considered,i.e., the validity '
 o-fthe amendment to.,Section29 of Article 667, V.P.C. The
 amendment Is designed to aid collectionof the tax on beer
 sold to Military Establishments. Omission of the exemption
 of 'militarybeer cons~igned to military Installations"from
 the requirementthat all beer imported into the State be con-
 signed to the holder of one of the enumeratedpermits in effect.,,
 requires a permit for the importationof beer into m?.litary
 establlshmentst In cases where~the State of Texas has ceded
 police jurlsdlctlonto the Unl,tedStates, the State is without,
 power to Issue or require the.purchaseof permits or licenses':
 sInbe .suchpermits norlicenses are imposed under the State's
 Police Power to control~thetilcoholio beverage business. AttO*
 General's Opinion No. WW-354, O-3216. See.also Collins v. Voz'
bh-.Reagan Ruffman,.page3          .. ,(OpinlonNo..WW-598)


mite Park & Curry Company, 304 U.S. 518 (1938). Since the
state cannot require the licensing of a consigneewithin a
Federal area In which police jurisdictionhas been ceded, It
cannot accomplishthe ssme result Indirectlyby ,requlrlngthat
all beer Imported Into the state be consigned to the holder of
a license. Further, such a requirementwould constitutean
undue Interferencewith Interstate commeroe. The case of
Murphy v. Dove, 249 Fed. 2d 783 (U.S. D.C. 1957, Cert.Den.
355 U.S. 9%)   contains the following statementon point:
             "Since Kansas does not have territorial
           jurisdictionto regulate liquor In the Federal
           enclave ,lthas no authorityto impose revenue
           measures concerningliquor which are Inseparable
           from such regulatory aspects of-the~Act. The
           effect of what It seeks to do by the regulatory
           provisions of Its 1aw.l.sto make Impossiblethe
           purchase'or sale of llawr on the.Reservatlon.
           or Importationof iiquor in Interstate0ommerEe
           Into the Reservation. Such-a constructionwould
           not only place a burden on irrterstate~cosunarce ,,.,,_
           of liquor to the Reservation but would star,It
           entirely. In Johnson v. Yellow CabTransl5 Com-
           ~~;lO~Clr., 137 F; 26 274 279 we sa&d that
                      state has no pow& to'forbld the trans-
           porta~l&'ln Interstate commerce of Intoxicating
           liquor through Its territorialboundarles.~ and
           that a State r... ..has no jurlsdlotionto require
           or grant permits for the Importationof intoxicating
           liquors into. . . ."a reservation." [Emphasis
           added)
             Therefore, the requirementthatall beer imported Into
Texas be consigned to the holder of a license Is Inoperativeas
respects
 .           beer consigned to military establishmentsin which pollc~
JU??iFKliCtiOn   has been ceded.
         The last sentence of the amended Seotlo,n29 implicitly
requires the payment of taxes on all beer sold to Federal C(overn-
ment lnstrument~ltles. .Such a requirement is in direct con-




provision Is void.
                         SUMMARY
           The State my not.,ta$lmportations~of beer by
           any Federal Qoverhment ~Ins:trumentallty~,nor
                                        ,,
                                         . ,'
                                            .;.
2920
 Mr. Reagan Huffman, Page 4           (OpinionNo. W-598)


          may It tax "first sales" of beer to any Govern-
          ment Instrumentality,or by sudh Instrumentality
          to any "authorizedpurchaser." The State has
          the authority to $ax all other "importations"
          and "first sales regardlessof whether such
          "importations"0; "first sales" occurred within
          Federal areas.
           The State has no power to require the licensing
           of consigneesof beer in Federal areas where
           police jurisdictionhas been ceded, and cannot
           Indirectlyaccomplish the same result by re-
           quiring that all beer imported into the State
           be consigned to the holder of a license; such
           a requirement is further unconstitutionalas
           constitutingan undue Interferencewith inter-
           state commerce. Therefore, the requirement that
           all beer imported into Texas be consigned to
          'the holder of a license is inoperativeas respects
           beer shipped to consigneeswithin military es-
           tablishmentsin which police jurisdictionhas been
           ceded.                           .~.
          The implicit requirementof the iast sentence
          of Section 2, H.B. 57, that taxes be paid on
          all beer sold to Federal Government instru-
          mentalities Is In direct contraventionof the
          constitutionalprohibitionagainst taxation of
          the Federal Governmentby the State Government
          embodied In Title 26, U.S.C.A., Section 107,
          and is void.
                              Yours very truly,
                              WILL WILSON


 JNP:cm
 APPROVED:
  OPINION COMMITTEE:
  Geo. P. Blackburn; Chairman
  C. Dean Davis
  C. K. Richards
  Elmer McVey
  Linward Shivers
  REVIEWED FOR THE ATTORNEY GENERAL
  By: W. V. CtEPPWT
