                    E
                             OF          XAS
                           L?aSrnN    ‘11, TEXAS




                               June    13,     1960

Honorable Robert S. Calvert                  Opinion   No. W-845
Comptroller of Public Accounts
Capitol Building                             Re:   Questions concerning the
Austin, Texas                                      permit provisions   of the
                                                   Soeclal Fuels Tax Law.
                                                   Art. 10.11(l)   chapter 10,
                                                   Ii. B. 11, 3rd C. S. 56th
                                                   Leg.., as it pertains to
Dear Mr. Calvert:                                  “User Permits"
           .You have requested an opinion on two questlona con-
cerning the Special Fuels Tax Law;(Art. 10.11(l)           Chapter 10,
Ii. B. 11, 3rd C. S. 56th Leg.).       ‘iYour first  question is
whether a “user” who maintains a fuel storage In Texas and
purchases special fuels in bulk, quantities         predominantly for
delivery   into the fuel .supply tanks of hi8 motor vehicles,
and who also operates a ~number of the motor vehicles          in
interstate    commerce, nece.ssitatlng     the importation   of special
fuels in the fuel supply tanks of such vehicles,           is required
to obtain a non-bonded user permit as well as a bonded user
import permit.
           Answering this question requires a brief examlna-
tlon of the purpose and scope of the Special Fuels Tax Act.
Article  10.03 of the Act Imposes a tax upon the use of spec-
ial fuels for the propulsion    of motor vehicles     upon the
public highways of this State.       Revisions of the Act enacted
by the Third Called Session of the 56th Legislature         were de-
signed to remove the collection      of the tax from the service
station level to the wholesale supply level.         Ninety per cent
or more of the special fuels sold in Texas are used for non-
highway purposes.    Since the tax Is laid only on fuels uSed
for highway purposes, the collection       system Is aimed at re-
ducing to a minimum the amount q tax refunding.          This is
accomplished through a System of permit controls.          This system:
operates as follows:     A wholesale   supplier Is required
(1) to collect   the tax on all deliveries     to licensed non-
bonded retail  dealers and bulk user8 (such as truck and bus
lines)  whose purchasers are predominantly for delivery        into,
the fuel supply tanks of motor vehicles;        (2) to sell tax free
to licensed and bonded retail     dealers and bulk users whose
purchases are predominantly for non-highway use, and who are
required to pay taxes directly to the State only on the fuel
Honorable   Robert S. Calvert,   page 2   Opinion   No. W-845



sold and/or delivered   into fuel supply tanks of motor
vehicles;   and (3) to sell tax free to exclusive    non-highway
consumers who furnish a signed statement that none of the
special   fuels so purchased will be delivered   into fuel tanks
of motor vehicles.
           ”User” , as contemplated by the Act, means every
person who delivers   any special fuels into the supply tanks
of motor vehicles   owned or operated by him, and any person
who imports special fuels into this State in the fuel sup-
ply tanks of motor vehicles    owned or operated by him.
Article 10.11(l)   provides, in so far as pertinent:
            “Upon approval of an application   and approval
            of bond if a bond is required,   the Comptroller
            shall Issue to the applicant a permit authorizing
            him to engage in the kind of business or other
            operations  or to perform the functions  set out in
            and authorized by the class of permit so issued . . .
            Such permit shall be of the kind and classifi-
            cations as set out herein below:
             . . . .
            “NON-BONDED
                      USER PERMITS.
            ‘Authorizing persons whose purchases of special
            fuels are predominantly for delivery   by them into
            the fuel supply tanks of motor vehicles   owned or
            operated by them to act as users.
            ”RONDEDUSERPERMITS.
            “Authorizing persons whose purchases of special
            fuels are not predominantly for delivery  by them into
            the fuel supply tanks of motor vehicles  owned or op-
            erated by them to act as users.
            “BONDEDUSER IMPORTPERMITS.
            “Authorizing  persons who import special  fuels
            into this State in the fuel tanks of; motor vehicles
            owned or operated by them to act as users.”
           A wholesale suppli;er may sell only to those holding
permits as bonded or non-bonded users or dealers.      He is re-
quired by Article   10.03(3) to collect   the tax on each gallon
of special  fuels dellvered  to non-bonded users.    No provision
of the law requires or authorizes     the supplier to collect   the
Honorable    Robert   S. Calvert,   Page 3   Opinion No. WW-845


tax from any bonded user, or any person      operating   only in the
capacity of a ,bonded user.
            A bonded user import permit authorizes     the holder
to import special fuels in the fuel supply tanks of his motor
vehicles.    Article  10.03(5) requires him to report and pay
the tax to the State on each gallon so Imported and con-
sumed in the operation of, the vehicles      upon the Texas high-
ways. However, Article 10.13(5) appears to limit the
reporting   required to be made by the user-importer     to special
fuels used In interstate     vehicles  only, and not -that used
in vehicles   operated entirely    In intrastate  commerce.
           Article   10.11(l)   authorizes   a supplier to operate
aa a dealer or user without securing a separate permit, and
authorizes  a licensed    dealer to operate as a user without
obtaining a separate permit.        No comparable provision  author-
izes a bonded user-importer      to., act a8 a non-bonded user with-
out obtaining a separate Permit.
            For the foregoing  reasons, It is ‘cle,ar that If a
user is maintaining storage tanks in Texas and purchasing
special fuels from suppliers In bulk quantities        predominantly
for delivery   Into fuel supply tanks of his motor vehicles
(thereby qualifying    him as a non-bonded user), and ,ls also
operating a number of motor vehicles     in interstate    commerce
(which requires him to secure a bonded user-import        permit),
such user is required to obtain both a non-bonded user permit
and a bonded user import permit.
              Your next question concerns the provisions    of
Article     10.08, which provides as follows:
             “OPTIONALCOMPHTATION
                                OF TAX.
             “In the event the tax herein imposed on special
             fuels imported into this State in the fuel supply
             tanks of motor vehicles   and the tax on”:special
             fuels used In mototi vehicles iowned or’%perated by
             licensed  supplier or other persons acting as users
             can be more accurately   determined on a mileage
             basis (that IS by determining and using the total
             number of miles traveled and the total gallons of
             fuel~consumsd),   or In ease It is more practicable
             to so determine the tax, the Comptroller is hereby
             authorized to approve and adopt such basis.”
Honorable   Robert   S. Calvert,   ,Page 4       Opinion No. WW-845


            In reference   to the foregoing    provision,   you ad-
vise:
            “The Comptroller has construed the above Article
            10.08 to be, and clearly      Intended by the
            Legislature    to be, an exception to Article      10.03-(5)
            providing that the tax shall be paid to the State
            on each gallon delivered      by a user into the fuel
            supply tanks of motor vehicles,       and to Article    10.14-
            (3) penalizing     the filing  of a claim for tax refund
            on any special fuels delivered       into fuel supply
            tanks of motor vehicles.       And that upon adoption
            by the Comptroller of the mileage basis authorized
            in Article    10.08 for determining the amount of tax
            due Texas on special fuels delivered        into motor
            vehicles    in Texas and thereafter     used partly on the
            Texas hlghwa s and partly      In other States, the said
            Article   10.0 ii will supersede and control over the
            other Articles     cited herein.”
          Article   10.08 authorizes the Comptroller to measure
the tax due from a given user on a mileage basis if that sys-
tem is more practicable   and will more accurately    determine
the amount’of tax due.    In case the Comptroller elects to
use this procedure,   the provisions of Article   10.03(5) that
the tax Is to be paid on each gallon delivered     by a user Into
the fuel supply tanks of motor vehicles   is superseded.
            In cases where a user has paid taxes upon special
fuels delivered     into fuel supply tanks which travel in ln-
terstate   commerce,    an anomalous situation    arises.    Article
10.14 authorizes     a refund of taxes paid on special fuels
consumed In non-highway use.         However s Section (3) of Article
10.14 specifically      provides that any dealer or user who files
a claim for refund of the tax paid on any special fuel
delivered   into the fuel supply tank of’s motor vehicle          shall
forfeit   the right to the entire amount of the refund claim
filed.    The Act imposes a tax only upon special fuels used
on Texas’ highways, therefore       It is apparent that gas used on
hlghways~ of other states is used for a “‘non-,hlghway” purpose
within the meaning of the refund provision.            Consequently,
to give effect     to the plainintent     of the Legislature     that
a user Is entitled      to a refund on all special fuels used for
non-highway purposes requires thatxctlon            (3) of Article
10.14 be disregarded      to the extent that it Indicates      that no
refund may be had for taxes paid on special fuels subsequently
used,in motor vehicles       on highways of other ‘states.     A user
is entitled    to a refund of taxes paid on special fuels used
In motor vehicles      out of state and may make application
Honorable   Robert S. .Calvert,   Page 5       Opinion $0.    ~~-845


therefore   In the form prescribed   by Artiole   10.14.    However,
this’ does not mean that Article    10.08, when invoked by the
Comptroller,   supersedes any of the provision8     of Article
10.14, for the right to refund exists regardlees         of whether
the amount of tax due is figured on a mileage basis, ors in
some manner, by the amount of gallons actually used on
Texas highways.    (In this regard, It should be noted that
the mileage formula for computing the tax may be used only
where It will most accurately     and practioally   reflect   the
actual amount of gallons used for highway purposes.          Where a
certain number of gallons are delivered      to a user, all of
which are used on Texas highways, the tsx must be collected
on each such gallon;    in such a case, the Comptroller has no
discretion   to employ the mileage formula.)
                                  SUMMARY
             A specLa1 fuels “u8er” who .i8 maintaining storage
tanks In Texas and purchasing special fuels from suppliers
in bulk quantities    predominantly for delfvery into fuel
supply tank8 of his motor vehicles,       and.18 also operating
a number of the motor vehicle8 In Interstate        commeroe,
necessitating    Importation of,,epecial   fuels in the fuel sup-
ply tank8 of such vehicles,     Is r’equired to obtain both a
non-bonded user permit and bonded user import permit.
            Article  10.08 of,the     Special .?uel8 Tq Act, when
Invoked by the Comptroller , supersedes the provision       of
Article   10.03 (5) that the u8er pay the tax on eaah gallon
of special    fuels delivered   into the fuel supply tanks of
his motor vehicle.      Article   10.14(3) does not prevent a U8er
from seauring a refund of taxes paid oti ,Bpeci,al fuels
delivered   into the fuel supply tank8 of motor vehicle8 and
used on the highways of other states.
                                     Very truly    yours,
                                     WILL WILSOR
                                     Attorriey General      OS Texas


APPROVED:                             RYw-4Lt
                                        RMck N. Pricer
                                                   ’
OPIMIGNCOMMITTEE:                           Assistant
W. V. Geppert, Chairman               JNP:jp
J. Arthur Sandlin
Riley *Eugene Fletcher
Phoclons Park, II                     REVIEWEDFOR THE ATTORNEY
                                                             GENERAL
Marvin Ii. Brown, Jr.                 By: Leonard Passmore
