1                                               R-506


                           OFFICE       OF
             THE ATTORNEY GENERASL

                           June 5,   1947

    Honorable George Ii.Sheppard
    Comptroller of Public Accounts
    Austin, Texas        Opinion No. V-236
                         Re:   The effect to be ac-
                               corded the l$ sales
                               tax on transfer of
                               motor vehicles under
    Dear Sir:                  the submitted facts.
              You have requested the opinion of this Depart-
    ment upon the following factual situation:
              "9 car owner trades a Second Hand Auto-
         mobile valued at $3,043.00 to a dealer for a
         new unregistered automobile valued at $2,471.00.
         The dealer pays the difference of $572.00 to
         the original car owner in cash.
                 'The'Tax Aas~essor-Collectorupon &he ap-
         plication~for registration of these two auto-
         mobiles demanded the 1% Sales Tax on the
         $3,043.00    automobile as authorized by subsec-
         tion b of Section I of Article 7047-X.     The oar
         dealer refused the payment of this tax relying
         on subsection b of Section II of Article 7047X.
         The Tax Assessor-Collector has written this De-
         partment as to whether he Is required to ool-
         lect the taxes from the above mentioned. hue
         shall, therefore,.thank you to advise us wheth-
         er the dealer 1s required to pay the taxes.
              "The dealer alleges that the Second Hand
         car was puzyzhasedby him for re-sale only, and
         the tirlginal-owner of the Second Hand car al-
         leges~that the new car acquired by him Is for
         personal use.
              "Due to the fact that no tax has been paid
         upon the sale of the new automobile valued at
         $2,471.00, and It Is to be used upon the high-,
         ways, you will please advise us whether or not
         a tax should be paid even though the value of
Honorable George H. Sheppard - Page 2


     the new car was lees than the value of the
     oar that was traded to the deeler for it.”
          Your query iv whether or not the l$ motor ve-
hicle retail sales tax Is due on the sale of the auto-
mobile valued at $3,043.00 or on the sale of the automo-
bile valued at $2471.00.
          The pertinent parts of House BLll Ho. 8, 'lots
of the 47th Legislature, Regular Session, 1941, Chapter
184, Article VI, p. 269 (Codlfled as Article 7047-X,
Vernon’s Civil Statutes), are as follows:
          “Section 1. (a) There Is hereby lev-
     ied a tax upon every retail sale of every
     motor vehicle sold In thl Stat       such tax
     to be equal to one (1) pe: -enteA* the total
     consideration paid or to be paid to the sell-
     er by the buyer, which conalderetlon    shell
     include the amount paid or to be paid for said
     motor vehicle end all aecessorlea attaohed
     thereto at the time of,the sala, vhethep ouoh
     consldemtlon                   be In the nature       of aaeh,       credit,
     or exchange of other property, or a oomblnat;on
     of these . . .
          “(b) In all cases of retell  sales lavolv-
     int$the exohange OT motor vehloleu, the partz
     transre~rlng the title to the motor vehlole NV-
     &g the greeter vs1ue Shall be ooMieeraa the
     seller, and no tex is Imposed upon the trclnafor
     Of a motor vehiole                     tredea   Ln UDOll the       DuroMIe
     prlOe       0T acme ,OthOFmotor                 VOhlOle.

             ”
                 .    .   .


           “Sootion 3. (a) The term ‘#ale’ a6 here-
     in used shall lnolude lnstalment and oredit
     mle#, and the exahenge of propetir, (16well
     ea the sale thsrsoS Tar money, evet~ olosed
     trars9otion aonotltuting a mle.   The trem-
     action whereby the possesrlon of propezrtg18
     transferred but the seller retain8 title II
     eaouritg for the payment of the prioe ah811 bo
     deemed a sale.
             l’(b)            The    term    Wtall     srls’     or    9etall
     mleef           88 herein         used shell      inolude        rlZ~rrlrr
    Honorable George B. ~Sheppard+Page   3

I

        ’of Cotor vehicles exckpt thoaa..rhsreby’t~s“;..’
         purchasere’cqu%tiaa .~
                              motor vehicle f OI?the,
         exclusive purpose of resale and not for use.”
         @mphaala added]
              The q otok:vdhltil$~
                                retail sales tax composes
    Article VI of House aill No. 8, known as the “Omnibus
    Tax Bill”, thb,pimsry object of whlah was the raising
    of general ,revenuefor the State. The general rule of
    law, in the.construotion of tax statutes when the legls-
    lative intent Is ambiguous or obscure, of strict con-
    struction against the State and liberal construction In
    favor of the taxpayer, must be applied. (See 40 Tex.
    Jur. Par. 45,~~. 69).
              In that pert of the transaction lnvolvlng the
    automobile valued at $3043.00,  the.owner transferrl   its
    .tltle$ecamd the “seller” as defined In Section 1 (b“5
    aslpre,allice alich,motorvehicle had the greater value’ln
    the exchange of vehicles. The dealer became the “pur-
    chaser” of such vehicle and having acquired It for the
    “exc1ua.lvepurpose of resale” is exempt from the payment
    bf the tax thereon by the provisions of Section 3 (b)
    aupra.*
              As to that part of the transa,ctlonwhen the oar
    dealer transfers the title to the new unregistered auto-
    mobile valued ~3%$2471.00, as’a part of the “retail sale
    lnrolvlng the exchange.of.motor vdhicleti”,since this auto-
    m6biU wee 'tredbd  ln,up& the purchas&prlce of some oth-
    er moto%.‘~ehial&“,vhioh was of .leaser ‘value than the oth-
    er motor vehicle ltivolvedin the “exchange,” the car deal-
    er Is not the.“seller” as defined in Section 1 (b) supra,
    and no tax is imposed upon Its transfer. Therefore, such
    motor vehicle wg be registered without the payment of
    the 1% sales tax by either psrtg.

                           SUMMARY

              Wh6re an .exchangeIs made by the :owner of
         a used motor vehicle with a ca~rdealer for a
         new unregistered motor vehicle together with an
         additional cash consideration paid by the oar
         dealer to the owner, the used vehicle being ac-
         quired by the car dealer for the eizzlualvepur-
         pose of resale, each of the motor vehicles may
         be registered without the payment of the 1%
Honorsble George H..Sheppard - pa:ge4~


     motor.~vehiale rate13 aslea tax,the~~on. Arti-
     cle 7047-K, Vernonb   C$vU Ste$utea.- -.




                                      C. I.~Riabarda
                                            Assistant
                                                     *e
CKR/lh                                                -%




                                 :I   ATToRmcimIqRAL

                                  I

                                                       L