Al-Sal Oil Co. v. State Board of Equalization

—In this tax refund action arising under the Motor Vehicle Fuel License Tax Law (Rev. & Tax. Code, § 7301 et seq.), the State Board of Equalization (Board) appeals from a judgment in favor of the taxpayer, Al-Sal Oil Company, Inc. (Al-Sal). The issue is whether Al-Sal was required to pay an excess gallonage tax—applicable to licensed distributors —on its retail sales of straight gasoline during the time it sold such gasoline and blended and sold gasohol. We agree with the trial court that Al-Sal was not required to pay this tax and we therefore affirm the judgment. In arriving at our conclusion we have been forced to make our way through a legislative scheme to simplify state taxation of the gasoline industry. The exercise calls to mind words by U.S. Congressman Delbert L. Latta when confronting a similar scheme: “I hold in my hand 1,379 pages of tax simplification.” (On tax reform, quoted in U.S. News & World Report, Dec. 23, 1985.)

Background

The Motor Vehicle Fuel License Tax Law

In 1941 the Motor Vehicle Fuel License Tax Law (hereafter, Fuel Tax Law) was enacted, replacing the 1923 Gas Tax Act. (See Rev. & Tax. Code, § 7301, 60 West’s Ann. Rev. & Tax. Code (1987…