economic burden is shifted to it through operation of the contract. As pointed out in the opinion in the King and Boozer case, by concession of the Government and on authority, the Constitution, without implementation by Congressional legislation, does not prohibit a tax upon Government contractors because its burden is passed on economically by the terms of the contract or otherwise as a part of the construction cost to the Government.”

In view of these recent decisions, we respectfully request that you give further consideration to this problem, and that you advise the Social Security Board that it may include in its grants to the State of California the entire amount which the department of employment is required to pay in connection with the purchase of supplies and equipment for the administration of the California Unemployment Reserves Act without the deduction of any amount which may improperly be designated as a tax, but which actually constitutes a part of the purchase price of supplies and equipment.

Section 302 (a) of the Social Security Act, 49 Stat. 626, provides, in part

The Board shall from time to time certify to the Secretary of the Treasury for payment to each State which has an unemployment compensation law approved by the Board under title IX, such amounts as the Board determines to be necessary for the proper administration of such law during the fiscal year in which such payment is to be made.

The decision of September 8, 1937, supra, apparently was predicated to a considerable extent upon the ruling of the Supreme Court of the United States in the case of Panhandle Oil Co. v. Mississippi ex rel. Knox, 277 U. S. 218, to the effect that the vendor of gasoline sold to the United States was exempt from the payment of an excise tax measured by the quantity of gasoline sold upon the theory that the tax fell upon the Government. However, a careful examination of the recent decision of the Supreme Court of the United States in the case of State of Alabama v. King and Boozer, 314 U. S. 1, 86 L. ed. (Adv. Ops.) 1, leaves little or no room for doubt that a vendor who sells supplies to the United States is not exempt from the payment of a State sales tax upon the transaction unless the legal incidence of the tax is upon the vendee. And the holding of the Supreme Court of California is that the legal incidence of the retail sales tax of that State is upon the vendor (Western Lithograph Co. v. State Board of Equalization, et al., 11 Cal. (2d) 156), so that the tax is not to be regarded as being passed on, as such, to the purchaser. Cf. Lash's Products Co. v. United States, 278 U. S. 175.

Such being the case it would appear that the price paid by the department of employment or other agency of the State of California for such supplies or equipment purchased by it as are "necessary for the proper administration" of the State's unemployment compensation laws may not be viewed as including, as such, the tax imposed on vendors by the provisions of the California Retail Sales Tax Act of 1933, as amended, although the sale price of the supplies or equipment may have been increased by reason of the imposition of such tax on the vendor; and as it thus appears that the tax loses its identity as such and is merged in the purchase price paid by the State agency,

the theory that grants which may be made to the State to cover the additional expense would be diverted to the payment of a State tax seems no longer tenable. Cf. decision of August 2, 1940, to you.

Accordingly, in view of the foregoing, I have to advise that the Social Security Board is authorized to include in its grants to the State of California for the purpose set forth in section 302 (a) of the Social Security Act the entire amount which the department of employment or other State agency is required to pay in connection with the purchase of supplies and equipment the Board finds necessary for the proper administration of the unemployment compensation laws of that State without the deduction of any amount on account of the additional expense incurred by reason of the tax imposed by the provisions of the California Retail Sales Tax Act of 1933, as amended.

(B-22581)

PAY-ACTIVE DUTY-SERVICE CREDITS-NAVAL RESERVE OFFICER ON HONORARY RETIRED LIST

A Naval Reserve officer on the honorary retired list created by section 309 of the Naval Reserve Act of 1938 is not entitled for longevity pay purposes while on active duty to credit for the time elapsing between the effective date of his transfer to the honorary retired list and the date on which he became entitled to active duty pay and allowances.

Assistant Comptroller General Elliott to the Secretary of the Navy, January 31, 1942:

There has been considered your letter of December 15, 1941, requesting a decision on the question whether Lt. Comdr. Howard C. Marshall, D-V (G), United States Naval Reserve, honorary retired list, is entitled, while on active duty, to credit for longevity pay purposes for the time elapsing between the effective date of his transfer to the honorary retired list created by section 309 of the Naval Reserve Act of 1938 (52 Stat. 1183) and the date on which he became entitled to active duty pay and allowances. There was enclosed with your request for decision a letter from the disbursing officer, Inshore Patrol Headquarters, First Naval District, Boston, Mass., as follows:

Subject: Service for Longevity Purposes for (13779) Lt. Comdr. Howard C. Marshall D-V (G) U. S. N. R.

1. Subject officer reported for active duty on October 6, 1941.

2. Statement of Service furnished by Commandant First Naval District states that subject officer had 23 years 6 months and 12 days for pay purposes up to January 1, 1941, the date he was transferred to the Honorary Retired List.

3. Clarification is requested whether subject officer is entitled to longevity from January 1, 1941, to date of reporting for active duty.

An indorsement of the Chief of the Bureau of Supplies and Accounts, relative to the question, is as follows:

Subject: Right of Lieutenant Commander Howard C. Marshall D-V (G), U. S. N. R., to count period on the honorary retired list for longevity pay purposes. Reference: (a) Section 3 of the act of June 19, 1922.

(b) Section 7 of the Naval Reserve Act of 1938, approved June 25, 1938.

1. Section 3 of the act of June 10, 1922 [42 Stat. 627], provides that in computing the increase of pay for each period of three years' service, commissioned officers of the Naval Reserve

shall be credited with full time for all periods during which they have held commissions as officers of any of the services mentioned in the title of this act, or in the Organized Militia prior to July 1, 1916, or in the National Guard, or in the Naval Militia, or in the National Naval Volunteers, or in the Naval Reserve Force or Marine Corps Reserve Force, when confirmed in grade and qualified for all general service, with full time for all periods during which they have performed active duty under reserve commissions, and with one-half time for all other periods during which they have held reserve commissions." and section 7 of the Naval Reserve Act of 1938 provides in part as follows:

"Commissioned officers, exclusive of chief warrant officers, of the Naval Reserve, including those on the honorary retired list or who may have been retired, when employed on active duty or on training duty with pay or when employed in authorized travel to and from such duty shall be deemed to have been confirmed in grade and qualified for all general service and shall receive the pay and allowances, including longevity pay, as provided by law for the reserve forces of the United States, and shall when traveling under orders or under competent authority receive transportation in kind, mileage, or actual expenses as provided by law for travel performed by officers of the Regular Navy.

2. It appears from the information contained in the basic letter of the Disbursing Officer, Inshore Patrol, Navy Yard, Boston, Mass., dated October 10, 1941, that Lt. Comdr. Howard C. Marshall, D-V(G), U. S. N. R., was transferred to the honorary retired list on January 1, 1941, and reported for active duty on October 6, 1941. There is no available decision of the Comptroller General as to whether time spent on the honorary retired list may be counted in determining longevity increases to which a reserve officer in receipt of active duty pay is entitled. In view of the wording of Section 7 of the Naval Reserve Act of 1938, quoted above, it is recommended that a decision be obtained from the Comptroller General as to whether Lieutenant Commander Marshall is entitled to count for longevity pay purposes the time elapsing between effective date of transfer to the honorary retired list and the date on which he became entitled to active duty pay and allowances.

Sections 309 and 310 of the Naval Reserve Act of 1938 are as follows:

SEC. 309. An honorary retired list for the Naval Reserve is hereby established, and officers and enlisted men of the Naval Reserve shall be placed on this retired list of the Naval Reserve without pay or allowances, upon reaching the age of sixty-four years, or upon their own request, after thirty years' service in the Naval Reserve, except as otherwise provided in this act : Provided, That service in the Army, Navy, Marine Corps, Coast Guard, Naval Auxiliary Service, Naval Reserve Force, Naval Militia, National Naval Volunteers, Naval Reserve, Marine Corps Reserve Force, and Marine Corps Reserves shall be counted as service in the Naval Reserve under the provisions of this section: Provided further, That Naval Reservists who have been specially commended for their performance of duty in actual combat with the enemy by the head of the executive department under whose jurisdiction such duty was performed, shall, when placed upon the honorary retired list, be advanced to the next higher grade.

SEC. 310. Officers and men of the honorary retired list created by section 309 of this title, who have performed a total of not less than thirty years' active service in the Army, Navy, Marine Corps, Coast Guard, Naval Auxiliary Service, Naval Reserve Force, Naval Militia in Federal status, National Naval Volunteers, Naval Reserve, Marine Corps Reserve Force, and Marine Corps Reserve, or who have had not less than twenty years' such active service, the last ten years of which shall

have been performed during the eleven years immediately preceding their transfer to the Honorary Retired List of the Naval Reserve created by section 309 of this title or to the honorary retired list in existence on the date of approval of this act, shall, except while on active duty, be entitled to pay at the rate of 50 per centum of their active-duty rate of pay as prescribed in section 7, title I, of this act: Provided, That the pay of members of the honorary retired list prescribed by this section shall be paid from the appropriations made for the maintenance of the Naval Reserve.

In view of the terms of the laws in effect at the time of enactment of the Naval Reserve Act of 1938, and in the absence of any clear provision in the said act requiring or justifying a contrary holding, it is concluded that Lieutenant Commander Marshall is not entitled to count for longevity pay purposes the time elapsing between the effective date of his transfer to the honorary retired list and the date on which he became entitled to active-duty pay and allowances.

UNIFORM

(B-22921)

ALLOWANCE-NAVAL RESERVE OFFICERS UPON REPORTING FOR ACTIVE DUTY IN TIME OF WAR OR NATIONAL EMERGENCY

Upon first reporting for duty in time of war or national emergency at a location where uniforms are required to be worn, commissioned and warrant officers of the Naval Reserve who have not previously received the $100 peacetime uniform allowance authorized by section 302 of the Naval Reserve Act of 1938 are entitled to that allowance as well as to the further sum of $150 authorized by the same section for the purchase of required uniforms when first reporting for active duty in time of war or national emergency.

Assistant Comptroller General Elliott to the Secretary of the Navy, February 2, 1942:

There has been considered your letter of January 2, 1942 (with enclosure), as follows:

There is forwarded herewith for your consideration a letter from the Officer in Charge, Retainer Pay Division, Bureau of Supplies and Accounts, dated December 12, 1941, with accompanying endorsements, relative to the question of uniform allowance payable in the case of commissioned and warrant officers of the Naval Reserve reporting for active duty on and after December 8, 1941. Your decision is requested on the questions set forth in paragraph 2 of the enclosed letter of December 12, 1941, as follows:

(a) In view of the declaration of war on December 8, 1941 (Public Law 328, 77th Congress), are commissioned and warrant officers of the Naval Reserve reporting for active duty on or after that date entitled to the $100 uniform allowance authorized to be paid by Section 302 of the Naval Reserve Act of 1938 approved June 25, 1938 (52 Stat. 1180; 34 U. S. C. 855a) ?

(b) If it is decided that commissioned officers and warrant officers of the Naval Reserve are entitled only to the $150 uniform allowance upon first reporting for active duty in time of war, may such officers be paid the further sum of $50 after completion of each period of not less than four years in the Naval Reserve subject to the conditions outlined in Section 302 of the Naval Reserve Act of 1938? The indorsement of the Bureau of Navigation relative to the questions presented is as follows:

Subject: Uniform gratuity-amounts payable; request for advance decision regarding.

References: (a) Naval Reserve Act of 1938 approved June 25, 1938.

(b) Public Law 188, 77th Congress approved July 24, 1941. 1. Forwarded, concurring in the recommendation in the preceding endorsement that the basic letter be referred to the Comptroller General for decision. 2. Attention is invited to the last proviso of Section 302 of the reference which states, "That in time of war or national emergency a further sum of $150.00 for the purchase of required uniforms shall be paid to officers of the Naval Reserve when they first report for active duty." The use of the word "further" indicates that it was the intent of Congress that Naval Reserve officers first reporting for active duty in time of war would receive not only the $100.00 authorized in Section 302 of reference (a) in time of peace but the sum of $150.00 as an additional payment. The total of $250.00 approximates the cost of uniforms required by Naval Reservists on active duty in war time.

3. As further evidence that the above was the understanding of Congress is Section 7 (b) of reference (b) which reads "Enlisted men shall, upon being initially appointed as provided by Section 2 of this Act, be paid the sum of $250.00 as a uniform gratuity."

Section 302 of the Naval Reserve Act of 1938, 52 Stat. 1180, is as follows:

In time of peace, upon first reporting for active or training duty with pay, after enactment hereof, at a location where uniforms are required to be worn, or after the authorized performance of fourteen drills, a commissioned or warrant officer of the Naval Reserve shall be paid a sum not to exceed $100 as reimbursement for the purchase of the required uniforms, and thereafter he shall be paid an additional sum of $50 for the same purpose upon the completion of each period of not less than four years in the Naval Reserve: Provided, That this latter amount of $50 shall not become due any officer until he has completed not less than one hundred and fifty drills or periods of other equivalent instruction or duty or appropriate duties and fifty-six days' active or training duty, or seventy-five drills and eighty-four days' active or training duty, or one hundred twelve days' active or training duty: Provided further, That any officer who has heretofore received a uniform gratuity shall not be entitled to either of the abovementioned sums until the expiration of four years from the date of the receipt of the last such gratuity: Provided further, That uniforms for aviation cadets shall be provided as heretofore or hereafter authorized by law: And provided further, That in time of war or national emergency a further sum of $150 for the purchase of required uniforms shall be paid to officers of the Naval Reserve when they first report for active duty.

In a decision dated November 8, 1939, B-6777, to the Acting Secretary of the Navy, it was held that under the provisions of section 302, supra, officers of the Marine Corps Reserve who had no previous active duty or active duty for training prior to their reporting for active duty under Executive Order No. 8245, dated September 8, 1939, pursuant to the national emergency proclamation of the same date, are entitled to be paid the peacetime sum of $100 as reimbursement for the purchase of required uniforms, providing uniforms are required to be worn at the place of so reporting for duty, and to the additional sum of $150 for the same purpose. The effect of section 302 was stated in the said decision as follows:

The language of the last proviso of section 302 of the Naval Reserve Act of 1938-"that in time of war or national emergency a further sum of $150 for the purchase of required uniforms shall be paid to all officers of the Naval Reserve when they first report for active duty," does not indicate that two separate and distinct allowances are authorized for the purchase of required uniforms but rather a single sum, a minimum and maximum being payable under different conditions, the minimum sum to be payable in time of peace and the maximum sum to be paid when reporting for active duty in time of war or national emer