(a) A licensed public seller of compressed natural gas or liquefied natural gas or the licensed fleet producer of compressed natural gas or liquefied natural gas may deduct the number of gallons of compressed natural gas or liquefied natural gas sold or disbursed to the following entities provided that the exempt entity has a valid exempt entity license issued in accordance with subsection (j) of Section 40-17-332:

(1) The United States government or any agency thereof.

(2) Any county governing body in this state.

(3) The governing body of any incorporated municipality in this state.

(4) City and county boards of education in this state.

(5) The Alabama Institute for Deaf and Blind, the Department of Youth Services school district, and private and church school systems, as defined in Section 16-28-1, which offer essentially the same curriculum as offered in grades K-12 in the public schools of this state.

(b) The exempt entity is not entitled to apply for a refund for any excise tax paid to the licensed public seller or licensed fleet producer. The licensed public seller or licensed fleet producer must take the deduction for all gallons of compressed natural gas or liquefied natural gas sold to the licensed exempt entity on the monthly tax return. The licensed exempt entity must provide the licensed public seller or licensed fleet producer with its exempt entity number prior to the purchase. If the licensed exempt entity is not subject to the excise tax levied under this article on compressed natural gas or liquefied natural gas, the licensed exempt entity will not be subject to the state inspection fee levied under Section 8-17-87.