1 Powell is situat ed in Knox County. 

# FILED
January 13, 1998 Cecil Crowson, Jr. Appellate C ourt Clerk IN THE COURT OF APPEALS OF TENNESSE EASTERN SECTION AT KNOXVILLE

DEROYAL INDUSTRIES, INC., ) ) CLAIBORNE CHANCERY Plaintiff/Appellee, ) ) NO. 03A01-9708-C H-00328 v. ) ) HON. BILLY JOE WHITE RUTH E. JOHNSON, ) CHANCELLOR COMMISSIONER OF REVENUE, ) STATE OF TENNESSEE, ) ) Defendant/Appel

lant ) VACATED
John Knox Walkup and Se an P. Scally, N

ashville, for the A

ppellant. Dale C. Allen and H. Bruce Guyton, Knoxville, for the Appellee.
O P I N I O N

INMAN, Senio

r Judge This is a sales tax de

ficiency case. T

he taxpayer filed a

determinative action in the Chance

ry Court of Claibor

ne County against the C

ommissioner of Revenue, who file

d a motion to dismiss all

eging improper venue . The motion was denied, and the

case proceeded to judgment. The Com missioner appeals, insisting, inter alia, that the Chancellor erred in holding that C

laiborne County was a proper venue. The plaintiff wa

s granted a Charte

r by the State in 1978.

According to the Charter, its corporate, registered and principal address is “DeRoyal Industries, Inc., 200 DeBusk Lane, Powell, Tenness ee, 37849.” 1

Thepla intiff sells equipme nt to the health care

industry, and conduct

s its2

business in various counties within Tennessee and else

where in the sever

al states. According

to John S harp, the treasurer and corporate controller of the plaintiff, who described the vario us corporate divis ions of the plaint iff, t he cor porate division, situated in Powell, Ten nessee, i s respons ible for “sales, g eneral and administrative

funct ions , marketing people, human resources , finances, information

systems, all of the

administrative suppor

t, all of the m arketing support, and the sa les support.” Followingan audit by the De partment of Revenue, a Not ice of the Assessment

was issued to the pla

intiff, which had purcha se d certain equipment allegedly used in the manufacturin g process and therefore exe mpt from sales tax. The accuracy of

the assessment is cha

llenged by the plaintif

f in this litigation. T.C.A. § 67-1 -1803(a) provides: “Thesubject matter jur

isdiction shall be and

the venue

of suits filed pursuant to Acts 1986, Ch. 749 [T.C.A. § 67-1-1080, et. seq. ] shall liein the Chancery Courtof either Davidson County or in the county in Tennessee of the t

axpayer’s domicile

or in the county in which the taxpayer has the tax payer’s place of busi ness in Tennessee.” Because tax suits implicate state sovereignty, they “can be maintained only in the manner and upon the conditions consented to by the State.” Jack Daniels Distillery, In c. v. Olsen, 716 S.W.2d 496 (Tenn. 19 86). The appellee arg

ues that since its pri

ncipal place of busin

ess in Tennessee is in Cla

iborne County, wher

e “most of its manuf

acturing and fabricating processes take place,” and that ‘domicile’ is not the same as ‘principal place of

business,’its selec

tion of Claiborne Cou

nty as a venue for filing this action was proper.

The Commissioner a

rgues that the taxpay

er’s principal pla

ce of business is Powell, Tennessee, within the meaning of T.C.A. § 67-1-1803(a). We agree.3 In Express Co. v. Patterson , 122 Tenn. 279 (Tenn. 1904), the Supreme Court ruled that the term “principal of fice or place of business” means ‘especially in conne

ction with taxation, ’ the domicile of the corporation, citin

g Grundy County v. T. C. I. Railr oad Co., 94 Tenn. 308 (Tenn. 1894). The Court added: “Theresidence or ‘domicile’ of a corporation under our statute is the countywhere the Charte

r is registered . . . and it is the place where the governing power

of the corporation resides and is exercised, an d not the place where i ts ordinary bus iness is conducte d.” The judgment is vacat ed and the suit is d ismissed without prejudice. The remaining issue

involving the authority o f the Commissioner t

o compromise a tax dispute without the written concurrence of the Comptroller and Attorney Gene

ral is pretermitt

ed. Costs are assessed to the appellee.

___________________________ William H. Inma

n, Senior Judge CONCUR:

__________________________ Herschel P. Fr

anks, Judge

__________________________ Don T. McMurra

y, Judge