Case Name: National Merchandising Corp., Appellant, v. New York State Department of Taxation and Finance, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1978-05-11
Citations: 63 A.D.2d 785
Docket Number: 
Parties: National Merchandising Corp., Appellant, v New York State Department of Taxation and Finance, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 63
Pages: 785–786

Head Matter:
National Merchandising Corp., Appellant, v New York State Department of Taxation and Finance, Respondent.

Opinion:
Appeal from a judg ment of the Supreme Court at Special Term, entered October 29, 1976 in Albany County. Appellant is a Massachusetts corporation which engages in certain business activities in New York. The respondent Tax Commission, believing that revenue derived by the appellant from its activities here is subject to the sales tax, served a notice of deficiency on the appellant. Rather than follow the administrative appeal procedure set forth in the tax statute itself (Tax Law, § 1138, 1140), the appellant chose to commence what is essentially a declaratory judgment action seeking a ruling that its activities constitute the providing of advertising services and as such are exempted from the tax by section 1105 (subd [c], par [1]) of the Tax Law. Special Term dismissed the action for failure to exhaust the administrative appeal provided for in the tax statute. This was error. A declaratory judgment action may be used to challenge the applicability or constitutionality of a taxing statute without exhausting the administrative remedies the taxing authority may provide (Matter of First Nat. City Bank v City of New York, 36 NY2d 87, 92-93; Dunn & Bradstreet v City of New York, 276 NY 198, 206; Matter of Hosp. Tel. Systems v New York State Tax Comm., 44 AD2d 271, affd 36 NY2d 746). Since the State has not answered and neither party has briefed the merits of the case, it must be remitted to Special Term for further proceedings. Judgment reversed, on the law, without costs, and matter remitted to Special Term for further proceedings not inconsistent herewith. Mahoney, P. J., Kane, Staley, Jr., Larkin and Mikoll, JJ., concur.