Court Opinion

ID: 8303993
Source: CourtListenerOpinion
Date Created: 2022-10-17 11:21:47.327074+00
Date Added: 2024-06-11T16:44:27.842657
License: Public Domain

On Petition to Rehear
PEE CUEIAM.
G-eneral Electric Company through able counsel has filed herein a very courteous, dignified and forceful petition to rehear. We have read and re-read this petition and in addition thereto have again examined and re-read the record herein. After doing so, the following opinion results.
It is very ably contended that a judicial construction was given this tax statute in the Tennessee Products & Chemical case (Tenn. Products & Chemical Corp. v. Dickinson, 195 Tenn. 63, 256 S.W.2d 709) referred to at length in the original opinion herein, which is binding on us and amounts to a reenactment of the statute by the Legislature when it did not change the statute after the Tennessee Products case was announced.
In support of this argument a number of cases are cited, such as Miller v. Kennedy, 164 Tenn. 470, 51 S.W.2d 1000; Smith v. North Memphis Sav. Bank, 115 Tenn. 12, 89 S.W. 392; Hayes v. Kelley, 111 Tenn. 294, 76 S.W. 891; and others.
These authorities are fine so far as they go, but they do not' cover the question here. The tax statute involved in the Instant case was in no wise applicable in any of these cases. As pointed out by this court in Swartz v. *209Atkins, 204 Tenn. 23, 315 S.W.2d 393 this Court did not so construe the statute in the Tennessee Products case— we merely applied an old equitable doctrine which had been followed in many preceding cases which are cited in the present petition to rehear. This doctrine is not disturbed by the Swartz case, nor is it disturbed by the opinion in this case.
The first time the tax statute was construed and a meaning applied to the terms of the Act was in the Swartz case. The rule contended for now in this petition to rehear would apply if we attempted to ascribe a different meaning to the tax statute. This rule of the interpretation or the meaning of the statute as promulgated by the Swartz case was again followed by this Court in Combustion Engineering v. McFarland, 209 Tenn. 75, 349 S.W.2d 138, wherein this Court, among other things, said: “When the latter opinion (the opinion in the Swartz case) is examined, however, it will be seen that this Court has not followed that broad language in determining what the equities of the case should be to justify the Court in granting relief in the face of a legal claim or demand such as the statute T.C.A., sec. 67-3026 fixed, as the same is construed in this latter opinion.” And then again in this Combustion Engineering case we said: “When a deficiency occurs the interest and penalties become a part of the tax itself so that the Department has no discretion to remit the penalty and interest.”
The contention in the petition to rehear now being discussed must be overruled and we must adhere to our statements in regard to the Tennessee Products case as made in the original opinion herein for reasons therein expressed.
*210As said in the outset we have again read the briefs, pleadings and proof herein and it seems perfectly obvious to us from these pleadings and briefs filed by the respective parties that the principal issue involved was the interpretation to be given the language used by this Court in these two cases, i. e., Tennessee Products and the Swartz case. Thus so considering it was the reason for our statement made in the beginning of the original opinion herein. We must and do adhere to this position.
It is argued that the allowance of the return of certain penalties and interest, set forth in the original, was not based on the equitable doctrine as set forth in the Tennessee Products case. It is true that the Chancellor didn’t so say, but it must be concluded that the only reason possible for the allowance of these items in favor of the tax payer was basically based on the equitable doctrine as applied in the Tennessee Products case. As said in the original opinion, the reason for our reversing this holding of the Chancellor was because this equitable doctrine did not apply to the return of interest and penalties when considering an objective construction as placed on the Swartz and Combustion Engineering cases heretofore.
Penalty and interest attach as a matter of law, as we pointed out in the Combustion Engineering case. The petitioner here has paid the tax and only seeks to recover the penalty and interest. Certain statements we made in the original opinion on these questions may and are too broad to apply as a general proposition but were intended, and now so construed, as applying only to the factual situation as developed in this record on these various items that were allowed by the Chancellor. What we have just said applies particularly to the Standard *211Disinfectant Company and the Borden Electric Company who had re-sale certificates. The mere fact that they had these certificates did not relieve them in the particular case from collecting the tax when they knew, or should have known, that the merchandise was being purchased for ultimate consumption. This record supports the fact that they at least should have known that this was true. The proof in this record shows that the supplies purchased by this vendee, that is, Borden Electric Company, were being shipped directly to the construction project and were being used there by the contractor as the ultimate consumer.
Again let us, a little more in detail, look at the situation of the sales to Shannon Electric Company. The record beginning on page 78 and going two or three pages there shows that this sale was made to Shannon Electric, a Nashville Company, and they in turn shipped it to Ft. Campbell, Kentucky. Upon investigation of this sale, General Electric collected the tax from Shannon based on a pro-rata consumption of approximately seventy-two (72%) percent of the goods which were used by Shannon in Tennessee. The record shows that Shannon did not purchase these items for re-sale but for consumption. “They were consumed according to Shannon Electric Company, seventy-two per cent in Tennessee and the remainder of it in Kentucky. (Tr. p. 79') * * * No. Except what Shannon told the General Electric, Mr. Felts of General Electric sent out and talked to Shannon and Shannon told Felts what percentage was used in Tennessee and what percentage was used in Kentucky, and we accepted Mr. Shannon’s statements and reduced the audit accordingly. ” It is clear thus that this tax was correctly collected, *212and thus it is as a matter of law the interest and penalties attached.
The State did assign error as to the allowance of the portion allowed for interest and penalty on the part where the statute of limitations had run. The petitioner here, General Electric, does not insist that the assessment of taxes is erroneous and since interest and penalty attach as a matter of law this thus cannot be questioned even if General Electric did collect this tax from its ven-dees, because the only contention of the tax payer when properly analyzed is that it is contending’ in good faith that it was not liable for the tax. This does not excuse the taxpayer.
After a very thorough study and consideration of the matters, questions and points raised in the petition to rehear we are satisfied with our original opinion and all questions raised therein as clarified by this opinion are overruled and denied.