BellSouth Advertising and Publishing Company v. Ruth Johnson, Commissioner of Revenue, State of Tennessee

Summary

The Tennessee Supreme Court held that BellSouth Advertising and Publishing Company was entitled to a credit for Alabama sales tax paid on photocompositions used to produce telephone directories distributed in Tennessee. Because the cost of the photocompositions was included in the directories’ taxable cost price, imposing Tennessee use tax without the credit would result in prohibited duplication of taxation. The court reversed the lower courts and granted summary judgment to BellSouth.

Holdings

1. BellSouth was entitled under Tennessee Code Annotated section 67-6-507(a) to a credit for the Alabama sales tax paid on the photocompositions because the photocompositions' cost was included in the cost price of the directories subject to Tennessee use tax.
2. Summary judgment should have been entered in favor of BellSouth rather than the Department because the undisputed facts established BellSouth's entitlement to the statutory credit.
3. The court did not reach BellSouth's Commerce Clause claim because its statutory holding granted BellSouth complete relief.

Questions Presented

1. Whether Tennessee Code Annotated section 67-6-507(a) grants a credit against Tennessee use tax for sales tax paid to another state on photocompositions whose cost is included in the cost price of telephone directories distributed in Tennessee.
2. Whether the Department's refusal to grant the credit violated the Commerce Clause of the United States Constitution.

Disposition

reversed_and_remanded