ÿWPCí …# VU:a %› 0(¡w@É4  , B4 0Jv 0TÀ 0^ 0hr 0rÚ 0|L 0†È 0N 1uÞ 0dS U*· B)á DC  AMMÍšv~gvÓå B¸ D3Õ 0@ AOHÆ— 0D] D/¡ BИHP LaserJet 4Si/4SiMX PS 600dpiPSCRIPTÀäÌÀÀÌÀä0 ,†r‰AZ‹"Arial RegularX($¡¡ tugvîwUxygz{D|Ó€†DÒ x3|x†C:\WPWIN60\TEMPLATE\STANDARD.WPT2 ÿÿ0Indent1Ô2ÔÔ3  Ô2" ÿÿ0Indent2à0 àÔ2ÔÔ3  Ô2, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)P ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ< Œ 9p`(Arial% Line 7 d7Border 1dd€- Cþÿ << Gÿÿ ÃÝ ƒ!ÝÔ€ÔÝ  ÝÔ€ÔÓ  Óò òÔ YYY ÔFILEDÔ€XÔÌÌOctober€18,€1996ÌÌCecil€W.€CrowsonÌAppellate€Court€ClerkÔ  Ôó óPtPtHPð€ÿÜÿìô”(üHPð€P € €'Styl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑGenevaÑÑ ÑÒ  BA Op Geneva ÒÒ  BA Op Geneva Ò d%%%%'ÿÿdxd("ÿÿ$££Ò  ÒÒ  Ò€-‚ƒCþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5($$””ò òÚ  Ú1Ú  Úó ó„„'÷ÿ dxdüÿP PdÝ ƒ!ÝÔ . ÔÔ€ÔÝ  ÝÓ  ÓÑ\R AØ'\ÑÑ7€w®XXdædÈ7Ñà@ àò òIN€THE€COURT€OF€APPEALS€OF€TENNESSEEÌà@ àWESTERN€SECTION€AT€NASHVILLEÌÌÌBARNES€&€NOBLE€SUPERSTORES,à à)ÌINC.,€d/b/a€BOOKSTAR,€€à àà à)Ìà àà àà àà àà àà à)Ìà àà àó óPlaintiff/Appelleeà àà àò ò)€€Davidson€Chancery€No.€94„2778„IIIÌà àà àà àà àà àà à)ÌVS.à àà àà àà àà àà à)€€Appeal€No.€01A01„9604„CH„00149ÌÙ€€ÙßL€!" ;+'h|«O` ç `€€Lßà àà àà àà àà àà à)ÌJOE€B.€HUDDLESTON,à àà àà à)ÌCOMMISSIONER€OF€REVENUE,à à)ÌSTATE€OF€TENNESSEE,à àà àà à)Ìà àà àà àà àà àà à)Ìà àà àó óDefendant/Appellantà àò ò)ó óÌÌÌà@ àAPPEAL€FROM€THE€CHANCERY€COURT€OF€DAVIDSON€COUNTYÌà@ àAT€NASHVILLE,€TENNESSEEÌà@ àTHE€HONORABLE€ELLEN€HOBBS€LYLE,€CHANCELLORÌÌÌÌÌò òCHARLES€W.€BURSONó óÌò òAttorney€General€&€ReporterÌÌSEAN€P.€SCALLYÌAssistant€Attorney€GeneralÌó óNashville,€TennesseeÌAttorneys€for€Defendant/AppellantÌÌÌò òMARIAN€F.€HARRISONÌALAN€D.€JOHNSONÌWILLIS€&€KNIGHTÌó óNashville,TennesseeÌAttorneys€for€Plaintiff/AppelleeÌÌÌÌÌÌò òAFFIRMEDÌÌÌÌÌÌÌó óà àà àà àà àà àà àà àà àà àò òALAN€E.€HIGHERS,€J.ÌÌÌÌCONCUR:ÌÌW.€FRANK€CRAWFORD,€P.J.,€W.S.ÌÌBEN€H.€CANTRELL,€J.ó ó›à àœÌÓÓà àIn›€this€case,€the€Tennessee€Commissioner€of€Revenue€(ð ðCommissionerðð)€appeals€Ñ7€w®XXdæXXdæ7ÑfromÏthe€trial€courtððs€grant€of€summary€judgment€in€favor€of€Bookstar.€€The€primary€issue€with€whichÏwe€are€presented€is€whether€Bookstarððs€sale€of€cards€that€entitle€its€customers€to€a€discount€onÏmerchandise€is€subject€to€Tennessee€sales€tax.€€We€hold€that€these€sales€are€not€subject€toÏtaxation.€€Consequently,€we€affirm€the€judgment€of€the€court€below.ÌÌà@ àò òI.ó óÌà àThe€pertinent€facts€are€undisputed.€Between€1991€and€1993,€Bookstar€sold€ð ðReadersÏChoiceðð€cards€to€its€customers.€€For€a€$10.00€annual€fee,€customers€received€a€card€thatÏindicated€their€membership€in€the€Readers€Choice€Club,€which€entitled€them€to€a€10%€discountÏon€Bookstar€merchandise€in€all€Bookstar€stores€across€the€country.€€Presentation€of€the€cardÏwas€not€necessary€in€order€for€€a€customer€to€receive€the€discount€if€the€customer€knew€his€orÏher€membership€number€and€the€expiration€date€of€the€card.€€Ìà àIn€June€1994,€the€Commissioner€issued€a€notice€of€tax€assessment€to€Bookstar€in€theÏamount€of€$45,562.00€for€sales€taxes€owed€on€the€sales€of€the€discount€cards.€€Bookstar€filedÏsuit€in€the€Davidson€County€Chancery€Court€contesting€the€assessment€of€the€taxes.€€BookstarÍalleged€that€the€$10.00€fee€represented€payment€for€membership€in€a€discount€buying€club,Ïwhich€is€not€subject€to€sales€tax€because€the€transaction€does€not€involve€the€sale€of€tangibleÏpersonal€property.€€Instead,€Bookstar€argued,€the€fee€was€paid€in€exchange€for€the€intangibleÏprivilege€of€receiving€a€discount€on€merchandise,€which€is€not€taxed€under€the€applicableÏstatutes.€ÌÌà àThe€Commissioner€advanced€two€arguments€in€support€of€his€assessment.€€First,€theÏCommissioner€argued€that€the€cards€themselves€were€tangible€personal€property€subject€toÏsales€tax.€€Alternatively,€the€Commissioner€asserted,€the€sale€of€the€cards€for€$10.00€constitutedÏprepayment€for€merchandise.€ÌÌà àFollowing€a€hearing€on€Bookstarððs€motion€for€summary€judgment,€the€trial€court€held€thatÏthe€$10.00€membership€fee€was€not€capable€of€being€identified€with€any€specific€sale€of€goodsÏand€that€the€membership€cards€themselves€were€not€tangible€personal€property.€€Furthermore,Ïthe€trial€court€held€that€because€the€members€were€not€obligated€to€purchase€any€BookstarÏmerchandise,€€the€$10.00€fee€could€not€be€considered€part€of€the€purchase€price.€€Accordingly,Ïthe€trial€court€granted€Bookstarððs€motion€for€summary€judgment,€holding€that€Bookstar€carried€itsÏheavy€burden€of€demonstrating€by€clear€and€convincing€evidence€that€the€Commissioner€erredÏin€imposing€sales€tax€on€the€$10.00€club€membership€fees.€ÌÌà àOn€appeal,€the€Commissionerððs€position€is€that€payment€of€the€$10.00€fee€constitutesÏprepayment€for€merchandise€because€Bookstar€customers€are€in€effect€applying€$10.00€towardÏthe€later€purchase€of€Bookstar€inventory.€According€to€the€Commissioner,€customers€will€notÍreceive€a€true€10%€discount€until€they€have€recovered€their€$10.00€by€purchasing€$100.00Ïworth€of€merchandise.€€The€Commissioner€concedes€that€any€purchases€over€$100.00€results€inÏa€true€10%€discount€which€is€not€subject€to€sales€tax.€ÌÓ  Óò òÌII.ó óà àÌÓ  Óà àà àThis€case€comes€to€us€on€summary€judgment,€which€should€be€rendered€whereÏthe€evidence€shows€that€there€is€no€genuine€issue€as€to€any€material€fact€and€the€moving€partyÏis€entitled€to€judgment€as€a€matter€of€law.€€T.R.C.P.€56.03.€€There€does€not€appear€to€be€anyÏconflict€in€the€evidence€as€to€the€material€facts€of€the€present€case.€€Therefore,€we€deem€theÏissue€on€appeal€to€be€entirely€one€of€law.ÌÌà à€Tennessee€imposes€a€sales€tax€on€the€sale€of€tangible€personal€property€within€theÏstate.€€Specifically,€T.C.A.€ðð€67„6„201€provides€in€part:ÌÓÓœ›à8 àà8 àIt€is€declared€to€be€the€legislative€intent€that€every€person€isÏexercising€a€taxable€privilege€who:€Ìà8 àà8 à(1)€Engages€in€the€business€of€selling€tangible€personal€propertyÏat€retail€in€this€state.ÌÌT.C.A.€ðð€67„6„201€(1994).ÌÓÓœ›à àð ðTangible€personal€propertyðð€includes€personal€property€that€ð ðmay€be€seen,€weighed,Ïmeasured,€felt,€or€touched,€or€is€in€any€other€manner€perceptible€to€the€senses.ðð€€T.C.A.€ðð€67„6„102(28)€(1994).€€T.C.A.€ðð€67„6„202(a)€provides€that€a€sales€tax€is€levied€on€the€sale€of€tangibleÏpersonal€property€at€a€rate€of€6%€of€the€sales€price.€€ð ðSales€priceðð€is€defined€as€ð ðthe€total€amountÏfor€which€a€taxable€service€or€tangible€personal€property€is€sold...provided,€that€cash€discountsÏallowed€and€taken€on€sales€shall€not€be€included....T.C.A.€ðð€67„6„102€(25)€(1994).€ÌÌà àThe€determinative€inquiry€in€this€case€is€whether€the€sale€of€discount€cards€constitutes€aÏprepayment€for€merchandise.€€In€order€to€resolve€this€issue,€we€look€first€to€the€language€of€theÏstatute€in€order€to€ascertain€and€effectuate€the€intent€of€the€General€Assembly.€€òòState€ex€relÏMetropolitan€Govððt.€v.€Spicewood€Creek€Watershed€Dist.óó,€848€S.W.2d€60,€62€(Tenn.€1993).€€It€isÏa€general€rule€of€construction€that€sales€and€use€taxes€will€not€be€extended€by€implicationÏbeyond€the€clear€import€of€the€language€used€and€will€not€be€enlarged€to€embrace€matters€notÏspecifically€named.€€òòMorton€Pharmaceuticals,€Inc.€v.€McFarlandóó,€368€S.W.2d€756,€760€(Tenn.Ï1963).€Ìà àÌà àAfter€evaluating€the€applicable€statutes€in€light€of€the€circumstances€of€the€case€òòsubÏjudiceóó,€it€is€our€opinion€that€Bookstarððs€sale€of€discount€club€memberships€is€not€subject€to€salesÏtax.€The€Commissionerððs€prepayment€argument€must€fail€for€the€simple€reason€that€a€memberÏhas€no€obligation€ever€to€purchase€any€merchandise.€€The€true€object€of€the€subject€transactionsÏbetween€Bookstar€and€its€customers€is€to€bestow€upon€club€members€the€intangible€right€toÏreceive€a€discount€on€merchandise.€€The€membership€card€is€merely€an€indicia€of€that€intangibleÏright€and€incidentally€aids€in€the€exercise€of€that€right.€€The€club€member€may€ultimately€elect€notÏto€avail€himself€of€the€privilege€of€buying€anything.ÌÌà àThe€Commissioner€has€also€raised€certain€burden€of€proof€issues€for€our€consideration.€ÏSpecifically,€the€Commissioner€argues€that€Bookstar€bore€the€burden€of€proving€that€certainÏcustomers€were€either€exempt€from€sales€tax€or€that€the€full€$10.00€was€not€applied€toward€theÏpurchase€of€merchandise.€€Additionally,€the€Commissioner€asserts€that€Bookstar€bore€theÏburden€of€proving€that€some€customers€purchased€merchandise€outside€Tennessee.€€Both€ofÍthese€contentions,€however,€assume€that€the€imposition€of€the€sales€tax€was€proper€at€the€outsetÏand€that€Bookstar€must€prove€entitlement€to€an€exemption.€€Because€we€have€determined€thatÏsales€tax€may€not€properly€be€imposed€on€Bookstarððs€sale€of€discount€cards,€these€issues€areÏpretermitted.ÌÌà àThe€judgment€of€the€trial€court€is€affirmed.€€Costs€on€appeal€are€adjudged€againstÏappellant.ÌÌÓÓÌà àà àà àà àà àà àà àà àòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€Ìà àà àà àà àà àà àà àà àóóHIGHERS,€J.ÌÌÌÌCONCUR:ÌÌÌÌòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óóÌCRAWFORD,€P.J.,€W.S.ÌÌÌÌòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óóÌCANTRELL,€J.ÌÌà à