WPC D (VCq B>7ߡbW:*٭[g{pĠ}_ ,ƴpȃG3d=3su%+ yrYDž\ԟ!-ACqyZZCq*Y+wǹsXb8N{ʀlJqJtĺTDxoL1vj s h P{1&UC|\!!!OǺk@.& Z8e)< uU~Bc3!YtaJxa0O{n`Fr*piaRuT*ˇ2O_,Y\o%ř ^I-$~yQܖӌ93,{7&V}jgJjҷ+qh2g(b#\ % ^ # 0/ UN w 4 z  i x mz   _ %  NEb 0 B 0 D3i D- 0K ASg 0- 0D AHP LaserJet 4050 Series PCL 5e,,,,0p3+s (`$.8dd8    ("  Z6Times New Roman RegularB+ 2HH C:\PROGRA~1\COREL\WORDPE~1\TEMPLATE\CUSTOM~1\REVISE~1.WPTC:\Program Files\Corel\WordPerfect Office 2000\Template\Custom WP Templates\revised standard opinion.wpt3|xU Level 1Level 2Level 3Level 4Level 5Level 1Level 2Level 3Level 4Level 5Level 1Level 2Level 3Level 4Level 5Level 1Level 2Level 3Level 4Level 5- -(|G2h$ !.8HdXXd8         0  = d(|3 d$ !.8HdXXd8     VVVV'dxd)!dxdx( $ Figure  1  ^_X`YE<<CLevel 1Level 2Level 3Level 4Level 5(|3 d$ !.8HdXXd8     ($$   1  X[Z&OLE 2.0 Box <=8C HKKKK !.8Hdd8     _  H8YXXdd8  @ C4HINTHECOURTOFAPPEALSOFTENNESSEE  @kk$ATNASHVILLE#HC4 #Ԉ &   August9,2001Session L XYXH #HXXY#_TOMKATS_ԀCATERING,INC.v.RUTHE.JOHNSON,Commissionerof J Revenue,StateofTennesseeXYXH   ^ @@ AppealfromtheChanceryCourtforDavidsonCounty  ^ @@No.98828IICarolL.McCoy,Chancellor  J @@*AV) ` dE<` A   @@TTNo.M200003107_COA_ԄR3CVFiledSeptember19,_2001_   AV) ` dE<` A      Thisisasalestaxcase.ThetaxperiodisfromDecember1,1990throughJanuary31,1994.During  thisperiod_TomKats_,acateringbusiness,chargeditscustomersafixed,perunitpriceforfood,but x providedoptionalserviceswaiters,bartender,barbacks,showchefs,valetsforanadditional d charge,whichwasbilledseparately.TheCommissionerruledthatsuchoptionalserviceswerea P  partofthesale,andassessedataxdeficiencywhich_TomKats_Ԁpaidandfiledthisactionfora < refundwhichwasunavailing.Thejudgmentisreversed. (x  Tenn.R.App.P.3AppealasofRight;JudgmentoftheChanceryCourtReversed  P   #HXY#XYX.HWilliamH._Inman_,Sr.J.,deliveredtheopinionofthecourt,inwhichWilliamB.Cainand ( PatriciaJ.Cottrell,_J.J._,joined.  CharlesA._Trost_ԀandMichaelG.Stewart,Nashville,Tennessee,fortheappellant,_TomKats_  Catering,Inc.  PaulG.Summers,AttorneyGeneralandReporter;MichaelE.Moore,SolicitorGeneral;andSean `!  D._Clancy_,AssistantAttorneyGeneral,fortheappellee,RuthE.Johnson,Commissionerof L"! Revenue,StateofTennessee. 8#"  OPINION #HXXY#XYXH %` $     #HXXY #XYXH I.  &8"& P   ThisactionwasfiledMarch18,1999seekingarefundofsalestaxesintheamountof ($( $21,552.00fromanassessmentof$35,340.43.Thebasisof_TomKats_Ԁclaimforrefundisthatits )$) chargesforoptionalservicesarenotsubjecttosalestaxundertheauthorityof _Penske_ԀTruck *%* LeasingCo.v._Huddleston_ ,795S.W.2d669(Tenn.1990).TheansweroftheCommissioner +&+ offeredlittleexplicationandgenerallydeniedthevalidityoftheclaimforrefund. p,',  \-(- _   II.   0  Therelevantfactsarenotcontroverted.AsfoundbytheChancellor(#(# 8  8`   TomKats,thetaxpayer,isacateringcompanywhichchargesafixed ` perunitpriceforallfooditemsorderedbycustomers.When L  customersrequestthatfoodbeservedbuffetsyle,TomKatsincludes 8  inthecostofthefoodtobeservedthecostofasingleworkerper $ t buffettable.Theworkerisresponsibleforsettingupthebuffet  ` equipmentandfooddisplay,tendingthebuffetbyrefillingtrayswith  L  food,andthenpackingupthebuffetattheendofagivenevent.As  8  thecostoftheworkerswhosetupbuffetsispartofthefixedprice $  customerspayforfood,TomKats,bycollectingtaxonsaidfood,   collectsontheworkersservices.Customerscanorderfoodwithout   askingTomKatstoprovide optionalservices,e.g.,servers,   bartender,barbacks,showchecks,valet,orcraftserviceattendants.   Customerscanalsoorderjustfoodwithoutanyservers. Serveras p setoutinTomKatsinvoices,issynonymouswith waiterandisan \ individualwhoservesfoodeitherbypassingtrays,waitingtablesor H servingpeoplealongabuffetline.Duringthetaxyearsatissue, 4 1990to1994,TomKatsseparatelybilledoptionalservicesperformed  p byemployeewaiters,cooks,andservers.(Emphasessupplied). \` x` x   Thepartiesagreethattherearenodisputedmaterialfactsandthatthecasecouldproperly 4 beresolvedbysummaryjudgment.Rule56.03,Tenn.R.Civ.P.     TheChancellorfoundthatTomKatsdecisiontobillseparatelyforoptionalservers[waiters]  whoperformedthesamefunctionsasserversunderthebasiccontractwasanunwarranteddistinction  betweentaxableandnontaxablefunctionsanddeniedtherefundsought.TomKatsappealsand  presentsforreviewtheissueofwhetherthecourterredinholdingthatseparatelyinvoicedcharges l foroptionalservicesweresubjecttosalestax.Theissuebeingoneoflaw,ourreviewisdenovo X  withnopresumptionofcorrectness. Tenn.FarmersMutualIns.Co.v.Amer.MutualIns.Co. ,840 D! S.W.2d933(Tenn.Ct.App.1992). 0"    III.  $X"    `    TennesseeCodeAnnotated676202provides: %0!$ 8  8`   Fortheexerciseoftheprivilegeofengaginginthebusinessofselling '#& tangiblepersonalpropertyatretailinthisstate,ataxisleviedatthe (#' rateofsixpercent(6%)ofthesalespriceofeachitemorarticleof )$( tangiblepersonalpropertywhensoldatretail.|*%)` x` x  h+&*   TennesseeCodeAnnotated676102(26)defines salespriceas:  8  8`   [t]hetotalamountforwhichataxableserviceortangiblepersonal  propertyissold,includinganyservicesthatareapartofthesaleof t tangiblepersonalproperty...`` x` x   TomKatsarguesthatitsoptionalserviceswaiters,bartenders,barbacks,showchefs,valets, 8  etc.,arenottaxableunderthestatutoryscheme,seeT.C.A.676205etseq.,becausethese $ t servicecontractsareseverablefromcateringcontracts.TheCommissionerdisagrees,arguingthat  ` suchoptionalservicesareapartofthesaleoftangiblepersonalpropertyandcannotbemeaningfully  L  separatedfromthesaleofcateredfood.Relyingon CrescentAmusementCo.v.Carson ,213  8  S.W.2d27(Tenn.1948)theChancelloragreedwiththeCommissionersargument. $    Crescent involvedsalestaximposedontheleasingofmoviereels.Thetaxpayerarguedthat   thereelsweremerelyexpressionsofthenontaxableservicesofactorsandwritersusedinthe   makingofthemovie.Thisargumentwasrejected.TheSupremeCourtnotedthatthenontaxable   serviceshadbecomeinseparablefromthetaxablereelswhichcouldnotbeorderedwithoutthe p servicesitembodied.WeagreewithTomKatsthat Crescent isinappositetothecaseatBar,which \ iscontrolledby Penske . H   Penske leaseditsvehiclesforafixedrateplusafixedmileageratethatincludedmaintenance  p costs.Undertheleaseandserviceagreementalesseewasgiventheoptionofpurchasingfuelfor  \ theleasedvehiclesfromPenske.Revenuesgeneratedbythefuelpurchaseoptionareaccountedfor H byPenskesfuelsalesdivisionandarebilledseparatelyfromthetruckleaserevenues. 4   TheCommissionerassessedsalestaxesonfuelbillings,followingtheprincipleannounced   in MagnavoxConsumerElec.v.King ,707S.W.2d504(Tenn.1986)thatiffuelcostsareincluded  intheagreedrentalpriceofequipment,theentireleasepaymentissubjecttotheusetax.    TheCourt,in Penske ,disagreed,becausethepartiesintendedthattheleaseofequipmentwas l  separateandapartfromthefuelsalesagreementthoughtheywereincludedinthesamedocument. X  TheCourtnotedthattheagreementfortheleaseofequipment,anditscost,andtheagreement D! coveringfuelsalesarereadilydistinguishable,andthatneitheragreementwasdependantuponthe 0"  other.Sincegasolineisexemptfromsalestax,theassessmentwasinvalid. #l!   Applyingtherationaleof Penske tothecaseatBarconcludestheissue.Thecatering $D # contractswereseparableanddivisible;theoptionalservicesweregenuinelysoandonlyfoodwas %0!$ soldbyTomKatsatfixedperunitprices.Anyconcernthatthedifficultiespresentedbya &"% requirementthatthecostofanoptionalservicemustbeseparatedoutofthepackagebeforeasales '#& orusetaxisimposeddoesnotappeartobeoverarching.The readilydistinguishabletestof (#'  Penske iswhetherthechargesforataxableitem,andforanontaxableitem,canbedistinguished )$( primafacie. |*%)    `     h      h+&*   Ifacateringcustomerordersashowchef,forinstance,thisoptionalserviceisdocumented  bytheAgreement.Itisnotdisputedthateverysinglesaleofoptionalservicewasseparatelybilled,  andthusreadilydistinguishablefromthesaleoffood.Hence,suchsalesmustbetreatedseparately  forsalestaxpurposes. t   Thejudgmentisreversedandthecaseisremandedtothetrialcourtforallappropriate L  purposesincludingtheentryofjudgmentforrefund.Costswillbepaidbydefendant,RuthE. 8  Johnson,CommissionerofRevenue,StateofTennessee. $ t    `     h     ___________________________________ $     `     h     WILLIAMH.INMAN,SENIORJUDGE