PEE CUEIAM.
This suit was originally filed by General Electric under sec. 67-2303, T.C.A., to recover penalties and interest paid [199]*199under protest, on total amount of taxes paid and due under the Sales and Use Tax Act.
This litigation arises out of transactions of the General Electric Supply Company, a division of the General Electric Company, with its vendees. General Electric Supply Company is the supplier for General Electric dealers. It also sells to contractors or others who are the ultimate consumers of their products. These operations are supervised by a Sales Manager who has a crew of salesmen who call on customers, get the business and bring in orders. General Electric generally distributes all types of electrical supplies, but does not handle major appliances.
An audit was made by the Department of Revenue of the State of the complainant’s transactions covering a period of time from January 1,1953, through December, 1958. As a result of this audit, assessments were made against General Electric for additional tax liability, together with penalty and interest thereon. As a result of this audit certain taxes were found due which were paid along with penalty and interest. This suit though was brought by the General Electric Company only to recover th¿ amount of the penalty and interest in an amount in excess of $10,000.00, which amount represents approximately half penalty and half interest. The Chancellor held that in certain instances penalty and interest were not equitably collectable and in other instances he held that they were properly collected. From the adverse decree against General Electric and against the Commissioner, both parties have perfected appeals.
The General Electric Company has pitched its entire case upon the holding of this Court in Tenn. Products and Chemical Corp. v. Dickinson, 195 Tenn. 63, 256 S.W. [200]*2002d 709, while the State pitches its lawsuit upon the case of Swartz v. Atkins, 204 Tenn. 23, 315 S.W.2d 393. Thus it is that we are met in the outset with the contention by the respective parties that these respective cases control the positions that they take in these lawsuits. When we wrote Swartz v. Atkins, supra, it was the intention of the Court by what is said in that opinion to more or less limit and confine the holding in Tenn. Products v. Dickinson, supra, to the particular facts of that case and the time at which it was written. The Tenn. Products case was written in the early stages of the Sales Tax Law in this State and before people of the State were adequately familiar with the Sales Tax Act. The Tenn. Products case is based largely and primarily, though not said so in the opinion, on the time element. We now hold that the Tenn. Products case must be and is limited to the particular facts of that case and the time in which it was written, and the holding in that case is no longer applicable. The correct rules applicable to situations of the kind herein are controlled by the holding of this Court in the Swartz case, wherein the applicable Code Section (sec. 67-3026, T.C.A.) is quoted in full. That Section is applicable in the present litigation and in that case we held that “the Legislature in making the five per cent penalty * * *” intended for it to “ apply in any instance where the taxpayer had failed to make his return and make the payments on time.” This quotation is applicable here and we must and do apply it to the factual situation presented in this case.
More or less as an explanation and reason why we say what is said above might be better understood by a quotation from two articles appearing in the Vanderbilt Law [201]*201Review. In Yol. 6, page 1170, Vanderbilt Law Review, tbe writer very correctly says:
“In two cases, during tbe period considered, tbe Tennessee Supreme Court upheld tbe power and propriety of courts to relieve taxpayers of statutory penalties when tbe equities of tbe case seemed to demand it. If based upon well-known principles of statutory construction in favor of a taxpayer and strict construction to avoid penalties, sucb cases raise no problems. If, apart from tbe statutory interpretation and tbe application of tbe specific constitutional provisions, tbe Court exercises power to relieve from statutory requirements otherwise applicable because it is ‘sitting as a court of equity,’ it seems to raise serious questions relating to tbe basic separation of governmental functions called for under the Constitution of tbe State.”
One of tbe two cases cited for this statement is tbe Tennessee Products case. We feel confident that tbe bold-ing in this case does raise serious questions under our Constitution and this, aside from tbe reasoning in tbe Swartz case, is one of tbe major reasons why we are confining tbe Tennessee Products case to the facts and time of that case.
In an excellent article on State and local taxation appearing in Yol. 12, Vanderbilt Law Review, at page 1346, tbe author says:
“In Swartz v. Atkins, tbe issue was whether a taxpayer could escape penalty for failing to make a tax return and pay a certain use tax on tbe sole ground that tbe taxpayer was not aware that be owed any tax. Tbe Tennessee court quite properly held, it seems, that [202]*202such delinquency on the part of the taxpayer is not excused from the statutorily imposed penalty where the statute makes no provision for any such excuse. Although a tough decision for an innocent taxpayer, to hold otherwise would appear to open up a flood gate of would-be ignorance of tax laws. The decision reached by the court is also buttressed by the fact that the same statute did require ‘wilful intent’ in order to penalize the taxpayer for nonpayment where the penalty was much larger, but the statute makes no mention of intent under the smaller penalty which the taxpayer was seeking to escape in the case at hand. ’ ’
Thus it is that we confine the Tennessee Products case solely to the factual issue at the time in that case.
The contention of General Electric in this case is based entirely upon the proposition that it was guilty only of honest mistakes or a mistaken interpretation of the law relating to the Sales and Use Tax, and consequently under such circumstances may recover payment of penalty and interest under the equitable powers of the court. This record bears out such a contention, but we think for reasons above pointed out that this does not relieve penalties and interest for reasons stated in the Swartz case, supra.
The Chancellor correctly held that no recovery could be had of these penalties and interest insofar as they “arose as a result of honest mistakes by complainant in calculating the amount of táx due * This holding was made under the authority of Swartz v. Atkins, supra. The Chancellor held likewise that General Electric could not recover these penalties and interest :
[203]*203“ (a) On sales made to non-residents of the State of Tennessee from whom complainant collected and paid the tax of the State of purchaser’s residence.
“ (b) On sales made to Commercial Electric Company for complainant held no certificate from said Company.”
We affirm such holding based on the reasoning in the Swartz case, supra.
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PEE CUEIAM.
This suit was originally filed by General Electric under sec. 67-2303, T.C.A., to recover penalties and interest paid [199]*199under protest, on total amount of taxes paid and due under the Sales and Use Tax Act.
This litigation arises out of transactions of the General Electric Supply Company, a division of the General Electric Company, with its vendees. General Electric Supply Company is the supplier for General Electric dealers. It also sells to contractors or others who are the ultimate consumers of their products. These operations are supervised by a Sales Manager who has a crew of salesmen who call on customers, get the business and bring in orders. General Electric generally distributes all types of electrical supplies, but does not handle major appliances.
An audit was made by the Department of Revenue of the State of the complainant’s transactions covering a period of time from January 1,1953, through December, 1958. As a result of this audit, assessments were made against General Electric for additional tax liability, together with penalty and interest thereon. As a result of this audit certain taxes were found due which were paid along with penalty and interest. This suit though was brought by the General Electric Company only to recover th¿ amount of the penalty and interest in an amount in excess of $10,000.00, which amount represents approximately half penalty and half interest. The Chancellor held that in certain instances penalty and interest were not equitably collectable and in other instances he held that they were properly collected. From the adverse decree against General Electric and against the Commissioner, both parties have perfected appeals.
The General Electric Company has pitched its entire case upon the holding of this Court in Tenn. Products and Chemical Corp. v. Dickinson, 195 Tenn. 63, 256 S.W. [200]*2002d 709, while the State pitches its lawsuit upon the case of Swartz v. Atkins, 204 Tenn. 23, 315 S.W.2d 393. Thus it is that we are met in the outset with the contention by the respective parties that these respective cases control the positions that they take in these lawsuits. When we wrote Swartz v. Atkins, supra, it was the intention of the Court by what is said in that opinion to more or less limit and confine the holding in Tenn. Products v. Dickinson, supra, to the particular facts of that case and the time at which it was written. The Tenn. Products case was written in the early stages of the Sales Tax Law in this State and before people of the State were adequately familiar with the Sales Tax Act. The Tenn. Products case is based largely and primarily, though not said so in the opinion, on the time element. We now hold that the Tenn. Products case must be and is limited to the particular facts of that case and the time in which it was written, and the holding in that case is no longer applicable. The correct rules applicable to situations of the kind herein are controlled by the holding of this Court in the Swartz case, wherein the applicable Code Section (sec. 67-3026, T.C.A.) is quoted in full. That Section is applicable in the present litigation and in that case we held that “the Legislature in making the five per cent penalty * * *” intended for it to “ apply in any instance where the taxpayer had failed to make his return and make the payments on time.” This quotation is applicable here and we must and do apply it to the factual situation presented in this case.
More or less as an explanation and reason why we say what is said above might be better understood by a quotation from two articles appearing in the Vanderbilt Law [201]*201Review. In Yol. 6, page 1170, Vanderbilt Law Review, tbe writer very correctly says:
“In two cases, during tbe period considered, tbe Tennessee Supreme Court upheld tbe power and propriety of courts to relieve taxpayers of statutory penalties when tbe equities of tbe case seemed to demand it. If based upon well-known principles of statutory construction in favor of a taxpayer and strict construction to avoid penalties, sucb cases raise no problems. If, apart from tbe statutory interpretation and tbe application of tbe specific constitutional provisions, tbe Court exercises power to relieve from statutory requirements otherwise applicable because it is ‘sitting as a court of equity,’ it seems to raise serious questions relating to tbe basic separation of governmental functions called for under the Constitution of tbe State.”
One of tbe two cases cited for this statement is tbe Tennessee Products case. We feel confident that tbe bold-ing in this case does raise serious questions under our Constitution and this, aside from tbe reasoning in tbe Swartz case, is one of tbe major reasons why we are confining tbe Tennessee Products case to the facts and time of that case.
In an excellent article on State and local taxation appearing in Yol. 12, Vanderbilt Law Review, at page 1346, tbe author says:
“In Swartz v. Atkins, tbe issue was whether a taxpayer could escape penalty for failing to make a tax return and pay a certain use tax on tbe sole ground that tbe taxpayer was not aware that be owed any tax. Tbe Tennessee court quite properly held, it seems, that [202]*202such delinquency on the part of the taxpayer is not excused from the statutorily imposed penalty where the statute makes no provision for any such excuse. Although a tough decision for an innocent taxpayer, to hold otherwise would appear to open up a flood gate of would-be ignorance of tax laws. The decision reached by the court is also buttressed by the fact that the same statute did require ‘wilful intent’ in order to penalize the taxpayer for nonpayment where the penalty was much larger, but the statute makes no mention of intent under the smaller penalty which the taxpayer was seeking to escape in the case at hand. ’ ’
Thus it is that we confine the Tennessee Products case solely to the factual issue at the time in that case.
The contention of General Electric in this case is based entirely upon the proposition that it was guilty only of honest mistakes or a mistaken interpretation of the law relating to the Sales and Use Tax, and consequently under such circumstances may recover payment of penalty and interest under the equitable powers of the court. This record bears out such a contention, but we think for reasons above pointed out that this does not relieve penalties and interest for reasons stated in the Swartz case, supra.
The Chancellor correctly held that no recovery could be had of these penalties and interest insofar as they “arose as a result of honest mistakes by complainant in calculating the amount of táx due * This holding was made under the authority of Swartz v. Atkins, supra. The Chancellor held likewise that General Electric could not recover these penalties and interest :
[203]*203“ (a) On sales made to non-residents of the State of Tennessee from whom complainant collected and paid the tax of the State of purchaser’s residence.
“ (b) On sales made to Commercial Electric Company for complainant held no certificate from said Company.”
We affirm such holding based on the reasoning in the Swartz case, supra.
The Chancellor went on to hold though that the complainant could recover penalties and interest on transactions where it held exemption certificates and it had no knowledge that the materials were not for re-sale in:
“(a) Sales to Standard Disinfectant Company.
“(b) Sales to Borden Electric Company.”
The Chancellor also held that complainant is entitled to recover on a sale made to the Shannon Electric Company because it thought that the sale was being made in interstate commerce and that it had no knowledge that the material would be used in Tennessee, and could recover the tax paid on April 20,1960,4 ‘ on the taxes for the first eleven months of 1953, statute of limitations of six years having barred the recovery of said taxes.” It is from these things which the Chancellor held against the State that they have appealed. After reading this record, we are convinced that in each of these instances wherein the Chancellor allowed a recovery that he was in error. Under the rules and regulations which are promulgated by the Department and placed in the hands of taxpayers, it is provided among other things when a dealer, like the General Electric Company herein, sells its property free [204]*204of the Sales Tax on a certificate of re-sale “when lie knows, or should know in the use of ordinary care, that the property which lie is selling is not for re-sale by the purchaser, but is for the purchaser’s own use or consumption in his business or otherwise the registration certificate of the wholesaler may be revoked by proper action of the Commissioner, and he shall be liable for the tax.” There are other provisions. Under the Act and under these regulations there must of necessity, due to the complication of the tax matter, be a burden cast upon the taxpayer to determine whether or not the sale he is making is taxable. If this were not true and the burden was on the State to determine each tax thing at the time, it would be an impossible situation. Consequently there is a greater burden cast upon the taxpayer to determine under the factual situation depending upon each sale whether or not the tax is due. What has just been said will appear applicable by references to certain sales made by the taxpayer hereinafter.
In the two instances above mentioned sales made to the Standard Disinfectant Company and the Borden Electric Company were allowed the taxpayer on the theory he had no knowledge that the things were not to be used for re-sale. The proof shows with reference to the Standard Disinfectant Company that this was a business engaged strictly in selling janitorial supplies. The additional tax levied here which was paid by General Electric was based on the records of this company which reflected sales of small appliances and in some instances of major appliances which were not for re-sale but purely for the use and consumption of Standard itself. The merchandise purchased by this company was used for gifts and premiums to its customers. It seems to us that even though [205]*205Standard held a certificate which would exempt it where it bought things for re-sale, when it appeared to General Electric, as it should, since Standard was not in the business to re-sell these things, and that they probably were for its personal use, that this should not exempt these articles.
The Chancellor allowed a recovery of the penalty and interest paid on the Borden Electric Company tax. Of course, it must be remembered in each of these instances that General Electric did pay the tax and only the interest and penalties are involved. Borden Electric was both a dealer and a contractor and the instances out of which this tax arose were the sales of certain products for the use of a construction project at Cookeville which was being performed by Borden Electric. It seems to us that the use of the supplies purchased by this vendee under the circumstances, knowing that he was both a dealer and a contractor, there was an obligation on the vendor of these things to determine whether or not these articles were tax free. We thus think that this was a taxable item and, under the Act for the reasons above set forth, penalties and interest should not be returned. There is some indication from reading this record that General Electric had actual knowledge that this merchandise was being sold to Borden for use on this job and not for resale.
There were certain sales made to Shannon Electric Company in Nashville. This company ordered the goods shipped to Port Campbell, Kentucky. The Chancellor relieved the penalty and interest, even though the tax was paid by General Electric and no complaint made of that, because this was a transaction where it was pur[206]*206chased in Nashville to be shipped in interstate commerce. "We think though for the same reasons above expressed that the Chancellor was wrong in this because even though this was shipped to Fort Campbell, Kentucky, the sale was consummated entirely within Tennessee by a Tennessee vendee, and even though it was shipped in interstate commerce General Electric should have known that the goods were going to be used in Tennessee after they got there. The actual delivery of the goods was made to that portion of Fort Campbell which lies solely within the State of Tennessee. Transporting goods from one point in a State to another point in the same State, even though the carrier does cross over the State line, does not make such a transaction interstate commerce. Lehigh Valley Railroad v. Penn., 145 U.S. 192, 12 S.Ct. 806, 36 L.Ed. 672. This electric company in Nashville that purchased these things was engaged in the contracting business and as such it was the ultimate consumer of merchandise purchased from the complainant and under Rule 68 of the Sales and Use Tax Law it was liable for the Sales Tax on the sales to this vendee.
The last item on which the taxpayer was allowed to recover the penalty and interest paid was on taxes for the first eleven months of 1953 because the collection of this item was barred by the statute of limitations. We find in the record two copies of a long agreement waiving the statute of limitations; then, too, the manager of General Electric testified once or twice that there was no intention and that General Electric didn’t want to rely on the statute of limitations; that they expressly waived it. Of course, this waiver was executed to give the parties a chance to check the records and do all these things, and as a result of this waiver no action was taken until after [207]*207the payment was made and then this suit was brought to get the money back. The argument made for the recovery of this is more or less begging the question because it says it is true we waived the statute of limitations but still we want our money back for the penalties and interest on this because we didn’t know anything about it; we were honestly mistaken in it and didn’t know that we owed this sum of money. This though is not a sufficient excuse and under the statute there is liability therefor. We assume that the Chancellor based this allowance largely on the fact that he thought that since the statute had to run there were equities in favor of the taxpayer. Under such a situation we think that no equities are involved. This waiver, which was executed, was for the benefit of both parties. It was probably just as much, or more, for the convenience of the taxpayer as it was for the State.
The waiver, of course, of the tax liability under the statute of limitations necessarily is a waiver of the collection of the penalty and interest, and thus when it was determined from this audit that a tax was due the interest and penalty attached as a matter of law subjected the complainant to the payment thereof.
We have carefully considerd this matter and each item therein without going into too much detail in this opinion as it is entirely too long already, and have concluded that the Chancellor is correct in the first instance in denying recovery and was wrong in the second instance as pointed out in granting recovery. The result is that the decree is affirmed in part and reversed in part. Due to the fact that the Tennessee Products case is on record (counsel for the taxpayer in the Tennessee Prod-[208]*208nets case is the same counsel for the taxpayer in the instant case) the court costs of this case will be taxed one-third tp the State and two-thirds to the taxpayer.
'Pbewitt, Chibe Justice Tomlinson, Special Judge, and Buenett and Pelts, Justices, concurred.