NASHVILLE (AP) - The state is seeking to dismiss a lawsuit in which the Islamic Center of Nashville says it was unfairly denied a tax exemption.

The center argued in a September federal lawsuit that its Nashville International Academy school was disqualified from a religious tax exemption because the center followed its religious beliefs in a banking deal. The center was billed more than $87,000 in past-due taxes as a result.

In a recent court filing, The Tennessean (http://tnne.ws/2gkDkZB) reports that Tennessee Attorney General Senior Counsel Mary Ellen Knack has argued the lawsuit relates to a state tax law and thus should be brought in state court, not federal court.

At issue is a banking agreement the center struck to pay for the construction of a new school building in 2008 without interest.