Is compressed natural gas subject to sales and use tax?

No.  Compressed natural gas that is subject to the 13 cents per gallon tax (16 cents per gallon effective July 1, 2017) under Tenn. Code Ann. § 67-3-1113 is exempt from sales and use tax.  Note that liquefied gas that is subject to the 14 cents per gallon tax (17 cents per gallon effective July 1, 2017) under Tenn. Code Ann. § 67-3-1102 also is exempt from sales and use tax.