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Nashville, C. & S. L. Ry. v. Wallace - 288 U.S. 249, 53 S. Ct. 345 (1933)

Rule:

Taxes said to burden interstate commerce directly when levied upon or measured by the operation of interstate commerce or gross receipts derived from it, are beyond the state taxing power.

Facts:

Appellant railroad company challenged an excise tax imposed on gasoline that the railroad stored within the state. The railroad filed its action under the Tennessee Declaratory Judgments Act, claiming that the tax was unconstitutional. The trial court disagreed, as did the Tennessee Supreme Court.

Issue:

Is the imposition of excise tax on gasoline stored within the State violative of the Commerce Clause?

Answer:

No.

Conclusion:

The United States Supreme Court affirmed and held that the case presented for determination the railroad's liability for the tax and not an abstract determination of the validity of a statute. The court determined that the tax did not violate the Commerce Clause because the gasoline was not a subject of transportation in interstate commerce once it was unloaded and stored. The court reasoned that the railway had not arranged shipment of the gasoline to other states before unloading and storing it in Tennessee.

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