East Ohio Gas Co. v. Tax Commission of Ohio
283 U.S. 465 (1931)

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U.S. Supreme Court

East Ohio Gas Co. v. Tax Commission of Ohio, 283 U.S. 465 (1931)

East Ohio Gas Co. v. Tax Commission of Ohio

No. 453

Argued April 22, 23, 1931

Decided May 18, 1931

283 U.S. 465

Syllabus

1. A state can neither lay a tax on the act of engaging in interstate commerce nor on gross receipts therefrom. P. 283 U. S. 470.

2. While a state may require payment of an occupation tax by one engaged in both intrastate and interstate commerce, the exaction, in order to be valid, must be imposed solely on account of the intrastate business, without enhancement because of the interstate business done, and it must appear that one engaged exclusively in the interstate business would not be subject to the imposition, and that the taxpayer could discontinue the intrastate business without withdrawing also from the interstate business. Id.

3. The transportation of natural gas from wells outside of a state by the pipelines of producing companies to the state line, and thence, by means of the distributing company's high pressure transmission lines, to their connections with its local systems is essentially national -- not local -- in character, and is interstate commerce within as well as without the state. Id.

4. The mere fact that the title or the custody of the gas passes while it is en route from state to state is not determinative of the question where interstate commerce ends. Id.

5. Natural gas, purchased by an Ohio corporation for supply to its local consumers, was piped into, and distributed within, the state at high pressures. When it reached the company's local supply mains, the pressure was greatly reduced and the volume of the gas was greatly expanded. It there divided into many thousands of relatively tiny streams that entered the small service lines connecting the service mains with the pipes on the consumers' premises, and, so segregated in those lines and pipes, it remained in readiness, or moved forward, to serve as needed.

Held:

(1) That the treatment and division of the large compressed volume of gas is like the breaking of an original package, after shipment in interstate commerce, in order that its contents may be treated, prepared for sale, and sold at retail. P. 283 U. S. 471.

(2) The furnishing of the gas to the consumers in this way is not interstate commerce, but a business of purely local concern exclusively

Page 283 U. S. 466

within the jurisdiction of the state, which may constitutionally be subjected to a excise tax based on the gross receipts. Id.

6. Opinion in Pennsylvania Gas Co. v. Public Service Comm'n,252 U. S. 23, disapproved to the extent that it is in conflict with the decision here. P. 283 U. S. 472.

43 F.2d 170 affirmed.

Appeal from a decree of the District Court of three judges refusing a preliminary injunction and dismissing the bill, in a suit to restrain collection of a state tax.

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