In the case of Central of Georgia Railway Company v. Wright, Comptroller General of the State of Georgia (1918), the U.S Supreme Court ruled in favor of Central Georgia Railway Company. The railway company had challenged a tax imposed by the state on its gross receipts from interstate commerce activities, arguing that it was unconstitutional as it violated both federal law and the Commerce Clause which prohibits states from interfering with interstate commerce. The court agreed with this argument, stating that while states have power to tax businesses within their borders, they cannot impose taxes on activities related to interstate commerce because such matters fall under federal jurisdiction. Therefore, any state laws imposing such taxes were deemed invalid and unenforceable.

In the dissenting opinion for Central of Georgia Railway Company v. Wright, Justice Holmes argued that the majority's decision to strike down a state tax on railroad companies was incorrect. He contended that the Commerce Clause did not prohibit states from taxing businesses operating within their borders, even if those businesses were involved in interstate commerce. According to him, such taxes were necessary for states to fund public services and infrastructure essential for business operations. Furthermore, he disagreed with the majority's view that this particular tax discriminated against out-of-state entities since it applied equally to all railroads operating in Georgia regardless of where they were headquartered or incorporated. Thus, he believed there was no violation of either due process or equal protection principles under Fourteenth Amendment as claimed by plaintiff railway company.