In the 1931 case Gregg Dyeing Co. v. Query et al., the U.S Supreme Court ruled on a tax dispute between a South Carolina-based company and state officials. The dyeing company argued that its constitutional rights were violated by an allegedly discriminatory state tax law, which imposed higher taxes on businesses using power from their own electric plants than those purchasing electricity from public utilities. The court found no violation of equal protection under the Fourteenth Amendment, stating that it was within the discretion of states to classify different types of businesses for taxation purposes as long as there is reasonable basis for doing so. In this case, differences in conditions and circumstances justified differential treatment in taxation between companies generating their own power and those buying it from others.

In the dissenting opinion for Gregg Dyeing Co. v. Query et al., Justice Stone argued that South Carolina's tax on out-of-state cotton, which was dyed and printed in state before being shipped back out of state, violated the Commerce Clause of the U.S. Constitution. He contended that this tax placed an undue burden on interstate commerce by taxing a process (dyeing and printing) rather than a product or property within the state's jurisdiction. The majority upheld this tax as valid under their interpretation of manufacturing processes not constituting interstate commerce; however, Justice Stone disagreed with this view, asserting it would allow states to impose taxes arbitrarily on any phase of production they deemed "manufacturing," thereby disrupting free trade among states.