In the case of Moe, Sheriff, et al. v. Confederated Salish and Kootenai Tribes of the Flathead Reservation et al., 1975, the U.S Supreme Court ruled in favor of tribal sovereignty by upholding that state laws cannot infringe upon it. The issue at hand was whether Montana could impose a cigarette sales tax on a business owned by a member of the Confederated Salish and Kootenai Tribes located within their reservation. The court held that imposing such taxes would interfere with tribal self-government and thus violate federal law protecting Native American tribes' rights to govern themselves without undue interference from states. However, they also upheld parts of Montana's regulatory scheme not involving taxation - like licensing requirements for selling cigarettes - as long as these did not infringe upon tribal sovereignty or were preempted by federal law.

In the dissenting opinion for Moe v. Confederated Salish and Kootenai Tribes of the Flathead Reservation, Justice William Rehnquist argued that the majority's decision to exempt tribal members from state taxes on reservation lands was inconsistent with previous rulings. He contended that while tribes possess a certain degree of sovereignty, it is not absolute and can be limited by Congress or affected by their incorporation within a state. Thus, he believed Montana had jurisdiction to impose its cigarette tax on sales made by tribal members operating stores on reservations because these transactions involved non-tribal customers who were primarily off-reservation residents. Furthermore, he disagreed with the majority’s view about licensing fees for vehicles owned by tribal members residing in reservations as an intrusion into self-governance; instead seeing them as valid under precedent allowing states to regulate activities affecting health or welfare within their borders.