In the 1940 case of Nelson, Chairman of the State Tax Commission, et al. v. Montgomery Ward & Co., Inc., the U.S Supreme Court ruled in favor of Montgomery Ward & Co., a mail-order company that had been charged with taxes by Utah for its catalog sales to residents within the state. The court held that since these transactions were interstate commerce and not intrastate business activities, they could not be subjected to local taxation under federal law. This decision was based on an interpretation of Article I Section 8 Clause 3 (the Commerce Clause) of the United States Constitution which gives Congress exclusive power over interstate commerce. Therefore, any attempt by a state to impose tax obligations on such transactions would infringe upon this constitutional provision and is thus invalid.

In the dissenting opinion for Nelson, Chairman of the State Tax Commission, et al. v. Montgomery Ward & Co., Inc., Justice Roberts argued that the majority's decision was inconsistent with previous rulings regarding interstate commerce and taxation. He contended that Utah's tax on out-of-state retailers did not discriminate against or burden interstate commerce because it applied equally to all businesses operating within its borders, regardless of their location outside state lines. Furthermore, he maintained that this case differed from others in which taxes were deemed unconstitutional due to their impact on interstate commerce since there was no evidence suggesting such an effect here. In his view, upholding Utah's tax would have preserved states' rights to regulate and tax businesses within their jurisdiction without interfering with federal authority over interstate trade.