In the case of Southwestern Bell Telephone Co. v. Oklahoma et al., 1937, the U.S Supreme Court ruled in favor of Southwestern Bell Telephone Company (SWBT). The state of Oklahoma had imposed a tax on SWBT based on its gross receipts from both intrastate and interstate business operations. However, SWBT argued that this taxation was unconstitutional as it violated the Commerce Clause by taxing interstate commerce activities which are under federal jurisdiction. The court agreed with SWBT's argument and held that while states can impose taxes on businesses operating within their borders, they cannot levy taxes specifically targeting revenues generated through interstate commerce because such power is reserved for Congress under the Constitution’s Commerce Clause.

The dissenting opinion in the Southwestern Bell Telephone Co. v. Oklahoma case argued that the majority's decision was a departure from established principles of law and an intrusion into state affairs. The dissenters believed that it was not within the purview of federal courts to interfere with a state's power to tax its own corporations, especially when there is no clear violation of constitutional rights or federal laws involved. They contended that if every tax imposed by states were subject to scrutiny under due process clause, it would lead to chaos and uncertainty in taxation matters which are primarily a domain of states' authority. Furthermore, they disagreed with the majority's view about 'reasonableness' test for taxes arguing such tests should be applied only for regulatory measures rather than fiscal ones like taxes.