In the 1940 case of West India Oil Co. (Puerto Rico) v. Domenech, Treasurer of Puerto Rico, the U.S Supreme Court ruled in favor of West India Oil Company. The company had been charged with a tax by Puerto Rican authorities for importing gasoline into the island territory from foreign countries and then exporting it to other locations outside Puerto Rico without selling any locally. The court found that this practice was not subject to local taxation because it constituted interstate commerce under Article I, Section 8 of the U.S Constitution which gives Congress exclusive power over such matters. Therefore, imposing a tax on these transactions violated constitutional law as per rulings in previous cases like Dooley v United States and Empresa Siderurgica v County of Merced where similar principles were upheld.

In the dissenting opinion for West India Oil Co. v. Domenech, Justice Roberts argued that Puerto Rico's tax on foreign corporations was unconstitutional because it violated the Commerce Clause and Equal Protection Clause of the U.S. Constitution. He contended that this tax discriminated against interstate commerce by imposing a heavier burden on foreign corporations than domestic ones, which is prohibited under the Commerce Clause. Furthermore, he believed that this discriminatory taxation also infringed upon these companies' rights to equal protection under law as guaranteed by the Fourteenth Amendment since they were being treated differently based solely on their status as foreign entities without any justifiable reason or compelling state interest to do so.