This appeal presents the question of whether Alabama's gross receipts tax upon a railroad's earnings from "intrastate business" applies to receipts generated by the L & N Railroad's movement of goods between two points in Alabama. The Court of Civil Appeals held these receipts are taxable under the statute. We reverse.
The railroad gross receipts tax statute presently provides:
Code 1975, § 40-21-57 (emphasis supplied).
The receipts the State seeks to tax under this statute were derived from L & N's movement of various products to and from the Port of Mobile. These movements, stipulated by the parties as typical of the transactions at issue, consist of both export and import shipments. Export shipments involve transportation of paper goods from Selma to the Port, where the goods are then off-loaded onto a ship and subsequently exported.
No questions concerning taxes due under the statute arose until 1976, when L & N petitioned the Department of Revenue for a refund of taxes paid on receipts earned in 1972 and 1973. L & N asserted taxes on these movements were erroneously paid because of a clerical and/or computer error, and that no taxes were due on these "interstate" shipments. The Department denied L & N's petition and soon thereafter entered assessments for similar receipts earned during 1974, 1975 and 1976.
It is clear from recent decisions of the United States Supreme Court that, under proper circumstances and regardless of whether the transaction is characterized as interstate or intrastate, the State may tax the gross receipts generated by L & N's services without offending either the Commerce Clause, Art. I, § 8, cl. 3, or Import-Export Clause, Art. I, § 10, cl. 2, of the Federal Constitution. Washington Revenue Department v. Stevedoring Association, 435 U.S. 734, 98 S.Ct. 1388, 55 L.Ed.2d 682 (1978); Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977).
We begin by noting that the issue before us cannot be resolved by simply resorting to the literal meaning of the phrase "intrastate business." Nor can the proper resolution be reached by dissecting the phrase into two words and applying their respective definitions. Numerous decisions have used the terms "business" and "commerce" interchangeably in the context of state taxation of commerce. See, e. g., Puget Sound Stevedoring Co. v. Tax Commission, 302 U.S. 90, 58 S.Ct. 72, 82 L.Ed. 68 (1937); Shannon v. Streckfus Steamers, 279 Ky. 649, 131 S.W.2d 833 (1939). An even greater number of decisions have indicated that whether an activity is truly intrastate or interstate depends upon many factors beyond whether the activity occurred within the boundaries of one or more states. See, e. g., The Daniel Ball, 77 (Wall.) U.S. 557, 19 L.Ed. 999 (1870); Merchants Fast Motor Service, Inc. v. I. C. C., 528 F.2d 1042 (5th Cir. 1976); United States v. Philadelphia & R. Ry. Co., 232 F. 946 (D.C.Pa.1916); HC & D Moving & Storage Co. v. Yemane, 48 Haw. 486, 405 P.2d 382 (1965); Beam v. Baltimore & O. R. Co., 77 Ohio App. 419, 68 N.E.2d 159 (1945).
As a general rule, it is both the origin and intended destination of a transaction which governs whether the transportation is interstate; and once the movement acquires its interstate character, it remains until the final destination is reached. HC & D Moving & Storage Co. v. Yemane, supra;
The United States Supreme Court has been more receptive to those regulatory measures affecting interstate commerce which are based upon a state's police power than it has been to those measures based upon a state's power to tax. Freeman v. Hewitt, 329 U.S. 249, 253, 67 S.Ct. 274, 277, 91 L.Ed. 265 (1946). The Court's early attitude towards state taxation of interstate commerce was illustrated in Minnesota v. Blasius, 290 U.S. 1, 54 S.Ct. 34, 78 L.Ed. 131 (1933), wherein it was stated:
290 U.S. at 8-9, 54 S.Ct. at 36-37 (footnote omitted and emphasis supplied). It was upon this basis, i. e., an impermissible burden upon interstate commerce, that the Court struck down many gross receipts tax statutes. See, e. g., Gwin, White & Prince, Inc. v. Henneford, 305 U.S. 434, 59 S.Ct. 325, 83 L.Ed 272 (1939); Adams Mfg. Co. v. Storen, 304 U.S. 307, 58 S.Ct. 913, 82 L.Ed. 1365 (1938); Philadelphia & Southern SS Co. v. Pennsylvania, 122 U.S. 326, 7 S.Ct. 1118, 30 L.Ed. 1200 (1887); Fargo v. Michigan, 121 U.S. 230, 7 S.Ct. 857, 30 L.Ed. 888 (1887).
Tax immunity for interstate commerce did not remain absolute, however. In 1938, the Court's decision in Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 58 S.Ct. 546, 82 L.Ed. 823 (1938), demonstrated a philosophical change in the Court. In that case it was indicated that interstate commerce was not totally immune from state regulation, that it should pay its own way, and that certain taxes could be levied on interstate commerce as long as the tax was fairly apportioned. See also, Central Greyhound Lines of New York, Inc. v. Mealey, 334 U.S. 653, 68 S.Ct. 1260, 92 L.Ed. 1633 (1948).
Despite the conservative position adopted by the Court, some gross receipts taxes were upheld in limited circumstances. Such taxes were sustained against constitutional attack when the tax was imposed "in lieu of" all other taxes the state could levy upon the taxpayer. See, e. g., Illinois Central RR. v. Minnesota, 309 U.S. 157, 60 S.Ct. 419, 84 L.Ed. 670 (1940); Pullman v. Richardson, 261 U.S. 330, 43 S.Ct. 366, 67 L.Ed. 682 (1923); United States Express Co. v. Minnesota, 223 U.S. 335, 32 S.Ct. 211, 56 L.Ed. 459 (1912). In this context, the gross receipts tax was considered a fair substitute for
Gross receipts taxes were also sustained when the tax was imposed upon some purely local activity which justified the exercise of the state's taxing power. See, e. g., Memphis Natural Gas Co. v. Stone, 335 U.S. 80, 68 S.Ct. 1475, 92 L.Ed. 1832 (1938); Coverdale v. Arkansas-Louisiana Pipeline Co., 303 U.S. 604, 58 S.Ct. 736, 82 L.Ed. 1043 (1938).
Nippert v. City of Richmond, 327 U.S. 416, 423, 66 S.Ct. 586, 589, 90 L.Ed. 760 (1946).
The practical application of this local/interstate dichotomy is illustrated in Puget Sound Stevedoring Co. v. Tax Commission, 302 U.S. 90, 58 S.Ct. 72, 82 L.Ed. 68 (1937).
302 U.S. at 92, 94, 58 S.Ct. at 73, 74.
Similarly, in Spector Motor Service v. O'Connor, 340 U.S. 602, 71 S.Ct. 508, 95 L.Ed. 573 (1951),
340 U.S. at 609-10, 71 S.Ct. at 512 (citations omitted).
Finally, in Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977), and Washington Revenue Department v. Stevedoring Association, 435 U.S. 734, 98 S.Ct. 1388, 55 L.Ed.2d 682 (1978), the Court embarked upon a new course in the area of state taxation of interstate commerce. In Complete Auto the Court overruled the rule in Spector Motor Service "that a state tax on the `privilege of doing business' is per se unconstitutional when ... applied to interstate commerce," 430 U.S. at 289, 97 S.Ct. at 1084, and held that a state could impose an apportioned tax upon the gross receipts derived from a segment of interstate commerce conducted entirely within the taxing state.
The question before us is one of legislative intent. We presume that, in enacting the statute in 1935, the Legislature was aware of the existing interpretations and permissible limits of a state's power to tax. Wright v. Turner, 351 So.2d 1 (Ala. 1977); Coden Beach Marina, Inc. v. City of Bayou La Batre, 284 Ala. 718, 228 So.2d 468 (1969). Thus, we presume our Legislature knew that at the time the statute was passed, the rule in Blasius would have prevented the application of the tax to transactions similar to those at issue because they constitute a portion of interstate commerce. We also presume that the Legislature was aware of the fact that this tax could not be sustained as one "in lieu of" other taxes because the tax was expressly levied "[i]n addition to all other taxes." Code 1975, § 40-21-57. Similarly, we presume that the Legislature was apprised of the fact that it could not justify this tax as one upon "local activity," because to do so would require the indulgence in the proscribed conceptual segmentation of the integral parts of an interstate transaction. Finally, we presume that the Legislature is aware of the judicial enlargement of the State's permissible area and method of taxation, so that the Legislature could have taken full advantage of those changes if it either intended or desired to. Wright v. Turner, supra; Coden Beach Marina, Inc. v. City of Bayou La Batre, supra. No such changes have been made during the forty-five years since the statute was passed and the State
REVERSED AND REMANDED.
All the Justices concur.