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U.S. Supreme Court

Halliburton Oil Well Cementing Co. v. Reilly, 373 U.S. 64 (1963)

Halliburton Oil Well Cementing Co. v. Reilly

No. 24

Argued March 26 27, 1962

Restored to calendar for reargument April 2, 1962

Reargued December 3, 1962

Decided May 13, 1963

373 U.S. 64


Appellant sued in a Louisiana State Court for refund of Louisiana use taxes paid under protest and claimed by appellant to be discriminatory against interstate commerce. Louisiana taxed sales within the State at the same rate that it taxed the use within the State of articles brought from other States, and, in applying its use tax, it gave credit for sales or use taxes paid to other States; but there were discrepancies in the tax burden arising out of the methods of applying the taxes. Part of the tax involved was based on the cost of labor and shop overhead arising out of the assembling in Oklahoma of specialized oil well servicing equipment brought into Louisiana and used there, although these items of cost would not have been included in computing the tax had the assembling been done in Louisiana. Another part of the tax involved was based on the cost of certain articles bought second-hand in another State from parties not regularly engaged in the sale of such articles, although these articles would have been exempt from the Louisiana sales tax had they been purchased within the State.

Held: the taxes here involved are invalid, because they discriminate against interstate commerce. Pp. 373 U. S. 65-75.

(a) Equal treatment for in-state and out-of-state taxpayers similarly situated is the condition precedent for a valid use tax on goods imported from out of state. Pp. 373 U. S. 69-70.

(b) Characterizing the discrimination here involved as "incidental" does not validate the tax, since equality for the purposes of competition and the flow of commerce is measured in dollars and cents, not legal abstractions. Pp. 373 U. S. 70-71.

(c) On this record, the proper comparison is between the in-state and out-of-state manufacturer-user, and the Louisiana use tax, as applied to appellant's specialized equipment, discriminates against interstate commerce. Pp. 373 U. S. 71-73. chanrobles.com-red

Page 373 U. S. 65

(d) Since Louisiana exempts from its sales tax certain isolated sales within the State, the application of its use tax to similar isolated sales outside the State discriminates against interstate commerce. Pp. 373 U. S. 73-74.

41 La. 67, 127 So.2d 502, reversed.


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