delivered the opinion of the Court.
These are appeals from the Supreme Court of Tennessee, affirming a Chancery Court judgment for some $196,000 in favor of the State Commissioner of Finance and Taxation, against Esso Standard Oil Co., the party of record in No. 330. Ultimately liable, the United States intervened in that litigation and brought a separate appeal here, No. 378. It contended that the state tax involved is barred by principles of sovereign immunity. This is a test case. We are told that if the tax is sustained, a liability for upwards of $4,000,000 will rеsult.
The facts are these. During World War II the Government was actively engaged in the production and procurement of high octane aviation fuel. All such gasoline produced was purchased before it left the refinery and, by formal passage of title, became immediately the property of the Defense Supplies Corporation, a corporation wholly owned by the Reconstruction Finance Corporation, 6 Fed. Reg. 2972, as amended 6 Fed. Reg. 3363, and specificаlly exempt from state storage and use taxes, 55 Stat. 248. Release from storage by the producing companies occurred only on notification by the Petrоleum Administration for War, in accordance with allocation of specific lots of fuel to various official consumers, including *497 the Services and the Allies. The Air Force, in particular, then arranged for transportation of its various allotments — sometimes by government carrier — from the refineries to the nearest consuming point.
We are concerned with certain lots of Air Force fuel produced in the South at various plants and shipped through Memphis, Tennessee. It appеars that in 1943 a shortage of storage facilities developed in the area, forcing resort to privately owned tanks. Appellant Esso and the Lion Oil Company were able to provide such service through tanks at various points near Memphis. As a result, the Government entered into extensive contracts with Esso which in turn rentеd the Lion tanks, providing that the Company would “render services ... in receiving, storing, handling and loading Government-owned fuel.” The Company’s service charge ranged from 18/100 оf a cent to 6 3/10 cents per gallon. The United States agreed to assume liability for all state taxes. Pursuant thereto, allotments of gasoline were moved by bargе from refineries to these private tanks, stored there pending need, and later reshipped by truck to consuming airfields on order of the Air Force. The opеrations continued from 1943 through 1946 under several contracts of similar import.
August 2,1949, the State, after investigation, demanded that Esso pay taxes in connection with these оperations under the Tennessee gasoline tax, 2 Williams Tenn. Code §§ 1126-1147. This statute, in material part, provided:
“Every distributor when engaged in such business in this state, shall pay to the stаte comptroller, through commissioner of finance and taxation, for the exclusive use of the state, a special privilege tax, in addition to all other taxes, for engaging in and carrying on such business in this state, in an amount equal to six cents for each gallon of gasoline, and six *498 cents for each gallon of distillate refined, manufactured, produced, or compounded by such distributor and sold, stored or distributed by him in this state, or shipped, transported or imported by such distributor into, and distributed, storеd or sold by him within this state, during such year; . . . .” § 1127.
And § 1126 defines distribution as
“every person who engages in the business in the state of refining, manufacturing, producing, or compounding gasoline or distillate, and selling or stоring the same in this state; and also every person who engages in the business in this state of transporting, importing, or causing to be imported, gasoline or distillate into this statе, and distributing, storing, or making original sales of the same in this state, for any purpose whatsoever.”
Esso paid the required tax for the privilege of storing gasoline measured by the amount stored during the month of January 1944 — the statute of limitations having run in regard to 1943 operations — and sued to recover. The Government intervened in the trial court аnd entered its plea, echoed by Esso, that the tax was barred by the constitutional doctrine of intergovernmental immunity; that to construe the Tennessee statute as applicable to storage of gasoline owned by the United States makes it repugnant to the Constitution and void. Both the Chancery Court and the Court of Appeals rejected the claimed immunity and held the statute valid as applied.
The appellants take a firm stand on
United States
v.
Allegheny County,
Allegheny County, was United States had leased certain machinery to the Mesta Machine Company. In imposing the state ad valorem property tax, Pennsylvania included in the Mesta assessment both the privately owned land and buildings, аnd the government machinery. Id., at 179-180, 186. So the value of the federal property was, in part, the measure of the tax. We held the substance of this procedure wаs “to lay an ad valorem general property tax on property owned by the United States,” id., at 185, and therefore invalid. Our holding was not “dependent upon the ultimate resting place of the economic burden of the tax.” Id., at 189.
This tax was imposed because Esso stored gasoline. It is not, as the
Allegheny County
tax was, based on the worth of the government property. Instead, the amount collected is graduated in accordance with the exercise of Esso’s privilege to engage in such operations; so it is not “on” the federal property as was Pennsylvania’s. Federal ownership of the fuel will not immunize such a private contractor from the tax оn storage. It may generally, as it did here, burden the United States financially. But since
James
v.
Dravo Contracting Co.,
Neither condition applies to the kind of governmental operations here involved. There is no claim of a stated immunity. And we find none implied. The United States, today, is engaged in vast and complicated operations in business fields, and important purchasing, financial, and contract transactions with private enterprise. The Constitution does not extend sovereign exemption from state taxation to cоrporations or individuals, contracting with the United States, merely because their activities are useful to the Government. We hold, therefore, that sovereign immunity doеs not prohibit this tax.
Appellants press a further point, that the Tennessee courts have discriminated against the Federal Government by the result in this case. They point to the fact that heretofore, specifically in
Tennessee Oil Co.
v.
McCanless,
Affirmed.