Marshall, Chief Justice.
James B. Beam Distilling Co. (Beam) brought this action seeking a $2,400,000 refund for excise taxes it paid in 1982, 1983 and 1984. The taxes were paid pursuant to OCGA § 3-4-60, which imposed a higher tax on alcoholic beverages imported into the state than on those manufactured in Georgia. The statute was amended in 1985, shortly after the United States Supreme Court found a similar statute to be unconstitutional. See Bacchus Imports v. Dias, 468 U. S. 263 [364]*364(104 SC 3049, 82 LE2d 200) (1984).1 In the proceedings below, the trial court determined that the pre-1985 statute was unconstitutional because it violated the Commerce Clause of the U. S. Constitution. The court further held that the ruling would only be applied prospectively so that Beam is not entitled to a refund. We affirm.
1. The State appeals the trial court’s decision that the pre-1985 version of OCGA § 3-4-60 was unconstitutional. We find no error. The statute imposed higher taxes on out-of-state products solely because of their origin. The record demonstrates that the purpose and effect of the statute was simple economic protectionism, which is virtually per se invalid under the Commerce Clause of the U. S. Constitution. M.
2. Beam asserts that the trial court erred in applying the decision prospectively only. We disagree. In Flewellen v. Atlanta Cas. Co., 250 Ga. 709 (300 SE2d 673) (1983), this Court adopted the three-pronged test set forth in Chevron Oil v. Huson, 404 U. S. 97 (92 SC 349, 30 LE2d 296) (1971), to be applied in deciding a retroactivity question:
(1) Consider whether the decision to be applied nonretroactively established a new principle of law, either by overruling past precedent on which litigants relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed.
(2) Balance of the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation would further or retard its operation.
(3) Weigh the inequity imposed by retroactive application, for, if a decision could produce substantial inequitable results if applied retroactively, there is ample basis for avoiding the injustice or hardship by a holding of nonretroactivity.
Flewellen, 250 Ga. at 712. Retroactive application of a judicial decision is not compelled constitutionally or otherwise2 where unjust results would accrue to those who justifiably relied on the prior rule. [365]*365Strickland v. Newton County, 244 Ga. 54 (258 SE2d 132) (1979) (decision holding local option sales tax should be applied prospectively to avoid unjust results).
Applying the first prong of the Chevron test, we note that the decision does not now establish a “new rule.” However, if the decision had been rendered during 1984, the last year that the tax was assessed, it would certainly have overruled past precedent. The tax structure embodied in OCGA § 3-4-6Ó had been in effect in Georgia since 1938. In 1939 the statute was challenged on the grounds that it violated the Commerce Clause of the U. S. Constitution and was upheld. Scott v. State, 187 Ga. 702 (2 SE2d 65) (1939), overruled on other grounds, Blackston v. Ga. Dept. of Natural Resources, 255 Ga. 15 (334 SE2d 679) (1985). After the Scott decision, the import tax was not challenged again until 1985. See Heublein, supra. During the time that the taxes at issue here were collected, the State had no reason to believe that the import taxes were unconstitutional. Moreover, when it became clear that there might be constitutional problems with the statute, see Bacchus, supra, the legislature moved promptly to amend the statute to rectify the defects. Thus, it appears that the first prong of the Chevron test favors prospective application of the rule.
The second prong of the Chevron test has no application here because the statute at issue was repealed in 1985. We move therefore to the third prong of the test, which involves balancing the equities. Beam seeks 2.4 million dollars that it paid in 1982, 1983 and 1984. There are at least two other lawsuits currently pending in which other alcohol producers seek over 28 million dollars in tax refunds on the same grounds. Economic realities lead to the inescapable conclusion that the cost of this tax has or could have been already absorbed by the companies and passed on to Georgia consumers. Indeed, retroactive application of the ruling might well result in a windfall to the alcohol producers.
On the other hand, if the decision is applied retroactively, Georgia faces liability for over 30 million dollars in refunds for taxes it collected in good faith under an unchallenged and presumptively valid statute. Georgia would have to refund large sums of money that it has already spent. Prospective application would avoid imposing a severe financial burden on the State and its citizens. In such situations, this Court and the courts of other states have frequently declined retroactive application, even though the ruling allows an unconstitutional statute to remain in effect for a limited period of time. See Federated Mut. Ins. Co. v. DeKalb County, 255 Ga. 522 (341 SE2d 3) (1986); American Trucking Assn. v. Gray, 746 SW2d 377 (295 Ark. 43) (1988) (out-of-state truckers were not entitled to refund of taxes found violative of the Commerce Clause); Nat. Distributing [366]*366Co. v. Office of the Comptroller, 523 S2d 156 (Fla. 1988) (prospective ruling appropriate where equities weighed against refund of taxes paid under alcoholic beverage statute); Metropolitan Life Ins. Co. v. Commr. of Dept. of Ins., 373 NW2d 399 (N.D. 1985) (no refund of taxes paid under statute giving unconstitutional preference to domestic insurance companies).
3. In 1939, this Court upheld the precursor to the pre-1985 version of OCGA § 3-4-60 against a Commerce Clause challenge. Scott v. State, 187 Ga. 702, supra, overruled on other grounds, Blackston v. Ga. Dept. of Natural Resources, 255 Ga. 15, supra. Now, some fifty years later, we are striking down its successor because it violates the Commerce Clause.
As the dissent points out, there are a number of cases strongly supporting the argument that because the statute was unconstitutional, it was void ab initio. See, e.g., Dennison Mfg. Co. v. Wright, 156 Ga. 789 (120 SE 120) (1923); Battle v. Shivers, 39 Ga. 405 (1869).
However, the rule of voidness ab initio is not an absolute rule. It has exceptions.
“The general rule is that an unconstitutional statute is wholly void and of no force and effect from the date it was enacted.
Free access — add to your briefcase to read the full text and ask questions with AI
Marshall, Chief Justice.
James B. Beam Distilling Co. (Beam) brought this action seeking a $2,400,000 refund for excise taxes it paid in 1982, 1983 and 1984. The taxes were paid pursuant to OCGA § 3-4-60, which imposed a higher tax on alcoholic beverages imported into the state than on those manufactured in Georgia. The statute was amended in 1985, shortly after the United States Supreme Court found a similar statute to be unconstitutional. See Bacchus Imports v. Dias, 468 U. S. 263 [364]*364(104 SC 3049, 82 LE2d 200) (1984).1 In the proceedings below, the trial court determined that the pre-1985 statute was unconstitutional because it violated the Commerce Clause of the U. S. Constitution. The court further held that the ruling would only be applied prospectively so that Beam is not entitled to a refund. We affirm.
1. The State appeals the trial court’s decision that the pre-1985 version of OCGA § 3-4-60 was unconstitutional. We find no error. The statute imposed higher taxes on out-of-state products solely because of their origin. The record demonstrates that the purpose and effect of the statute was simple economic protectionism, which is virtually per se invalid under the Commerce Clause of the U. S. Constitution. M.
2. Beam asserts that the trial court erred in applying the decision prospectively only. We disagree. In Flewellen v. Atlanta Cas. Co., 250 Ga. 709 (300 SE2d 673) (1983), this Court adopted the three-pronged test set forth in Chevron Oil v. Huson, 404 U. S. 97 (92 SC 349, 30 LE2d 296) (1971), to be applied in deciding a retroactivity question:
(1) Consider whether the decision to be applied nonretroactively established a new principle of law, either by overruling past precedent on which litigants relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed.
(2) Balance of the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation would further or retard its operation.
(3) Weigh the inequity imposed by retroactive application, for, if a decision could produce substantial inequitable results if applied retroactively, there is ample basis for avoiding the injustice or hardship by a holding of nonretroactivity.
Flewellen, 250 Ga. at 712. Retroactive application of a judicial decision is not compelled constitutionally or otherwise2 where unjust results would accrue to those who justifiably relied on the prior rule. [365]*365Strickland v. Newton County, 244 Ga. 54 (258 SE2d 132) (1979) (decision holding local option sales tax should be applied prospectively to avoid unjust results).
Applying the first prong of the Chevron test, we note that the decision does not now establish a “new rule.” However, if the decision had been rendered during 1984, the last year that the tax was assessed, it would certainly have overruled past precedent. The tax structure embodied in OCGA § 3-4-6Ó had been in effect in Georgia since 1938. In 1939 the statute was challenged on the grounds that it violated the Commerce Clause of the U. S. Constitution and was upheld. Scott v. State, 187 Ga. 702 (2 SE2d 65) (1939), overruled on other grounds, Blackston v. Ga. Dept. of Natural Resources, 255 Ga. 15 (334 SE2d 679) (1985). After the Scott decision, the import tax was not challenged again until 1985. See Heublein, supra. During the time that the taxes at issue here were collected, the State had no reason to believe that the import taxes were unconstitutional. Moreover, when it became clear that there might be constitutional problems with the statute, see Bacchus, supra, the legislature moved promptly to amend the statute to rectify the defects. Thus, it appears that the first prong of the Chevron test favors prospective application of the rule.
The second prong of the Chevron test has no application here because the statute at issue was repealed in 1985. We move therefore to the third prong of the test, which involves balancing the equities. Beam seeks 2.4 million dollars that it paid in 1982, 1983 and 1984. There are at least two other lawsuits currently pending in which other alcohol producers seek over 28 million dollars in tax refunds on the same grounds. Economic realities lead to the inescapable conclusion that the cost of this tax has or could have been already absorbed by the companies and passed on to Georgia consumers. Indeed, retroactive application of the ruling might well result in a windfall to the alcohol producers.
On the other hand, if the decision is applied retroactively, Georgia faces liability for over 30 million dollars in refunds for taxes it collected in good faith under an unchallenged and presumptively valid statute. Georgia would have to refund large sums of money that it has already spent. Prospective application would avoid imposing a severe financial burden on the State and its citizens. In such situations, this Court and the courts of other states have frequently declined retroactive application, even though the ruling allows an unconstitutional statute to remain in effect for a limited period of time. See Federated Mut. Ins. Co. v. DeKalb County, 255 Ga. 522 (341 SE2d 3) (1986); American Trucking Assn. v. Gray, 746 SW2d 377 (295 Ark. 43) (1988) (out-of-state truckers were not entitled to refund of taxes found violative of the Commerce Clause); Nat. Distributing [366]*366Co. v. Office of the Comptroller, 523 S2d 156 (Fla. 1988) (prospective ruling appropriate where equities weighed against refund of taxes paid under alcoholic beverage statute); Metropolitan Life Ins. Co. v. Commr. of Dept. of Ins., 373 NW2d 399 (N.D. 1985) (no refund of taxes paid under statute giving unconstitutional preference to domestic insurance companies).
3. In 1939, this Court upheld the precursor to the pre-1985 version of OCGA § 3-4-60 against a Commerce Clause challenge. Scott v. State, 187 Ga. 702, supra, overruled on other grounds, Blackston v. Ga. Dept. of Natural Resources, 255 Ga. 15, supra. Now, some fifty years later, we are striking down its successor because it violates the Commerce Clause.
As the dissent points out, there are a number of cases strongly supporting the argument that because the statute was unconstitutional, it was void ab initio. See, e.g., Dennison Mfg. Co. v. Wright, 156 Ga. 789 (120 SE 120) (1923); Battle v. Shivers, 39 Ga. 405 (1869).
However, the rule of voidness ab initio is not an absolute rule. It has exceptions.
“The general rule is that an unconstitutional statute is wholly void and of no force and effect from the date it was enacted. This harsh rule is subject to exceptions, however, where, because of the nature of the statute and its previous application, unjust results would accrue to those who justifiably relied on it. . . .”
While we have declared statutes to be void from their inception when they were contrary to the Constitution at the time of enactment, . . . those decisions are not applicable to the present controversy, as the original . . . statute, when adopted, was not violative of the Constitution under court interpretations of that period.
Adams v. Adams, 249 Ga. 477, 478-79 (291 SE2d 518) (1982) (citations omitted) (quoting Strickland v. Newton County, 244 Ga. 54, 55 (258 SE2d 132) (1979) (citations omitted)). Other cases have held similarly. E.g., Strickland v. Newton County, 244 Ga., supra; Allan v. Allan, 236 Ga. 199, 207-08 (223 SE2d 445) (1976). In all of these cases, the Court has applied its decision prospectively rather than retroactively.
We apply the exception to the general rule. Here, the state has collected taxes under this statute or its predecessors over a half century in reliance on a decision of this court. Under these circumstances and the balancing factors discussed in Div. 2, supra, we hold it would be unjust to declare the statute void ab initio.
[367]*367In sum, we conclude that prospective application of the decision is appropriate. The decision of the trial court is affirmed in all respects.
Judgment affirmed.
All the Justices concur, except Smith and Weltner, JJ., who dissent as to Divisions 2 and 3.