The state of Arizona can levy a transaction privilege tax against a Utah company that operates river excursions through the Grand Canyon, even though virtually all of the company's business is transacted in Utah, the Arizona Court of Appeals says.

The ruling Tuesday reversed a lower court's ruling that Moki Mac River Expeditions Inc. of Salt Lake City was not subject to the Arizona tax.Judge Bernard Dougherty of Maricopa County Superior Court had held that "the activity engaged in by (Moki Mac) within the state of Arizona does not constitute engaging or continuing in business within this state."

Moki Mac already had won similar rulings from a Department of Revenue hearing officer and the state Board of Tax Appeals before the department appealed to Superior Court.

Revenue officials argued that the state is allowed to levy a transaction privilege tax on "any business charging admission fees for . . . amusement" within the state.

The appeals court agreed with the Department of Revenue in an opinion written by Judge Robert Corcoran, who since has been named to the state Supreme Court. The decision also held that imposition of the tax did not violate the U.S. Constitution and was not preempted by federal regulation of Grand Canyon National Park.

Moki Mac is based in Salt Lake City and its customers make reservations and pay for their trips at that office. The company maintains no offices, agents or solicitors in Arizona, although it advertises in this state and leases land at Badger Creek, which it uses for a parking lot, storage buildings and two dwellings.

The company also uses the Badger Creek site as a staging area for the Grand Canyon trips.

"We conclude that Moki Mac, by conducting river trips within the geographic boundaries of Arizona, was engaged in business within the state," Corcoran wrote. "The trial court erred in ruling that Moki Mac was not so engaged."

The case was remanded to Superior Court "for determination of the amount of interest accrued and for entry of judgment against Moki Mac for the tax deficiency, including accrued interest."