STATE OF KERALA AND OTHERS v. FR. WILLIAM FERNANDEZ ETC. ETC.
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- Supreme Court of India
- Decided
- Bench
- A. K. SIKRI and ASHOK BHUSHAN
- Citation
- [2017] 13 S.C.R. 663
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Headnote — Supreme Court Reports (editorial summary, not part of the judgment)
Catchwords
Entry Tax - Legislative competence of the State Legislature to impose Entry Tax on goods imported from outside the country entering into local area of the State -
Held
The import of goods from any territory outside India comes to an end when the goods enter into the custom frontiers of India and are released for home consumption -After import ofgoods is complete, the State legislature has fall legislative competence to levy entry tax under Entry 52 List 11 - The submission that essence of Entry 52 is octroi which can be levied only by local authorities and State has no legislative competence to impose entry tax under Entry 52 List 11 is fallacious - Constitution ofIndia - Seventh schedule, List II, Entry 52 - Orissa Entry Tax Act, 1999 - Kera/a Tax Act, 1994 - Bihar Tax on Entry of Goods in Local Area for Consumption, Use or Sale, 1993 - Uttar Pradesh Tax on Entry of Goods into Local Area Act, 2007 - E Uttarakhand Tax on Entry of Goods into Local Areas Act, 2009 - s.2(1)(c) - West Bengal Tax on Entry of Goods into Local Areas Act, 2012 - s.2(1)(c).
Catchwords
Entry Tax - State Legislations on levy of Entry Tax on goods imported from outside the country entering into local area of the F State -
Held
Orissa Entry Tax Act, 1999, Kera/a Tax Act, 1994 and Bihar Tax on Entry of Goods in Local Area for Consumption, Use or Sale, 1993 (before its amendment by Bihar Act, 2003 and 2006) do not exclude levy of entry tax on the goods imported from any place outside territories of India into a local area for consumption, -w~ G Entry Tax - Taxable event - Entry 52 provides a legislative field, namely, 'taxes on the entries of goods into a local area for consumption, use or sale therein' - The charging event arises on entry of scheduled goods into a local area - The origin of goods H 663
A has no relevance with regard to chargeability of entry tax - Any goods which are entering into a local area of a State whether coming from another local area of State, any other State or outside the country, the charging event is same for all goods entering into local area - Constillltion of India - Seventh Schedule, List II, Entry 52. B Entry Tax - Taxable event - Custom duty vis-a-vis entry tax on imported goods -
Held
The event for levy of customs d11ty, which is in the domain of the Parliament, is entirely different from that of event of entry tax - The liability to pay Stale entry tax arises only when goods enter into a local area for cons11mption, use and sale, which event is entirely different and separate from the levy of a c customs duty, which is on import - The taxing event pertaining to levy of entry tax occurs only qfter the taxing event of levy of customs duty is over.
Catchwords
Entry Tax - Whether doctrine of original/unbroken package as evolved by the American Court are to apply with ·regard to imported goods and thereby prohibiting the State from levying any tax till the goods are first sold/dealt by the importer -
Held
The Original Package Theory as developed by the American Supreme Court in case of Brown v. State of Maryland is not applicable in India and the imported goods are not exempted from entry tax till it reaches to the factory premises/destination of its cons11mption, use or sale.
Catchwords
Entry Tax - Non-inc/usicn of custom duty in the definition of purchase value in the statute of entry tax -
Held
Such non- inclusion is not an indicator of the fact that legislature never intended to levy entry tax on imported goods. Constitution of India - Seventh Schedule, List I, Entry 41 and 83 - Entry Tax Legislations - Whether intr11de into exclusive legislative Joma.in of Parliament as reserved imder Entry 41 and Entry 83 List I - '1fe/d: Entry tax legislations do not intrude in the legislative field reserved for Parliament under Entry 41 and under Entry 83 ofLisi I - The State Legislature is fully competent to impose tax on the entry of goods into a local area for consumption, sale and use - Orissa Entry Tax Act, 1999 - Kera/a Tax Act, 1994 - Bihar Tax on Entry of Goods in Local Area for Consumption, Use or Sale, 1993. H
Catchwords
Constitution of India - Art.286 - Restriction on imposition under Entry 52 List II -
Held
The restriction in the legislative power of the State as contained in Art.286 is with regard to taxing on sale or purchase of goods which takes place outside the State or in the course of import of the goods or services or export of goods or services - The restriction of Art.28.6 ipso facto cannot be placed while considering the legislative field of the State under Entry 52 and by virtue of Art.286, no restriction can be put on the legislative competence of the State in the field as defined under Entry 52.
Catchwords
Tax/Taxation - Nature of tax -
Held
It is well settled that the nomenclature or form of a tax is not a decisive factor to find out the nature of the tax - It is the matter of legislative policy as to how the c tax is to be collected. Tax/Taxation - Entry tax - The definition of taxation as given in Art.266(28) that tax includes general or local tax does not in any manner support the contention of the petitioner that tax under Entry 52 is only a local tax which ought to be collected through local bodies - It is the matter of legislative policy that whether a tax is collected as a general tax or a local tax - The nature of tax, measure of tax and machinery for tax collection are all different aspects - It is well within the jurisdiction of the legislature to formulate its policy regarding levy qftax and its collection - No capital can be made on the submission that since tax is not being collected by local authorities it is beyond the power of the State under Entry 52 List II. Interpretation of statutes - Taxation laws - While interpreting a taxing entry, no shackles can be put nor use of any expression in the Constitution of India, referring to a tax can be tied up to any pre-constitutional tax or levy - Further, any pre-constitutional tax practice cannot put any fetter on Constitution framers to define any tax, to elaborate the concept of tax or to move away or forward from any kind of earlier levy. G Interpretation of statutes - It is well known rule of statutory interpretation that by process of interpretation. the provision cannot be re-written nor any word can be introduced. Interpretation of Constitution - In deciding whether any particular enactment is within the purview of one Legislature or the
A other, it is pith and substance of the legislation that has to be looked into - Whenever a legislation is challenged as being under the competence of the State Legislature, the test, that one must find out by applying the rule of pith and substance that whether the legislation falls with in any ofthe List JI, if it does, no further question arises and attack on the ground of legislative competence must fail. B Orissa Entry Tax Act, 1999 - ss.2(d), 3 - Whether Entry Tax Legislations contemplated levy of Entry Tax on imported goods -
Held
Jn s.2(d), the word used is 'any place outside that local area or outside the State' - The word 'any' is a word of very wide meaning and use of word 'any' excludes any limitation - All the three c legislations clearly did not exclude goods coming from outside the territory of India and the definition of entry of goods read with charging section clearly included all goods entering into a local area - The expression "any place" before the words "outside the State" is also indicative of wide extent - The words 'any place' D cannot be limited to a place within the territory of India when no such indication is discernible from the provisions of the Act - Thus, the submission that entry tax legislation did not include imported goods cannot be accepted - Kera/a Tax Act, 1994 - Bihar Tax on Entry of Goods in Local Area for Consumption, Use or Sale, 1993.
Catchwords
Orissa Entry Tax Act, 1999 - Schedule, Part JI Item 9 - Plant imported in knocked out condition - Whether covered by expression " machinery and equipment" as used in the schedule of Orissa Act, 1999 ·-
Held
The Plant in a knocked out condition is nothing but a collection of machineries - Machinery and equipments are wide words which shall also cover plant in a knocked out condition - F Thus, a plant which is imported in knocked out condition is covered by the Part JI of Schedule of Orissa Act, 1999.
Catchwords
Bihar Tax on Entry of Goods in Local Area for Consumption, Use or Sale, 1993: s.4 as inserted by Bihar Act 19 of 2006 - Plea ofpetitioner that s.4 indicates that the tax levied under the Act would be collected and kept in a separate fund which is contrary to the constitutional mandate of Art.266 which mandates that all public money must be credited to consolidated fund of respective State -
Held
s.4 relates to creation offend and utilisation offunds received from the collection of entry lax - The creation of fund and its utilisation can in no manner effect the levy of the entry tax and the compensatory tax theory having already negated by nine-Judge A Constitution Bench of this Court in Jindal Stainless, the inquiry as to whether tax is compensatory or not is not relevant ~ Constitution of India - Art.266.
Catchwords
Words and phrases - Word 'any' - Connotation of -
Held
Word 'any' is a word of very wide meaning and excludes any limitation. Words and phrases - Import and export, concept - In the context of Art.286 of Constitution of India, discussed - Customs Act, 1962 - ss.2(23), 2(25), 2(26). Disposing of the matters, the Court c . HELD: 1. Whether Entry Tax Legislations contemplated levy of Entry Tax on Imported goods. 1.1 The plain and literal construction when put to Section 3 read with Section 2(d) of Orissa Entry Tax Act, 1999 clearly means that goods entering into local area from any place outside the local area or outside the State are to be charged with entry tax. Foreign territory would be a place which is not only outside the local area but also outside the State. The writ petitioners are trying to introduce words of limitation in the definition clause. The interpretation which is sought to be put up is that both the phrases be read as: (1) "from any place outside that local area but within that State"; (2) any place outside the State but within India. It is well known rule of statutory interpretation that by process of interpretation the provision cannot be re-written nor any word can be introduced. The expression "any place" before the words "outside the State" is also indicative of wide extent. The words 'any place' cannot be limited to a place within the territory of India when no such indication is discernible from the provisions of the Act; (Paras 58, 59) (703-H; 704-A-C) 1.2 The Entry tax legislations are referable to Entry 52 of G List II of Seventh Schedule of the Constitution. Entry 52 also provided a legislative field, namely, 'taxes on the entries of goods · into a local area for consumption, use or sale therein'. Legislation· is thus concerned only with entry of goods into a local area for consumption, use or sale. The origin of goods has no relevance with regard to chargeability of entry tax. The charging event arises
Reporter's headnote (continued) and case details
p. 663
{Civil Appeal Nos. 3381-3400of1998)
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p. 665
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p. 668
A on entry of scheduled goods into a local area. Any goods which are entering into a local area of a State whether coming from another local area of State, any other State or outside the country, the char11ing event is same for all goods entering into local area. The charging Section is clear, unambiguous and the provisions B cannot be read to mean that the imported goods coming from outside the country are excluded from charge of entry tax. Thus, definition clause, Section 2(d) read with Section 3 does not exclude the charging of the entry tax on goods entering into local area for consumption, use or sale from outside the country. [Paras 60, 63) [704-Ji)-E; 707-E-H) c State of Bombay v. S.F.N. Balsara AIR 1951 SC 318 : [1951) SCR 682; CIT v. Vatika Township (P) Ltd. (2015) 1 SCC 1 : [2014] 12 SCR 1037; Mathuram Agrawal v. State of MP (1999) 8 SCC 667 : [1999] 4 Suppl. SCR 195 - relied on. D Miss Kishori Shetty v. The King AIR 1950 FC 69 : 1950 RLW 46 - referred to. 1.3 Sj)ction 2(c) of the Bihar Act, 1993 as amended in 2003 by adding an explanation and as amended in 2006 by inserting a new Section 2(c), Section 2(l)(c) of Uttar Pradesh Tax on Entry E of Goods into Local Area Act, 2007, Section 2(1)(c) of the Uttarakhand Tax on Entry of Goods into Local Areas Act, 2009 as well as Section 2(1)(c) of the West Bengal Tax on Entry of Goods into Local Areas Act, 2012 expressly includes entering into local area from any place outside the territory of India. Said F inclusion of words 'from outside the India' can be said to have been made by way of abundant caution. The Bihar Amendment Act, 2006 by which Section 2(c) was inserted by including clause (iii) is also by way of abundant 'caution and to provide it expressly which was already included in the definition of Section 2(c) read with Section 3. The intent and purpose of amendment was clear that it was clarificatory and explanatory. It did not introduce a concept which was not already there. In Section 2( d) the word used is 'any place outside that local area or outside the State'. The word 'any' is a word of very wide meaning and use of word 'any' excludes any limitation. All the three legislations clearly did not exclude goods coming from outside the territory of India and the definition of entry of goods read with charging section A clearly included all goods entering into. a local area. Thus, the submission that entry tax legislation did not include imported goods cannot be accepted. [Paras 64-67] [708-A-C, F-H; 709- A]
p. 669
2. Entry 41 & 83 of List I and Entry 52 of List II B 2.1 Entry tax legislation by the State Legislature are referable' to Entry 52 List II as it exist prior to lOl"Amendment Act, 2016. The submission is that the entry tax legislation intrude into the field which is reserved to Parliament under Entry 41 and Entry 83 of List I. In so far as trade and commerce with foreign c countries, import and export across the customs frontiers and definition of customs frontiers, itis the Parliament which has exclusive legislative competence to make a law under Entry 41 and under Entry 83 on duties of customs including export duties. [Paras 68-70] (709-A-E] D 2.2 The Constitution of India, Part XI, Chapter I deals with legislative relations, legislative powers of Parliament and State Legislatures are clearly demarcated. Power to tax is an incidence of sovereignty and there is a clear demarcation of taxing field, which has been earmarked to the Parliament as well as to the State Legislatures. Taxing power of both Union and State E Legislatures are mutually exclusive and has been clearly demarcated. This is further clear by the fact that in List III, i.e. Concurrent List, no taxing entry is included except the entry of stamp duty & levying of fee in respect of any of the matters in List HI but not including fees taken in any Court. [Para 71] F (709-F-G) Godfrey Phillips India Ltd. & Anr. v. State of U.P. & Ors. (2005) 2 SCC 515 : (2005] 1 SCR 732 - referred to. 2.3 Entries in VII'" Schedule are not powers but fields of G legislation. It is also well settled that in deciding whether any particular enactment is within the purview of one Legislature or the other, it is pith and substance of the legislation that has to be looked into. Whenever a State legislation is challenged as being under the competence of the State Legislature, the test, that one H
p. 670
A must find out by applying the rule of pith and substance that whether the legislation falls within any of the List II, if it does, no further question arises. Attack on the ground of legislative competence must fail. The distribution of power between Union and States. is done in a mutually exclusive manner as is reflected by precise and clear field of legislation as allocated under different list under the Seventh Schedule. No assumption of any overlapping between a subject allocated to Union and State arises. When the field of legislation falls in one or other in Union or State Lists, the legislation falling under the State entry has always been upheld. The Scheme of distribution of legislative power betweell Union and States in the Constitution of India relies on the distribution of legislative power between the Federal Government and Priwincial Government as contained in Seventh Schedule of the Government of India Act, 1935. [Paras 74, 75] [711-D•F; 712-D-E] D Jindal Stainless Ltd. & Ors. v. State of Haryana & Ors. (2016) 11 SCALE 1 - followed The Governor General in Council v. The Province of Madras 58 L.W. 228; State of A.P. & Ors. v. Mcdowell & Co. & Ors. (1996) 3 SCC 709 : [1996] 3 SCR 721; E Tlie Province of Madras v. Messrs. Boddu Paidanna and Sons. 1942 FCR 90 - relied on Ram Krishnu Ramnath Agarwal ofKamptee v. Secretary, Municipal Committee, Kamptee AIR 1950 SC 11 : [1950] StR 15; Jiyajeerao Cotton Mills Ltd. Birlanagar, F Gwalior v. State of Madhya Pradesh AIR 1963 SC 414 : (1962] Suppl. SCR 282; D.G Gose and Co. (Agents) Pvt. Ltd v. State of Kera/a & Am: (1980) 2 SCC 410 : [1980] 1 SCR 804 - referred to
3. Concept & Extent of Import G 3.1 Import and export are concepts which denote trade between different countries. The term "import" signifies etymologically "to bring in". To import goods into the territory of India means to bring them into the territory of India from abroad. (Para 84[ (719-8) H
p. 671
State of Travancore-Cochin & Ors. v. Shanmugha Vilas A Cashewnut Factory, Qui/on AIR 1953 SC 333 : (1954) SCR 53 - referred to. Black's Law Dictionary, Tenth Edition: Advanced Law Lexicon by P. Ramanatha Aiyar, 3'' Editition - referred to. B 3.2 Article 286 of the Constitution provides for restrictions as to imposition of tax on sale or purchase of goods. The subject- matter of laws made by Parliament and legislatures of the States as per Article 246 read with Seventh Schedule and Article 245 are subject to the provisions of the Constitution. Legislative power as contained in List II is thus subject to express restrictions C as imposed by Article 286. Article 286 sub-clause (1) uses the expression "in the course of the import of the goods". The concept "in the course of import of goods" as used in Article 286(1) can very well be implied while considering the concept of the import of goods. In so far as Section 5 (3) of Central Sales D Tax Act, 1956, the said provision provides that last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export. Section 5(3) is with regard to the export of the goods out of the territory of India and has not been used with regard to the concept of import. The E submissions of the writ petitioners on the strength of Section 5(3) that even first sale after the import should be treated during the course of the import is not supported by the concept as contained in Section 5 of the 1956 Act and the reliance on the said provision is wholly misplaced. Restriction in the legislative power of the State as contained in Article 286 is with regard to taxing on sale or purchase of goods which takes place outside the State or in the course of import of the goods or services or export of goods or services. Restriction of Article 286 does not ipso facto can be placed while considering the legislative field of the State under Entry 52 and by virtue of Article 286 no restriction can be put on the legislative competence of the State in the field as defined under Entry 52. However, the concept underlined in "the course of import of the goods" as in Article 286(1 )(b) can very well be applied to find out as to when the import of goods come to an end. [Paras 92-94) [722-G-H; 723-A, B-G, HJ H
p. 672
A re Sea Customs Act Case AIR 1963 SC 1760 : (1964) SCR 787 - followed. J. V Gokal & Co. (Private) Ltd. v. Assistant Collector of Sales Tax (Inspection) & Ors. AIR 1960 SC 595 : (1960) SCR 852; Kiran Spinning Mills v. Collector of Customs (2000~ 10 SCC 228; Garden Silk Mills Ltd. & Anr. v. B Union of India & Ors. (1999) 8 SCC 744 : (1999) 3 Suppl SCR 295 - referred to. 3.3 The law relating to customs has been consolidated by the Customs Act, 1962. The definition of imported goods as given in Section 2(25) is - any goods brought into India from the place c outside India but does not include goods, which have been cleared for home consumption. The provision clearly contemplates that once the goods are released for home consumption, the character of imported goods is lost and thereafter no longer the goods could be called as imported goods. The import transit is only till the goods are released for home consumption. The taxing event for entry tax under Entry 52 List II is entirely different and has nothing to do with the customs duty. The State by imposing entry tax in any manner is not entrenching in the power of the Parliament to impose customs duty. The gpods are released for home consumption only after payment of the customs duty due to the Central Government. The goods which are imported cannot be held to be insulated so as to not subject to any State tax, any such insulation of the imported goods shall be a protectionist measure which will be discriminatqry and invalid. When all normal goods are subjected to State tax,. no exemption can be claimed by goods, which have been imported from payment of entry tax. To take a common example, all goods, which pass through a toll bridge are liable to pay toll tax, can it be said that the imported goods which after having been released from customs barriers and are passing through a toll bridge, are not liable to pay the toll tax, the answer has to be in No. Thus, the event for levy of customs duty, which is in the domain of the Parliament, is entirely different from that of event of entry tax. The liability to pay State entry tax arises only when goods enter into a local area for consumption, use and sale, which ~vent is entirely different and separate from the levy of a customs duty, which is on import. (Para 102) (728-F-H; 729- H A-CJ
p. 673
ITC Ltd. v. Agricultural Produce Market Committee & A Ors. (2002) 9 SCC 232 : [2002] 1 SCR 441 - followed. 3.4 The scope and ambit of the Constitutional entries have to be given a wide meaning and scope. There is no inhibition on the Parliament in exercising its legislative power under Entry 41 List I to define customs frontiers and further legislate with regard to duties of customs. The import commences when the goods leave the customs frontiers of the country from where the goods are imported and continue when the goods enters into the customs frontiers of imported country and ends when goods are released for home consumption. Till the event of import is over, Parliamentary Legislation, the control of Union continues for ensuring the realisation of the customs duties. The taxing event pertaining to levy of entry tax occurs only after the taxing event of levy of customs duty is over. Thus, the State Legislation imposing entry tax in no manner encroaches upon the Parliamentary Legislation under Entry 41 and Entry 83. There D is no invalidity in levy of entry tax by the States. [Paras 104, 105) [729-H); 730-A-D]
4. Original/Unbroken Package Theory The Origin.al/Unbroken Package is a theory which was evolved by U.S. Supreme Court in reference to imported goods. E The U.S. Supreme Court itself has abandoned the Original Package theory and it has been held that imported goods are not immuned from non-discriminatory ad valorem taxes imposed by the State. The goods imported after having been released from customs barriers are not immuned from any kind of State taxation, F which fall equally on other similar goods and the submission for the petitioner that immunity from State taxation shall continue till it reaches in the premises where it is to be taken for consumption, sale and use cannot be accepted. [Paras 106, 118, 123] [730-E; 738-B; 739-F) G State of Bombay & Am: v. FN. Balsara AIR 1951 SC 318; Gramophone Company of India Ltd. v. Birendra Bahadur Pandey & Ors. (1984) 2 SCC 534 : [1984) 2 SCR 664 - referred to.
p. 674
Footnotes
5. Non-i1tclnsion of custom duty in purchase value From thf definition of purchase value given in 2(j) of Orissa Act, 1999, three aspects are noticeable. Firstly, purchase value means the value of scheduled goods as ascertained from original invoice or bill. Secondly, it includes insurance charges, excise duty and other charges mentioned therein. And thirdly, other charges incidental to the purchase of such goods. The original invoice or bill of scheduled goods, generally include the entire value including the import duty or custom duty and in any event the inclusion of 'all.other charges incidental to the purchase of such goods' h11s to necessarily mean all charges including custom duty which is incidental to the purchase. Thus, non-inclusion of custom duty specifically in definition of purchase value in 2(j) is inconsequential and cannot lead to mean that the legislature never intended to include the imported goods nnder the entry tax legislation. [Para 125] [740-D-E] E
6. Whether entry tax legislations are not covered by Entry 52 List 11? 6.1 The distribution of legislative power between Union and State is a Constitutional Scheme included in the Constitution F of India after great deliberation. Different tax entries in List I and List II are fields of legislation which have to be widely interpreted and no restricted meaning of an entry has to be taken to fetter the legislative power of the· Union or State. [Para 131[ . . [744-C-D] 6.2 It is well settled that the nomenclature or form of a tax is not a decisive factor to find out the nature of the tax. It is the matter of legislative policy as to how the tax is to be collected. The definition of taxation as given in Article 266(28) that tax includes general or local tax does not in any manner support the contention of the petitioner that tax under Entry 52 is only a local tax which ought to be collected through local bodies. It is the matter of legislative policy that whether a tax is collected as a A general tax or 'a local tax. The natnre of tax, measure of tax and machinery for tax collection are all different aspects. It is well within the jurisdiction of the legislature to formulate its policy ·regarding levy oHax and its collection. Entry 52 of ListJI bas to be given its wide and full meaning and no limitation ill the . legislative power of the State can be read. [Para 132) [744-E-G) B 6.3 The Constitution framers have .abandoned the use of word 'octroi' which bas to be given a meaning and purpose. While interpreting a taxing entry no shackles can be put nor use of any expression in the Constitution of India, referring to a tax can be tieil up to any pre-constitutional tax or levy. Further, any pre- C qinstitutional tax practice cannot put any fetter on Constitution farmers to define any tax, to elaborate the concept of tax or to move away or forward from any kind of earlier levy. Taxes which are to be used by the local authorities can be collected by, the local authorities as well as by the State Government. It is the D matter of legislative policy as to bow the tax is collected and distributed. Under Listll Entry 5, the State bas legislative power to lay down powers of the Municipal Corporation by legislation'. It is again legislative policy that as to what machinery is to be provided by Tue State legislature regarding collection of ta:i;es on the entry o.f goods into a local area for consumption, use or sale. E No capital can be made on the submission that since tax is not being collected by local authorities it is beyond the power of the . State under Entry 52 List U. Entry ta:i; legislation is covered by Entry 52 List II. [Paras 133, 135) [744-G-H; 745-A, D, E) Municipal Corporation of Delhi v. Bir/a Cotton, Spinning and Weaving Mills, Delhi and Anr f1968) 3 SCR 251 - referred to.
p. 675
7. Expression "machinery and equipment" as used in the schedule of Orissa Act 1999 G The submissiOn for the petitioner was that the plant which is .imported by petitioners in completely knocked out condition . _ is not covered by expression machinery an_d equipments; It is submitted that plant and machinery are two different concept and· when plant is imported in a knocked out condition Item No, 9 of H
p. 676
A Part ll of Schedule is not applicable. The Plant in a knocked out condition is nothing but a collection of machineries. The plant being a wide term including machinery also, we fail to see how a knocked out plant shall not be covered by Item No. 9 of Part II of the Schedule, Machinery and equipments are wide words which B shall also cover plant in a knocked out condition. Thus, a plant which is imported in knocked out condition is covered by the Part ll of Schedule of Orissa Act, 1999. (Para 137, 139) (746-A, B, E, F) Advance Law Lexicon by P. Ramanatha Aiyar 3'4 Edition - referred to. c
8. Section 4 relates to creation of fund and utilisation of funds received from the collection of entry tax. The creation of fund and its utilisation can in no manner effect the levy of the entry tax and the compensatory tax theory. [Para 140) [747-B)
D Jaora Sugar Mi l/s(P) Ltd. v. State of Madhya Pradesh and Ors. [1996) l SCR 523 - referred to.
Footnotes
p. 677
[1999] 4 Suppl. SCR 195 relied on Para62 A [2005] 1 SCR 732 referred to Para 72 [19961 3 SCR 721 relied on Para 74 [19501 SCR 15 referred to Para 78 [1962] Suppl. SCR 282 referred to Para 79 B [19801 1 SCR 804 referred to Para 80 (2016) 11 SCALE 1 followed Para 82 [19541 SCR 53 referred to Para87 [19601 SCR 852 referred to Para 95 c [19641 SCR 787 followed Para96 (2000) 10 sec 228 referred to Para 100 [1999] 3 Suppl. SCR 295 referred to Para 101 [2002] 1 SCR 441 followed Para 103 D AIR 1951 SC 318 referred to Para 121 [ 1984 I 2 SCR 664 referred to Para 122 [1995] 3 SCR 23 referred to Para 125 [19631 Suppl. SCR 216 referred to Para 129 E [1968] 3 SCR 251 referred to Para 133 (1996) 1 SCR 523 referred to Para 140 2017 (12) SCALE 515 referred to Para 142 2017 (6) SCALE 540 referred to Para 142 F CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3381- 3400 of! 998. From the Judgment and Order dated 06.01.1998 of the Division Bench of the High Court of Kerala at Ernakulam in Writ Appeal Nos. 770,816,841,844,854,975,l003, 1004, 1005, 1022,1074, 1076,1115, G 1121, 1147, 1149, 1235, 1264 and 1346of1997 and Writ Appeal No. 1466(B) of 1996. WITH T. C. (C) No. 1'19 of 2013, C.A. No. 3720-3722 of 2003, C.A. No.15957, 15958, 15959, 15960, 15961-62, 15963, 15964, 15965, 15966, H
678 SUPREME COURT REPORTS . [2017] 13 S.C.R.
A_ 15967, 15969, 15971,.15973, 15974, 15975, 15976, 15977, 15978, 15979, 15980, 15981, 15982,.15983, 15984, 15985, 15986, 15988, 15989, 15990, 15991, 15992, 15993, 15994, 15995, 15996, 15997, 15998, 15999, 16000, 16001, 16002, 16003, 16004, 16005, 16006, 16007, 16008, 16009, 16010, 16011, 16012, 16014, 16015, 16018, 16019, 16021, 16023, 16027, 16035, 16026, 16029-33, 16037, 16038, 16039, 16040, 16042, 16043, 16045, B 16047, 16049, 16050, 16051, 16052, 16053, 16054, 16055, 16057, 16059- 60, 16063, 16065, 16069, 16070, 16073, 16075, 16080, 16082, 16084, 16085, 16087, 16089, 16092, 16094, 16095, 16096, 16097, 16098, 16099, 16100, 16101,16102, 16103, 16104, 16105, 16107, 16108, 16109, 16110, 16120,16112,16113,16114,16115,16116,16117,16119,15968,16056, c 16013, 16016, 16017, 16020, 16022, 16024-25, 16028, 16034, 16036, 1604!, 16044, 16046, 16048, 16058, 16061, 16062, 16064, 16071-72, 16074,16076,16081, 15970,16083,16086,16088, 16090,16091,16093, 16029-33, 16077-79, 16066-68, 16111, 15523, 15524, 15518-20, 15522, 15525, 15521, 16157, 16156, 16155 & 16163 of2017, C. A. Nos. 5860, D 5861,4210,8734,8738,8737,8736,8740,8739,8735,8741,8744,9292, 8745, 9293 & 3026 of2012, C.A. No. 3592 & 4651of1998, C.A. No. 918of1999, W.P(C) No. 574 of2003, C.A. Nos. 6177, 6178, 6179 & 6180 of2010, C,A. Nos. 2042 & 2041 of2011. Arvind P. Datar, S. K. Bagari, Jagdeep Dhankar, Rakesh Dwivedi, Sr. Advs., Dinesh Kumar Garg, Ginny J. Rautray, Ms. Kanchan Kaur E Dhodi, Ms. Vanita Bhargava, Ajay Bhargava, Ms. Abhisaar Bairagi, Mis. Khaitan & Co., G Prakash, Jishnu M. L., Ms. Priyanka Prakash, Ms. Beena Prakash, Vijay Shankar V.L., U. A. Rana, Himanshu Mehta, Mis. Gagrat and Co., Sibo Sankar Mishra, Mis. Mitter & Mitter Co., S. Nandakumar, Ms. Tanupriya Gupta, Ms. Senjul Mehta, M. S. Saran F Kumar, Ram Dhan Singh.Narwal, V. N. Raghupathy, P. K. Manohar, Ms. Fereshte D. Sethna, Ms. Anuradha Dutt, Tushar Jarwal, Rahul Sateeja, Ameya Pant, Ms. B. Vijayalakshmi Menon, Shibashish Misra, Sylona Mohapatra, Manish Kumar Saran, Gopal Singh, Nakul Dewan, Pradhuman Gohil, Vikash Singh, Ms. Taruna Singh Gobi!, Himanshu Chaubey, Vinayak Panikkar, Ms. Ishita Singh, Zain Maqbool, Abhijit G Sengupta, K. Harshavardhan, Karthik Sunder, Senthil J agadeesan, Gaurav Kejriwal, Sujit Keshri, P. S. Sudheer, Rajan Narain, Ravinder Narain, Ajay Aggarwal, Ms. Mallika Joshi, Praveen Kumar, Ms. Birta Gupta, Sunil Kumar Jain, Pawanshree Agrawal, Bibekananda Mohanti, Ajit
STATE OF KERALA v. FR. WILLIAM .FERNANDEZ 679
Kumar Singh, Punya Garg, Sunil Jain Priyanka Parida, K. R. Sasiprabhu, A Devashish Bharuka, Mohan Pandey,_P. V. Dinesh, Ramesh Babu M. R., Kedar Nath Tripathy, Ashok Kwpar Gupta ll,'Ashok Panigrahi, K. K. Mani, Ajay Choudhary, B. Krishna Prasad, Mis. Karanjawala & Co., Nikhil Nayyar, Shishir Deshpande, K. V. Vijayakumar, Romy Chacko, Pramit Saxena, Ms. Sharmila Upadhyay, Gopal Prasad, Jayesh Gaurav, B Ejaz Maqbool, S. Udaya Kumar Sagar, E. C. Agrawala, Tejswai Kumar Pradhan, Dr. Rajeev Sharma, V. N. Raghupathy, M. Paikaray, R. Chandrachud, Chanchal Kumar Ganguli, Sudarsh Menon, Rahul KaushikTarun Gulati, SparshBhargava, SishitaFarsaiya, VinayakMathur, Vipin Upadhyay, Anupam Mishra, Kishore Kuna!, A. Venayagam Balan, . Ms. Suruchii Aggarwal, Syed Shahid Hussain Rizvi, Mis. Arputham C Aruna and Co., Ms. Kirti Renu Mishra, Sanskirti Pathak, Apporva Upamanyu, Ms. Apurva Garg, Milind Kumar, C. N. Sree Kumar, Ravi Prakash Mehrotra, Praveen Kumar, Devashish Bharuka, Gunnam Venkateswara Rao, M. P. Vinod, Dileep Pillai, Atul Shankar Vinod, Ajay K. Jain, Vimlesh Kumar, Roy Abraham, Ms .. Reena Roy, Ms. Seema D Jain, Akhil Abraham, Hirninder Lal, Ms. Baby Krishnan, R. Sathish, Raj iv Mehta, M. T. George, Sunil Kumar Jain, K. R. Nambiar, Suvendu Suvasis Dash, Y. Prabhakara Rao, Sanjeeb Panigrahi, E. M. S. Anam, L. ·Badri Narayanan, Aditya Bhattacharya, Victor Das, Ms. Apeksha Mehta, Punit Dutt Tyagi, M. P. Devanath, Ms. Si).armila Upadhyay, Jagj it Singh Chhabra, Ms. Priyanka Parida, A. N. Arora, T. G Narayanan Nair, E · M. Shoeb Alam, Ardhendurriauli Kumar Prasad, Dharmendra Kumar Sinha, R. V. Kameshwaran, Deba Pras_ad Mukherjee, Ms. Prabha Swami, K. R. Sasiprabhu, Krishnayan Sen, B. S. Benthia, Aniruddha - P. Mayee, M. K. Dua;Parijat Sinha, Advs. for the appearing parties. Respondent-ex-parte. F
Judgment
·· The Judgment of the Court was delivered by ASHOK BHUSHAN, J. I. Leave granted.
22. These appeals relate· to entry tax levied on goods imported from different countries and brought into local area of a State. The G legislative competence of the State Legislature to impose entry tax on the goodS imported from outside the country entering into local area of. the State is questioned.The State legislations are also questioned on the ground that the entry tax legislations do not contemplate levy of an entry
68U SUPREME COURT REPORTS [2017] 13 S.C.R.
A tax on goods imported from outside the country. In this batch of appeals we are concerne\i only with entry tax legislations of States, namely, State ofOrissa, State ofBihar, State ofKerala and State of Jharkhand, the relevant provisions of which statutes shall be noticed hereinafter.
33. A nine-Judge constitution Bench in Ji11dal Stainless vs. Stale of Haryana and another, 2016 (11) Scale I, had answered several questions pertaining to entry tax legislat JUllS uf different States, which has largely settl~d various issues relating tu entry tax. However, the issue pertaining to levibility of entry tax on the imported/foreign goods was left to be answered by regular Bench. Answering the reference following was stated in answer No. I 0: c '"The questions whether the entire State can be notified as a local area and whether entry tax can. be levied on goods entering l:qndmass o( India from another country are left tu /;Je detern1ined in appropriate proceedings."
(emphasis by 11s) D
44. As noted above this batch of appeals consists of appeals from the Judgments of Orissa High Court, Patna High Court, Kerala High ( \1urt and Jharkhand High Court. Large number of appeals have been filed questioning the different judgments rendered by different High Courts. For deciding this batch ofappeals it is sufficient to notice facts E of few of the appeals of each State. The parties shall be referred to as described in the High Courts. State of Orissa
55. In the appeals arising out of the judgments of the High Court of F Orissa, most of the appeals have been filed against judgments dated 18.02.2008 and 09.10.2012. Judgments of different dates were also delivered by the Orissa High Court following its judgments dated 18.02.2008 and 09.10.2012. There are appeals containing different facts and grounds which shall separately be noticed.
66. With regard to judgment dated 18.02 .2008 delivered in bunch of writ petitions, we take up Cii•il Appeal arising out of SLP(C)No.18405 of 2008 - Mis. Steel Authority of I11dia Ltd. vs. State of Orissa & Anr. The State of Orissa enacted Orissa Entry Tax Act, 1999 (hereinafter referred to as" 1999 Act") to provide for levy of tax on entry of the scheduled goods into a local area for consumption, use or sale therein and matters incidental thereto and connected therewith.
STATE OF KERALA v. FR. WILLIAM FERNANDEZ 681
[ASHOK BHUSHAN, J.)
77. The Steel Authority of India, a public sector undertaking of A Government of India filed the writ petition challenging the legality and constitutional validity of Orissa Entry Tax Act, 1999 and Orissa Entry Tax Rules, 2000 in so far as it seeks to levy and collect entry tax on imported goods including scheduled goods when brought into the mines premises of the writ petitioner No. I Company at Purunapani, Kalta, B Barsua in the District ofSundergarh and Boiani in the District Keonjhar. The validity of the Act was challenged on various grounds including the ground that 1999 Act is ultra vires to the Constitution. It was further pleaded that provisions of 1999 Act do not provide for levying of tax on imported raw materials for its plants and machineries which is used/ consumed at its factory for the manufacture of its finished products. c The grounds were also raised that levy is not compensatory.
88. The writ petition was heard along with the bunch of writ petitions raising some similar and some different grounds. The Division Bench vide its judgment dated 18.02.2008 upheld the vires of 1999 Act. D Civil Appeals arising out of SLP(C) Nos.124 24-12425 of 2008 - Mis. Simples Infrastructures Limited vs. State of Orissa & Ors. also needs to be noted:
99. The writ petitioner is a company which carries on business on works contract for construction of different types of civil and piling works outside at various places in the State of Orissa. While executing the aforesaid work the writ petitioner purchases Sand, Bricks and Cements chips and boulders for civil constructions and are transported from the petitioner's construction site, either inside or outside the State ofOrissa for being used in the work. The writ petitioner was directed to file returns by the Entry Tax Officer. Writ petitioner has challenged the constitutionality of Orissa Act, 1999 and prayed for restraining the respondent from realising any entry tax. The writ petition was also decided along with the bunch of writ petitions vide High Court's judgment dated 18.02.2008 as stated above.
I 0. Large number of civil appeals have been filed against the judgment dated 18.02.2008. lt is not necessary to notice facts of different cases. The writ petitioners were using raw-material brought from different places including foreign countries, Coal was also used by the various writ petitioners and levy on it of entry tax was questioned therein. H
682 SUPREME COURT REPORTS [2017] 13 S.C.R.
A Several subsequent judgments were also delivered by the Orissa High Court following the judgment dated 18.02.2008 which have also been questioned in different appeals.
1111. A subsequent judgment dated 9. I 0.2012 delivered by the Orissa High Court in Writ Petition No.15519 of 2010 and other connected writ B petitions have given rise to large number of civil appeals. The leading writ petitiolll in which judgment dated 09.10.2012 was delivered was writ petition No.15519 of20 I 0 -Tata Steel Limited vs. State ofOrissa & Ors. We now proceed to notice the facts and pleadings in the aforesaid writ petition. The writ petitioner, Tata Steel is company which has its branches, dirvisions across the State ofOrissa. The writ petitioner carries c on business in mining as well as manufacturing of Ferro-Chrome and Ferro-Manganese at different plants in the State ofOrissa. For the rea~y reference the pleadings in paragraph 3 of the writ petition needs to be extracted which is to the following effect: "3. That the relevant facts giving rise to the present writ D application are inter alia are:- (a) The petitioner in order to carry out its manufacturing activity both inside the state of Orissa as well as in factories located outside the state imports various raw materials from outside India. E (b) That for importing the said goods from outside India, the petitioner has obtained has obtained necessary licenses and permissions from appropriate authorities. (c} That the petitioner is registered under OVAT Act, CST Act and Orissa Entry Tax Act, 1999, and has been allotted TIN F number by the Sales Tax Officers of the State. The petitioner brings in various goods including scheduled goods for its plants, from within the state and also from outside the territory of India by way of import. The materials so purchased from various countries are duly supported by Bill of Entry and G other documents which have duly been incorporated in the accounts of the petitioner company. A specimen copy of a few Commercial Bi/ls/Bills of Entry representing import of materials is annexed hereto as Annexure-1. "
. STATE OF KERALA v. FR. WILLIAM FERNANDEZ 683 [ASHOK BHUSHAN, J.)
1212. The writ petitioner pleads that Legislature never intended to A levy entry taxon the value of the goods imported from outside the country by Entry Tax Act, 1999. Article 286(1 )(b) prevents a State from levying Sales Tax so as not to interfere with the Union's Legislative power with respect to the import and export across Customs Frontiers (Entry 41 of List I) and the duties of Customs including Export Duty (Entry 83 ofList B I).
1313. The States never intended to levy entry tax on goods from .outside the country. Referring to the definition of'purchase value', it is submitted that the omission of "Customs Duty" in Section 2(j) was deliberate. It is impermissible for the State to enact a legislation purported to be under Entry 52 of List II, the incidence of which is on import of C goods from outside India which is exclusively a matter for the Union under Entry 41 and 83 of List I. .14. Counter-affidavit was filed on behalf of the respondents justifying the entry tax. The State pleaded that levy of entry tax by the State is under Entry 52 oflist II of the Seventh Schedule. The provision_ D of Article 286 is available only in the case of sale of goods and not against the entry 1ax.
1515. It is incorrect to suggest thatthe Legislature never intended to levy tax on imported goo.ds coming from outside the country. The charge under Section 3 of the Orissa Act, 1999 would suggestthat levy is on the E basis of destination of scheduled goods. It is not the transaction of import which is sought to be levied with entry tax. The Divisio11JBench vide its judgment dated 09.10.2012 dismissed all the writ petitions except writ petition No. 7 of 2008 of Mis. IFGL Refractories. Civil Appeal No.32256 of 2013 - Mis. National Aluminium Company Limited vs:State of Orissa & Ors. · f
1616. The writ petitioner is the public sector undertaking and is ·running three units, namely, Aluminium Refinery Plant.atDamanjodi in the District ofKoraput, Aluminium Smelter Plant atAngul in the District ofAngul and Captive Thermal Power Plant atAngul. The writ petitioner _:in order to carry out its manufacturing/mining activity imports various G material and equipments including spares from outside India. For importing the said goods from outside India, the petitioner has obtained necessary licences and permission from appropriate authorities. The petitioner brings in various goods including scheduled goods for its business operation from within the State and also from outside the territory ofln4ia by way H
684 SUPREME COURT REPORTS [2017] 13 S.C.R.
A of import. The writ petitioner has filed the writ petition challenging the Orissa Entry Tax Act, 1999 and levibility of entry tax on petitioner. By a common judgment dated 09. I 0.2012 the writ petition has been dismissed. Aggrieved by which this appeal has been filed. Civil Appeal arising out of SLP(C) No.1426 of 2013 - Emami B Pape1r Mills Limited vs. State of Orissa & Ors.
1717. Th~ petitioner has set up a large scale industry for manufacture of Paper, paper Board and newsprint in Orissa in the Industrial Estate of Balgopalpur, District Balasore. The petitioner had entered into an agreement with Global Equipment and Machinery Sales Inc., c Montgomeryville, Pennsylvania, United States of America and placed orders for a Paper Plant and other machineries to be supplied by the said company to the petitioner. The petitioner imported into India a disassembled paper manufacturing plant in knock down condition with spares. The petitioner also imports other machineries from other countries and the said imported machineries and spare parts enter the Country D through different ports and are cleared by the petitioner on payment of the import duty levied under the Customs Act, 1962. Once the said plants and machineries are unloaded and cleared upon payment of the Customs Duty the said plant and machineries are transported to the petitioner's factory at Balgopalpur, Orissa. Besides importing machinery from other countries the petitioner also has to purchase various machineries and spare parts from different manufacturers in other States in India. The petitioner was called upon to submit a statement showing the names of the goods imported by the petitioner. The respondent further threatened to resort to coercive measures ifthe petitioner failed to make payment of the entry tax on the import of plant and machinery. The petitioner made ad hoc payment under protest. Petitioner protested against the levy of entry tax on the plant and machinery imported from USA. The petitioner filed a writ petition No. 13978 of 2008 Orissa Act, 1999 questioning the levy of entry tax on import from outside the country, the constitutional validity of the Orissa Act, 1999 was also challenged. G Counter-affidavit and rejoinder-affidavits were filed to the writ petitions and videjudgment dated 9.10.2012 the High Court dismissed the writ petition. Civil Appeal arising out ofSLP(C)No.11060of2013- Mis. IFGL Refractories vs. State of Orissa and ors. H
STATE OF KERALA v. FR. WILLIAM FERNANDEZ 685
[ASHOK BHUSHAN, J.]
1818. The writ petitioner has set up a factory at Sector 'B', Kalunga A Industrial Estate as an J00% import substitution project. The petitioner commenced commercial production of special refractories and operating systems used by the producers of iron and steel. The petitioner has continually been expanding its production capacity by installing and erecting plant and machinery both indigenous and imported. For the B manufacture of the refractory products, the petitioner requires imported raw materials, stores and spares, trading items and capital goods. Petitioner imports various materials from different countries. The materials are fused silica, lime stabilize fused zirconia, fused magnesia, sintered magnesia, silicon metal, natural PVC, refractory glaze, furfural alcolhol and micro silica. Generally, these goods are imported from either c the Kolkata Port or the Kolkata Airport where from they are transported to the factory. Besides the raw materials imported from other countries, the petitioner also uses raw materials available in other States within the Union oflndia. The petitioner was under the bona fide belief that it was not required to pay entry tax on the goods imported from abroad. Further, D the petitioner effected a payment under protest ofRs.37,08,682/- towards entry tax. The petitioner filed writ petitioner No. 7 of 2008 challenging the Entry Tax Act, 1999. The writ petition was filed basically on the following three grounds: a. Entry tax is not leviable on goods imported from outside India as being violative of Article 286 read with Article 246 of the E Constitution; b. Entry tax is not leviable on goods purchased from other States when the same goods are not manufactured within the State ofOrissa in terms of Article 304(a) of the Constitution. F c. In any case, the goods imported from outside India/purchased from other States by the petitioner are not specified in the schedule appended to the Act and therefore not exigible to entry tax.
1919. The writ petition filed by the petitioner has been partly allowed G by a common judgment dated 09.10.2012. The High Court although upheld the levy of entry tax on goods imported from outside the country but invalidated the levy of entry tax on certain goods purchased/imported by the petitioner which were not mentioned in the schedule appended to the 1999 Act. Aggrieved by the said judgment, this appeal has been filed. H
686 SUPREME COURT REPORTS (2017] 13 S.C.R.
A Transfe!lfed Case No.149 of 2013 - Mis. Paradeep Phosphates Ltd. vs. State of Orissa and ors.
2020. The Transfer Petition (C) No.530 of 2012 was filed by the petitioner, Mis. Paradeep Phosphates Ltd. praying for the transfer of Writ Petition No.16541 of2007 pending in the High Court ofOrissa at B Cuttack. The t~ansfer petition was allowed by this Court on 23.07.2013 on which this T.C. No.149 of2013 has been registered. The petitioner is engaged in manufacture of different types of chemical fertilizers like OAP, MOP, NiPK. The petitioner has been importing raw materials through Paradeep Port wherein it has its Conveyor facility and the said raw materials are unloaded from the Ships and directly dispatched to C petitioner's factory without using any infrastructure facility provided by the Government of Orissa. Petitioner has a plant at Paradeep under the Revenue Distri¢t of Jagatsinghpur, Orissa. The petitioner has an adjoining township at Paradeep. The petitioner constructed its own approach roads from the State Highway, developed the plant and township site. The D petitioner procures about 98% of its raw materials from outside the country. Petitioner has been paying entry tax on imported scheduled goods 'under protest'. Petitioner filed writ petition No.16541 of 2007 challenging the notice for assessment and payment of entry tax. Petitioner also prayed for a writ of mandamus directing the State of Orissa not to impose levy of entry tax on the goods imported from outside the territory E oflndia.
2121. There are few other appeals which are different from the above mentioned conunon judgment of the Orissa High Court. Civil Appeal Nos.3720-3722 of2003 - National Aluminium Co.Ltd. F vs. State of Orissa & Ors.
2222. The writ petitioner is a Government of India Undertaking, engaged in production ofaluminaand aluminium. It has its captive Bauxite Mines and Alumina refinery factory at Damanjodi in the District of Koraput. The major raw material is bauxite. Petitioner has set up its own Captive Power Plant at Angul near its Smelter Plant. For production of electricity, the basic raw material is coal, which obtained from Mahanadi Coal Fields. The petitioner filed Original Jurisdiction Case No. 72 of 200 I challenging the validity of 1999 Act on several grounds. The Division Bench ofthe High Court vi de its judgment dated 13.11.2002 declined to strike down the 1999 Act. However, while declining to strike down the 1999 Act following directions were issued:
STATE OF KERALA v. F_R. WILLIAM FERNANDEZ 687 [ASHOK BHUSHAN, J.]
"44. Jn the result, while declining to strike down the Orissa A . Entry Tax Act, 1999 as ultra vires, we direct that:- -.
1. Unless the basic ingredients, i.e. Entry of Scheduled goods· . for the purpose of Consumption, Use or Sale into a local area of the Stat? are satisfic;d, the provisions of the Orissa Entry Tax Act, 1999 shall not be attracted; B
2. The goods which enter into local area/areas only for the purpose of transit will not be subject to Entry Tax; and
3. Every manufacture of scheduled goods under Section 26 shall collect by way of Entry Tax amount equal to the tax C payable on the value of the finished products under Section 3 of ihe Act from the buying dealer either directly or through an intermediary only if the scheduled goods sold are intended · for ENTRY into any local area of the State.for the purpose of Consumption, Use or_ Sale. " D • 23.Aggrieved by the saidjudirnent, these civil appeals have been filed. Civil Appeals arising out ofSLP(C) Nos.16744-46 of2013-BRG Iron & Steel Co. Pvt. Ltd. vs. Joint Commissioner of Sales Tax. Angul, Orissa. E
2424. The petitioner company during the course of its business was required to purchase plants and parts of plants, machinery and parts & spares of all kinds of machinery for the purpose of setting up a manufacturing unit at Dhenkanal, Orissa. The petitioner was also required to purchase raw materials such as stainless steel and iron & steel goods. F The company was also required to import and export goods particularly import of capital goods _such as its plant and machinery from outside the country. The petitioner has been regularly filing return under the Orissa Entry Tax Act, 1999. However, vide letter dated 30.03.2010 entry tax was demanded. The judgment was delivered by the High Court on G 09.10.2012 in Writ Petition No.15519of2010 holding that levy of entry tax on imported good& was within the plliview of OrissaAct, 1999. An · order dated 20.10.2010 has been passed by the Joint Commission of · Sales Tax holding the petitioner liable to pay entry tax on the imported goods besides penalty. Petitioner has directly come to this Court against H
688 • SUPREME COURT REPORTS [2017] 13 S.C.R.
A the assessment order passed by the Joint Commissioner of Sales Tax dated 20. l 0.2012. Civil Appeal arising out of SLP(C)No.36486 of 20 l 0 - Mis. Bajrangbali Alloys Pvt. Ltd. vs. Commissioner, Sales Tax & Anr.
2525. The petitioner carries on the business of manufacturing and B sale ofM.S. Ingots and M.S. Rod ITMT Bars) at Manguli in the District of Cuttack. The petitioner directly imports goods brought from outside the country into the local area. Petitioner filed Writ Petition No.16650 of 2010. In the writ petition, petitioner has attacked the correctness of the assessment order dated 23.02.2010 on the ground that assessment c order under Section 9C of the 1999 Act has been made by way ofOrissa Entry Tax (Amendment) Act, 2005 which came into force with effect from 19.05.2005. The writ petition has been dismissed by the Division Bench by its judgment dated 08.11.2010 on the ground that the petitioner is at liberty to seek its alternative remedy by filing an appeal within a period of two weeks, the writ petition was disposed of. D CIVIL APPEALS OF STATE OF KERALA
2626. The civil appeals relating to State of Kerala have been filed both by State of Kerala as well as by its officers. State of Kerala has filed appeals against judgment dated 06.01.1998 and several others E subsequent judgments following the judgment dated 06.0 l. l 998. Another judgment has been passed by High Court ofKerala on 18.12.2006. There is one writ petition filed by a company. It is sufficient to notice facts of few cases to decide the group of cases relating to Kerala. Civil Appeal Nos. 3381-3400 of 1998 - State Of Kerala & Ors Vs. FR. William Fernandez & Ors. F
2727. The State is in appeal against the Division Bench judgment dated 06.0 l. l 998 of Kerala High Court delivered in a batch of writ appeals including Writ Petition No. 770/1997; Father William Fernandez & Ors. vs State of Kerala & Ors. The various petitioners imported G motor vehicles from abroad after obtaining custom clearance and payment of custom duties and thereafter brought the vehicles in the State of Kerala. Some of the petitioners have also got their vehicles registered under the Motor Vehicles Act which have been given notice demanding entry tax under Kerala Tax on Entry of Goods into Local Areas Act, 1994 (hereinafter referred to as' 1994 Act'). The writ petition H
STATE OF KERALA v. FR. WILLIAM FERNANDEZ 689
[ASHOK BHUSHAN, J.)
was heard by learned Single Judge who vide its common judgment dated A 20.2.1997 dismissed all the writ petitions holding that entry tax can be collected from the owners of the vehicles who brought them from abroad before granting them registration in the State for consumption, use or sale. Writ Appeals were filed against judgment dated 20.2.1997 which have been decided vi de common judgment dated 06.01.1998. Although, B the Division Bench held that there is no limitation upon the State's powers · to legislate under Entry 52 List II of the VII'" Schedule of the Constitution but in case of goods, brought from abroad their entry into local area is outside the scope of 1994 Act, which Act is confined only to those goods brought from outside the State, that would not include the outside borders of the country. The Division Bench declared that vehicles bought from c outside the country are not liable to pay entry tax. Civil Appeal No. 6178 of2010- State ofKerala & Ors. vs. Idea Cellular Ltd.
2828. This appeal has been filed against the judgment dated 18.12.2006 of Division Bench ofKerala High Court by which judgment D a bunch of writ petitions have been decided holding that the levy of entry tax under 1994, Act as discriminatory and violative of Article 14, 30 I and 304 of the Constitution of India. The Division Bench followed the earlier Division Bench judgment of the Kerala High Court in Father William Fernandez case decided on 06.01.1998. Writ petition was filed by various assesses challenging the constitutional validity of 1994, Act and also questioning the entry tax on goods brought from outside the State or and goods brought from outside the country to the State of Kera la. The Division Bench held that levy of entry tax on goods imported from other States to the State of Kerala and from abroad is not compensatory in nature and such demand is illegal, unauthorised and violative of Article 301. Application for intervention has also been filed by various petitioners which applicants have also been heard. State has filed other appeals questioning subsequent judgments which have followed judgment dated 06.01.1998 and 18.12.2006. Writ Petition (C) No. 574 of 2003 -Parisons Agrotech Private G Ltd. & Anr vs. State of Kerala & Ors.
2929. This writ petition has been filed under Article 32 of the Constitution praying for declaration that 1994, Act is ultra vires and unconstitutional and the Act also does not apply to the entry of goods H
690 SUPREME COURT REPORTS [2017) 13 S.C.R.
A imported in India from foreign countiy. The petitioner company is engaged in the import of crude palmolin, refining the same to make it edible and thereafter selling of palmolin oil. The petitioner imports crude palmolin oil in bulk from Malaysia, Indonesia and Singapore. Purchase of crude by the petitioner is in the course of import from foreign countries and B imported through Cochin Port within the State of Kerala. The said sale & purchase in the course of import is exempted from the levy of tax under Article 286 of the Constitution of India read with Section 5(2) of the Central Sales Tax Act, 1956. The respondent directed the first petitioner to remit the entiy tax of purchase price of crude palmolin imported by the'petitioner. Petitioner has also relied on Division Bench C judgment of the Kerala High Court delivered in bunch of writ appeals including Writ Appeal 770of1997 against which SLP/CivilAppeal has been filed being CA 3381-3400of1998 and is pending. Civil Appeals relating to State of Bihar Civil Appeal arising out ofSLP(C) No. 26543 of2008 Mis ITC D Ltd. vs. State of Bihar ;JO. This appeal has been filed against Division Bench judgment of Patna High Court dated 27 .08.2008 by which the writ petition has been disposed of in terms of Para 69 Page 70 of the earlier decision in the case of Mis Indian Oil Corporation Ltd. (dated 09.1.2007 reported in E 2007 I 0 BST 140 Patna). The petitioner is a company engaged in the business of 1t1a11ufacturing and selling of cigarettes and smoking mixtures. Company carrying on business of manufacturing paper, paper board, packaging mati:rials and printing, thereon for said purpose Company has factories at different places all over the countiy including in Munger in F the State of Bihar. For manufacturing of cigarettes smoking mixtures, the company causes entiy of tobacco and other raw materials purchased from outside the State ofBihar into the local area of Munger. The State of Bihar has enacted the Bihar Tax on Entiy of Goods into Local Areas Act 1993(hereinafter referred to as 1993, Act). The 1993, Act has been amended by Bihar Act, 9 of 2003, Bihar Act, 11 of 2003 and Bihar Act G 19 of2006. By Bihar Act 11 of2003, an explanation has been added to the effect that entiy of goods into local area for consumption, use or sale therein from any place outside the territoiy of India shall also be deemed to be an entiy of goods for the purposes of the Act. Petitioner challenged the vires of the Act, as amended in 2003. Petitioner prayed for direction H
STATE OF KERALA v. FR. WILLIAM FERNANDEZ 691
[ASHOK BHUSHAN, J.]
to remove, withdraw and cancel the collection of entry tax under the impugned Act. Civil Appeal arising out of SLP(C) No. 11646 of 2009- VST Distribution Storage v.The State ofBihar & Ors.
3131. This appeal has been filed against judgment dated 28.08.2008 by which judgment the writ petition filed by the appellant has been disposed of in terms of the para 69 of the Division Bench judgment of Patna High Court, Mis Indian Oil Cornoration Ltd. (supra). Civil Appeal arising out of SLP(C) No. 7356of2010 - ITC Ltd vs State of Bihar c
3232. This appeal has been filed against judgment and o,rder dated 15.02.2010 of the Division Bench of the Patna High Court by which writ petition filed by the petitioner has been dismissed. Petitioner has challenged the constitutional validity of 1993, Act thereby challenging the Section 4of1993,Act as inserted by Amendment Act 19 of2006. lt was prayed that Amendment Act be declared as ultra vires to the power D of State Legislature. Petitioner has also challenged the demand notice dated 20.6.2009 issued by Joint Commissioner, Commercial Tax Bhagalpur and demand notice dated 03.07.2009 under the Amendment Act, 19 of 2006. It was noticed in the writ petition that in view of the judgment dated 09.01.2007 of the Patna High Court in Indian Oil E Corporation Ltd. (supra) after the amendment by amending Act, ·19 of 2006 the entry tax sought to be levied with effect from 29.08.2006, has become compensatory and constitutionally valid. Civil Appeal of State of Jharkhand Civil Appeal arising out of SLP (C) 1101 OF 2007 - State of F Jharkhand & Ors.v.Tata Iron & SteelCo. Ltd.
3333. State of Jharkhand filed an appeal against the Division Bench judgment dated 14.08.2006 delivered in Writ Petition(T) No. 5354 of 2004, Tata Iron & Steel Co. Ltd. Jamshedpur, Sinhbhumi vs. State of Jharkhand. The petitioner is engaged in manufacturing the iron & steel G products by its integrated steel plant at Jarnshedpur in the State of Jharkhand. For the purpose of manufacturing activities, company is importing coal from Australia and Newzealand in pursuant to sevend foreign contracts executed with foreign parties which comes to Haldia
692 SUPREME COURT REPORTS (2017] 13 S.C.R.
A and Paradeep Ports in India and from there said coal is transported either by rail or road to Jamshedpur in the State of Jharkhand. 1993, Act was adopted in the State of Jharkhand after its creation from 15.11.2000. A Notification dated 23.03 .2002 was issued under Sub section 1 of Section 2 by adding 10 new items to the scheduk. Notification dated 23.03.2002 was issued levying the entry tax on imported coal. A memorandum was B issued by Commissioner of Commercial lax. Petitioner prayed for quashing a part of the Notificotion dated 23.3.2002 by which entry tax was sought to be levied by the State 1• 1 '.:.<1 k.hand on imported coal and other consequential relief's have been claimed.
3434. The Division Bench vide its judgment and order dated C .14.08.2006 allowed the writ petition holding that provisions of 1993, Act as adopted by the State of Jharkhand do not satisfy the requirement of Article 301 reap with Article 304. State Aggrieved by the said judgment have come up in the appeal. This appeal was heard by this Court on 29.08.2017 by which proceeding the impugned judgment of the Jharkhand D of High Court which rested on the Compensatory Theory has been set aside. It is useful to quote the last two paras of the proceeding dated 29.08.2017 whi<:h is to the following effect: "We need not comment upon this argument. Suffice is to slate that insofar as the impugned judgment H'hich is rested un the E compensatory theory stands set aside. if" any rights accrue in favour of the respondentlassessee or the respondent has any right to challenge the /e1•y un the aforesaid ground l1'hich was taken before the High Court it would be open to the respondentlasseesee to pursue the same. F The respondentlassessee had also raised the co!llention that coal was imported on which no entrr tax was paid. On this aspect, we have heard the arguments and the judgment is reserved. "
3535. Thus in the present appeal, we have permitted the assessee to G raise the only issue as tu whether on imported coal entry tax could be levied.
3636. We have heard large number of learned counsel for the writ petitioners including Shri Arvind P. Datar, Shri A.K. Ganguli, Shri S.K.Bagaria, Shri Jagdeep Dhan~ar, Dr. G.C. Bharuka, Shri Ashok H
STATE OF KERALA v. FR. WILLIAM FERNANDEZ 693
[ASHOK BHUSHAN, J.]
Kumar Panela, Senior Advocates. Shri Rakesh Dwivedi, Senior Advocate A has been heard on behalf of the State of Orissa and State ofBihar. Shri V.Giri, Senior Advocate has appeared on behalf of the State of Kera la. Shri Ajit Kumar Sinha, Senior Advocate has also been heard. Submissions
3737. The following are the substances of submissions raised by B different learned counsel for writ petitioners relating to State of Orissa attacking the provisions of I 999, Act: i. The legislature has not created any chargeability for levy of entry tax on goods imported from outside the country in Orissa Entry Tax Act, 1999. Entry of goods has been defined in Section c 2( d) which contemplates entry of goods into a local area from any place (i) outside that local are.a or (ii) any place outside the State. The provision does not contemplate goods entering from any place outside the country. Putting a literal interpretation of the 1999,Act, it is clear that legislature never intended to cover D the goods imported from outside the country. It is submitted that wherever legislature intended to impose entry tax on the imported goods coming from outside the country, the entry tax legislation specifically mentioned so in the le.~islation. The reference has been made to the provisions of the Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale E Act, 1993 (as Amended by Bihar Act 11 of 2003 and 19 of 2006) wherein an explanation and a new Section 2( c) to the following effect was inserted:- "(iii) into a local area from any place outside the territory of India." Further in Uttar Pradesh Tax on Entry of Goods into Local Area Act, 2007 under Section F 2( l)(c) following is specifically provided for "(iii) into a local area from any place outside the territory of India." Similar is the provision of Section 2(1 )(c) of Uttarakhand Tax on Entry of Goods into Local Areas Act, 2009 and farther Section 2( l)(h) of the West Bengal Tax on Entry of Goods into Local Area Act, 2012 where any place outside India is specifically G mentioned. iLit is only Parliament which is empowered to make any law with regard to trade & commerce with foreign countries as well as with regard to levy of duties of customs thereon. Entry 41 covers H
694 SUPREME COURT REPORTS [2017] 13 S.C.R.
A "trade & commerce with foreign countries, import and export across custom frontiers; definition of custom frontiers" 'Entry 83 of List I covers "duties of custom including export duties". Entire field connected or related to trade & commerce with foreigii countries is within the exclusive domain of the Union and beyond the legislative competence of the State Legislature. B Entry 52 of List II can have no application in respect of goods, import~d from outside India which continues to be imported goods in the course ofimport. The import movement in respect of imports continues till the goods reach the factory, which movement is an integral and inexplicable part of the import c movement. From the above single taxing event and single import movement, the State Legislature cannot carve out any taxing event by seeking to term it as a tax from entry into local area for consumption, use or sale therein. The entry tax legislation imposing entry tax on the imported goods is thus beyond the competence of State Legislation. Article 286( I )(b) of the D Constitution excludes the taxing power of the State in respect of goods in the course of import. iii. The goods imported by actual users for their captive consumption and own use continues to remain in the course of import and continues to retain the character of imported goods. The E Doctrine of Unbroken Package evolved by American Courts do sulJports the petitioners' case. The judgment of the US Supreme Court in Brown versus Maryland 6 L.Ed. 678 which laid down that the constitutional prohibition of State to tax the goods imported survives even after they have landed and cleared F from custom, after payment of duties the protection continues till they are sold by importer, is still good law and has been followed subsequently. iv. The impugned entry tax is not an entry under Entry 52 of List II of the VIIlh Schedule of the Constitution. The tax covered G . by Entry 52 is nothing but the levy that is known as octroi, which is a tax levied by a local self authority on the entry of goods into the area administered by such local government. The expression 'local area' in Entry 52 signifies that tax in this entry is a local tax. The local authority into whose local area, the goods enters for consumption, use or sale therein can levy H
STATE OF KERALA v. FR. WILLIAM FERNANDEZ 695
[ASHOK BHUSHAN, J.]
and collect the said tax. The tax refers to in Entry 49 of Provincial A List under the Government oflndiaAct, 1935 and Entry 52 of List II under the Constitution is 'octroi', which have been prior thereto, was levied by and for the benefit of local authorities and usurpation of this levy by State would thus be beyond the legislative power of the State under Entry 52. B v.The imported machineries which are imported in completely knocked out condition are not covered by Schedule of 1999, Act. A plant imported in knocked out condition is neither machinery nor equipment and is not covered by Part II of Schedule. Hence, no entry tax could have been levied on imported plants which are received in knocked out condition. C vi. Section 4 Of Bihar Act 1993 as inserted by Bihar Act 19 of 2006 is violative of Article 266 of the Constitution oflndia.
3838. Shri Rakesh Dwive\li, learned senior counsel appearing for the State of Orissa and Bihar has refuted the above submissions. He D submits,that Section 3of1999, Act covers tax on imported goods. The definition section has two phrases (i) from any place outside that local area, (ii) or any place outside the State. Both the phrases on a plain and literal consideration would include the goods which are entering from outside the country. Foreign territory would be a place which is not only outside the local area but also outside the State. E
3939. The State Legislature is fully competent to levy entry tax under Entry 52 List II. The legislative field as included in Entry 52 List II has nothing to do with Entry 41 and Entry 83 of List I. Under the Indian Constitution, the distribution of powers with regard to tax has been done in a mutually exclusive manner in great detail and there is no overlapping in taxing power of the State and the Union. Duty of custom in Entry 83 List II is on import or export. The prohibition contained under Article 286 on the State Legislature are in reference to sale of goods and has nothing to do with entry tax on entry of goods for consumption, use or sale. Article 286 as well as Central Sales Tax, 1956 has no relevance with regard to Entry 52 List II.
4040. The word 'import' means to bring in. The word 'imported goods' are defined in Customs Act, 1962. The above definitions clearly indicate that ones the goods have been cleared for home consumption then they ceased to be imported goods. The importation happens before H
696 SUPREME COURT REPORTS [2017] 13 S.C.R.
A clearance for home consumption and after clearance the character as import ceases. The Doctrine of Unbroken Package as evolved by the US Supreme Cout•t is not attracted in this country. The judgment of the US Supreme Court in Brown 1>ers11s Stale of Maryland, 6 LED 678 has been discredited even in USA. Jn the subsequent judgments of US Supreme Court, the judgment of Brown vs. State ofMaryland has been B considerably dih;ted. The Federal Court as well as this Court has specifically held that the judgment of US Supreme Court in Brown vs. State of Maryland is not applicable in this country.
4141. The submissions raised by one learned counsel of the petitioners that entry tax is not covered by Entry 52 List II is wholly c fallacious. In the Constitution of lndia, there is clear demarcation of taxing power ofUhion and the State. When by Entry 52 List II, entry of goods in the local area for consumption, use or sale has been specifically provided the said entry has to be given its full meaning and content.
4242. Learned counsel appearing for the writ petitioners in the State D ofBihar in civil appeal arising out of judgment of Patna High Court as well as Jharkhand High Court has also adopted the above submissions raised on behalf of the petitioners. In reply thereto, learned counsel for the State of Bihar and Jharkhand has reiterated the same submissions as noted above.
4343. Shri V. Giri, learned senior counsel appearing on behalf of the State ofKerala adqpting the submission ofShri Rakesh Dwivedi contends that the judgment ofKerala High Court holding that entry tax cannot be levied on imported motor vehicles is fallacious. It is submitted that definition clause and charging section in the 1994, Act are clear enough F to include goods entering from any place outside the State for consumption, use or sale therein including outside territory of India. Learned counsel appearing for the respondent in civil appeals of State of Kerala has reiterated the submissions raised on behalf of the writ petitioners in appeals arising out ofjudgment ofOrissa High Court.
4444. From the submission raised by learned counsel for the parties and material on record following issues arise for consideration in this batch of appeals:- i. Whether Section 2( d) read with Section 3 of Orissa Entry Tax Act, 1999, Section 2(d) read with Section 2(d) of Kerala Act, H
STATE OF KERALA v. FR. WILLIAM FERNANDEZ 697
[ASHOK BHUSHAN, J.]
1994 andBihar Act, I993 (before its amendment in 2003), never A ·intended to levy any entry tax on the goods, entering into local area of State from any place outside the territory of India. ii. Whether Entry Tax Legislations in question intrude into exclusive legislative domain of Parliament as reserved under Entry 41 and Entry 83 List I. B iii.Whether levy of entry tax on goods imported from outside territory oflndia is legislation trenching the field of"import and export", "duties of custom" reserved to Parliament. iv. Whether the importation of goods, imported from a territory outside the India continues till the goods reach in the premises/ C factory of the importer, during which period State at no point of time is legislative competence to impose any tax. v.Whether doctrine of unbroken package as evolved by the American Court are to apply with regard to imported goods of the petitioners prohibiting the State from levying any tax till the goods are first sold/dealt by the importer. vi. Whether in the definition of purchase value as contained in Entry Tax Legislations in question, non-inclusion of custom duty is indicator of fact that the legislature never intended to levy entry tax on imported goods. E vii. Whether Entry Tax Legislations are not covered by Entry 52 List II since the Entry 52 is in essence entry of levying octroi which can be levied only by local authorities and the State has no legislative competence to impose entry tax under Entry 52 List II. F viii. Whether a plant, imported in knocked out condition is covered by the Part II of the Schedule of Orissa Act, 1999.
4545. Before we proceed to consider the various issues as ·noted above, it is relevant to notice the statutory provisions relating to entry tax applicable in the above mentioned States. G
4646. The Orissa Entry Tax Act, 1999 (hereinafter referred to as "Orissa Act, 1999") was enacted to provide for the levy and collection of tax on the entry of goods into a local area for consumption, use or sale
698 SUPREME COURT REPORTS [2017) 13 S.C.R.
A therein and matters incidental thereto and connected therewith. Section 2 contains definitions. Section 2(d) defines "entry of goods'', Section 2( e) defines "importer", Section 2(f) defines "local area" as follows : "2. Jn this Act, unless the context otherwise requires,- xxx xxx xxx B (d) "El'llry of goods" with all its grammatical variations and cognate expressions, means entry of goods into a local area from a11y place that local area or any place outside the Stale for consumption, use or sale therein; C (e) "Importer" means a dealer or any other person who in any capacity brings or causes to be brought any scheduled goods into a lmal area for consumption, use or sale therein; (/) "Local area" means the areas within the limits of any- (i) Municipal Corporation, D (ii) Municipality, (iii) Notified Area Council, (iv) Grama Panchayat, and (v) Ot/ler local authority by whatever name called, constituted or continued in any law for the time being in force and shall also ~nclude an Orissa Act industrial township constituted under section 4 of the Orissa 23 of 1930, Municipal Act, 1950,•"
4747. Section 3 relates to levy of tax. Section 3 sub-section ( 1) is as follows: "3.Levy of Tax. (1) There shall be levied and collected a tax on entry of the scheduled goods into a local area for consumption, use or sale therein at such rate not exceeding twelve percentum of the purchase value of such goods from such date as may be specified by the State Government and different dates and different rates may be specified for different goods and local areas subject to such conditions as may be prescribed." The Orissa Act, 1999 has been amended from time to time. H •.
STATE OF KERALA v. FR. WILLIAM FERNANDEZ 699
[ASHOK BHUSHAN, J.]
4848. The Kerala Tax on Entry of Goods into Local Areas Act, A 1994 (hereinafter referred to as 'Kerala Act, 1994) was enacted to provide for levy of tax on the entry of goods into the local area for conswnption, use or sale therein. Section (2)(d) defines 'entry ofgoods', Section 2(g) defines 'importer', Section 2(h) defines 'local area' and 2(n) defines 'purchase value' are as follows: B "2. (d) "entry of goods into a local area" with all its grammatical variations and cognate expressions. means entry of (Substituted by Act 23 of 1996 w.ej 29-7-1996.) goods into a local area from any place outside the State for use (Inserted by Act 12 of 2003 w.ej 1-4-2003.) consumption of sale therein; (g) "Importer" means a person who brings or cause to be brought any goods whether for himself or on behalf of his principal or any other person, into a local area, from any place outside the State for use, consumption, or sales therein or who owns the goods at the time of entry into the local area. (h) "Local area" means the area of jurisdiction of a local authority; E (n) "purchase value" means the value of the goods as ascertained from the original invoice and includes insurance, excise duties, countervailing duties, sales tax, transport fee, freight charges and all other charges incidentally levied on . the purchase of goods and in the case of a motor vehicle includes the value of accessories fitted to the vehicle; F Provided that, where the purchase value of the goods is not ascertainable on account of non-availability or non- production of the original Invoice or when the invoice produced is proved to be false or if the goods are acquired or obtained otherwise than by way ofpurchase. then the purchase G _value shall be the value or price at, which the goods of like kind ·or q~ality is sold or is capable of being sold, in open market"
700 SUPREME COURT REPORTS [2017] !3 S.C.R.
4949. Section 3 is a charging Section which is as follows: ..SectitJ11 3 - Levy of Tax Substituted by Act 23 of 1996 w.e.f 29-7-/996.) (/) Suhject tu t/le pro1·isions of this Act, tar shall be lei:ied and cul/ected a tax on the ent1~v oj· anJ' goods into un.1· /veal area .!Ur B conwmptio11. 11se vr sale therei11. I /nsatnl hr Act I() vl 211115.) 777<~ Tax u11 such goo,!.~ shall be al Slt<.:h rate or rates as 111ay be.fixed by Cv,·ernme11t bv 11otifirntio11. 011 the purchase value ol goods 11ot exceeding the tax payable for the goods as pff the (Substituted by Act 23of1996 we.( 29-7-1996.) [Schedule c to the Kera/a General Sales Tax Act, 1963 or the Kera/a Value Added Tax Act, 2003. Provided that no tax shall be levied and collected in respect of any motor vehicle which was registered in any Union TerritotJ' or any other State under the provisions of Motor D Vehicles Act, 1988 (Central Act, 59of1988), prior to a period offifteen months or morefrom the dale on which it is registered in the State: Provided fi1rlher that no tax shall be levied and collected in respec/ of any (S11bsti/11led by Ac/ 23 of 1996 w.e.f 29-7- E 1996.) goods which is !he property ol the Cenlral Government or which is used exclusively for purposes relaling 10 !he defence of India. (2) The tax shall be payable by the impor/er in such manner and within such lime as may be prescribed."
5050. Bihar Act, 1993 also defines entry of goods in Section 2(c), importer in Section 2(d), import value in Section 2(e) and local area has been defined in Section 2(f) which are as follows: "2(d) "Importer" means a dealer or any other person who is any capacity effects or causes to be effected t he enltJ' of any G scheduli:d goods into a local area for cons11mption, 11se or sale therein." (e) "Jmpor/ Value" means the va/11e of scheduled goods as ascertained from the purchase invoice/bills and includes insurance charges, [import duty, marine insurance charges, H
STATE OF KERAL1\ v. FR. WJLLIAM FERNANDEZ 701 lASHOK BHUSHAN, J.]
landing and wha(fage and port charges} acise duties, countervailing duties, sales tax, transport charges, freight charges and all other charges incidental to the import of scheduled gouds: Provided that where the purchase invoice/ bills are not produced or when the invoice/bi/ls produced are proved to be false or if; the scheduled good are acquired or ohtained otherwise than by >ray of purchase the import value shall be the ra/!le price at which the scheduled goods of like kind or quality is sold or capable of being sold in open market. (0 "Local Areas" means the areas within the limits of a- (i) Municipal Corporation; (ii) Municipality; (iii) Notified Area Committee; (iv) Cantonment Board; M fown Board; {VI) Mines c Board; (vii) Municipal Board; (\'iii) Gram Panchayat; (ix) Any other local authority by whatever nomenclature called, constituted or continued in any law fur the time being in force."
5151. Section 3 is a charging Section. Section sub-section(!) is as follows: "3. Charge of Tax- "(I) There shall be levied and collected a tax on entry of scheduled good' into a local area for consumption, use or sale therein for the purpose of' de1•elopment of trade.commerce and indu.1·tt)' in the Siate, at such rate, not exceeding twenty percent. of the import value of such good1', as may be specified by the State Gorernment in a notification published in a official gazette subject to such conditions as may be prescribed: Provided d!tf'erent rates for different scheduled good' may be spl!cified by the State F Government. Prvvided.fitrther. that i(1111 importer claims that he imparted goods notified 1111der s11b-sec1iot1 (I) not for the purpose of cons11111ptia11, use or sale, the burden of proving tho/ the import was for p11rpvses other than for consumption. G use or sale shall be on importer importing wch goods and making such claim. " ["Provided.fi1rther, that if' an importer claims that he imported good' notified under s11b-sec:tion (I) not.for the purpose of'cvnwmption, use or sale, the burden of providing that the import was for purposes other than .for H
702 SUPREME COURT REPORTS [2017] 13 S.C.R.
A consumption, use or sale, shall be on importer importing such goods and making such claim. " "(IA) The tax under sub-section (1) shall be continued to be levied till such time as is required to improve infrastructure within the State such as power, road, market, condition etc. B with a view to facilitate better market condition for trade, commerce and industry and to bring it to the level of. National average."
5252. The definition as given in Section 2( c) was amended by Bihar Act 19 of200(fi. It was published on 9th August, 2006. Section 2(c) was c substituted by the amendment to the following effect: "2(c) "Entry of goods, with all its grammatical variations and cognate expressions. means, entry of goods; (i) into a local area from any place outside such area,
D (ii) into a local area from any place outside the territory of India, for consumption, use or sale therein. "
5353. In the State of Jharkhand, Bihar Act, 1993 was adopted vide notification dated 18.. December, 2000. The amendment has been made vide Jharkhand Act 2 of 2002 in Bihar Act 16of1993. ln exercise of powers conferred by sub-section (I) of Section 3 of the Tax Act 1993 E (Bihar Act 161 1993) notification dated 23"' March, 2002 was issued specifying the conditions and rates of tax on the entry of scheduled goods. Whether Entry Tax Legislations contemplated levy of Entry Tax on Imported goods F
5454. We now proceed to consider ISSUE NOS. I, relating to the three States' enactments as noted. For answering the issue we notice the provisions ofOrissaAct, 1999.
5555. The submission which has been pressed by the learned counsel G for the writ petitioners is that the definition of entry of goods in Section 2(d) read with Section 3 levy of charge covers only the following: (i) Entry of goods into a local area from any place outside that local area; (ii) Entry of goods from local area or any place outside the State. H
STATE OF KERALA v. FR. WILLIAM FERNANDEZ 703
[ASHOK BHUSHAN, J.]
. It is submitted that entry of goods into local area can be any of A the following places: (i) from any place outside that local area that is from other local area within the State of Orissa itself; (ii) from any place outside the State that is from any place outside the State of Orissa. B The expression State here can only be the State of Orissa and cannot mean the country as a whole. (iii) from any place outside the country. .56. The definitionofSection2(d) on its own term does not cover entry of goods into a local area from any place "outside the country". It is, however, submitted that expression "any place outside the local area" by itself would have been enough to cover the goods imported from anywhere .outside the. local area. Outside the local area would have been outside the State or outside the country but Legislature never intended to levy entry tax on goods imported from outside the country that is why entry of goods from local area, from outside the State was provided for. Reference of various other States' enactments have been made where any place outside the country has been expressly mentioned. Reference has been made to West Bengal Tax on Entry of Goods into Local Area Act, 2012, Section2(h) which is to the following effect: E "(h) '.'entry of goods", with all its grammatical variations and cognate expressions, means bringing of goods into a local area from any place outside that local area or any place outside the State or from outside India, for consumption, use or sale therein, whether by a dealer or an importer other than a dealer himself or by any other person;"
5757. Section 2(1)(h) ofUttar Pradesh Tax on Entry of Goods into Local Area Act, 2007 and Section 2(1)(c) of the Uttarakhand Tax on Entry of Goods into Local Area Act, 2009 has been mentioned wherein the definition clause specifically includes "into a local area from any place outside the territory oflndia'.
5858. The plain and literal construction when put to Section 3 read with Section 2( d) clearly means that goods entering into local area from any place outside the local area or outside the State are to be charged H
704 SUPREME COURT REPORTS (2017] 13 S.C.R.
A with enl!y tax. Foreign territory would be a place which is not only outside the local area but also outside the State. The writ petitioners are trying to inti•oduce words of limitation in the definition clause. The interpretation which is sought to be put up is that both the phrases be read as: B ( 1) ··from any place outside that local area but within that State"; (2) any place outside the State but within India.
5959. It is well known rule of statutory interpretation that by process of interpretation the provision cannot be re-written nor any word can be introduced. 'Fhe expression "any place" before the words "outside the c State" is also1indicative ofl'ide extent. The words 'any place' cannot be limited to a place within the territory oflndia when no such indication is discernible from the provisions of the Act.
6060. The Entry tax legislations are referable to Entry 52 of List II of Seventh Schedule of the Constitution. Entry 52 also provided a D legislative field, namely, 'taxes on the entries of goods into a local area for consumption, use or sale therein'. Legislation is thus concerned only with entry of goods into a local area for consumption, use or sale. The origin of goods has no relevance with regard to chargeability of entry tax. In this context reference is made to judgment of Federal Court E reported in Miss Kislrori Shelly v. The King, AIR 1950 FC 69 (1950 RLW 46). The question which was considered in the above case was as to whether Item No.31 of List II in the Seventh Schedule of Government oflndia Act, 1935 which provided "intoxicated liquor and narcotic drugs" whether included foreign liquors. The arguments that provincial legislature has no power to restrict or prevent the goods imported from foreign F country, was repelled. Jn paragraph 4 of the judgment following has been held: "4. Nun: under S. JOO of the Con.\'titution Act the Provincial legislature has. subject to the orher sub-sections of that section, the exclusive pou'er tv 111ake tau's M ith respect to 1
G mat1ers enumerated in list Ji in the sch. VJ/. item 31 of that list comprises "intoxicating liquor and narcotic drugs. that is to sa)'. the production, mam!f'acture, possession, transport, purchase and sale of intoxicating liquors, opium and other narcotic drugs" subject to certain reservations not material here. Prima .fc1cie, the offending prol'i.<ions are within this H
STATE.OF KERALA v. FR. WILLIAM FERNANDEZ 705
[ASHOK BHUSHAN, J.]
Footnotes
706 SUPREME COURT REPORTS [2017] 13 S.C.R.
6161. To the same effect judgment of this Court in State ofBombay vs. S.F.N. Balsara, AIR 1951 SC 318 is referred. The submission which has been pressed by the learned counsel for the writ petitioners is that in a taicing statute one has to merely look into the text and there is no room for any intentment in deciding liability of the subject to tax regard must be had to i;>lain and strict letter oflaw. Reliance has been placed on B the judgment CIT v. Vatika Township (P) Ltd., (2015) 1 SCC 1. In paragraph 41.2 and paragraph 41.3 following has been held: "41.:Z. Alt the same time, it is also mandated that there cannot be imposition of any tax without the authority of law. Such a law has to be unambiguous and should prescribe the liability c to pay taxes in clear terms. If the provision concerned of the taxing statute is ambiguous and vague and is susceptible to two interpretations, the interpretation which favours the subjects, as against the Revenue, has to be preferred. This is a well-established principle of statutory interpretation, to help finding out as to whether particular category of assessee is to pay a particular tax or not. No doubt, with the application of this principle, the courts make endeavour to find out the intention of the legislature. At the same time, this very principle is based on "fairness" doctrine as it lays down that if it is not very clear from the provisions ofthe Act as to whether the particular tax is to be levied to a particular class ofpersons or not, the subject should not be fastened with any liability to pay tax. This principle also acts as a balancing factor between the two jurisprudential theories ofjustice - Libertarian theory on the one hand and Kantian theory along with Egalitarian F theory propounded by John Rawls on the other hand. 41.3. Tax laws are clearly in derogation of personal rights and property interests and are, therefore, subject to strict construction, and any ambiguity must be resolved against imposition of the tax. In Billings v. United States, the Supreme G Court clearly acknowledged this basic and long-standing rule of statutory construction: (L Ed p. 598) "Tax statutes ... should be strictly construed; and if any ambiguity be found to exist, it must be resolved in favour of the citizen. " H
STATE OF. KERALA v. FR. WILLIAM FERNANDEZ 707
[ASHOK BHUSHAN, J.]
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