Summary
In challenges concerning entry tax on foreign goods brought into local areas, the Court upheld the States’ competence under the then applicable Entry 52 of List II. The relevant Orissa, Kerala and Bihar enactments covered such goods. Customs import and local-area entry were distinct taxable events; release for home consumption ended import immunity. Orissa appellants received limited liberty to revive discrimination challenges.
Issues
- Whether the State enactments covered foreign goods without expressly referring to imports.
- Whether entry tax encroached on Union customs and foreign-trade powers.
- Whether original-package immunity continued until goods reached the importer’s premises.
- Whether customs valuation, local-authority collection or knocked-down plant objections defeated the levy.
- What relief and opportunity to raise discrimination remained available.
Provisions considered
- Seventh Schedule, List II Entry 52, before the 101st Amendment; List I Entries 41 and 83; Article 286, Constitution of IndiaLocal-area entry tax and customs import duties occupied distinct fields; Article 286’s sale/purchase restrictions did not invalidate the entry-tax field. (¶¶ 68–83, 90–105, 144)
- Sections 2(d), 2(j), 3 and Schedule Part II Item 9, Orissa Entry Tax Act, 1999Covered foreign goods entering for consumption, use or sale; incidental purchase charges included customs duty, and machinery/equipment included knocked-down plant. (¶¶ 46–47, 54–67, 124–127, 136–139)
- Sections 2(d), 2(g), 2(n) and 3, Kerala Tax on Entry of Goods into Local Areas Act, 1994The definition and charge included goods brought from foreign territory into local areas, contrary to the Division Bench’s restrictive construction. (¶¶ 48–49, 58–67, 144–145)
- Sections 2, 3 and 4, Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1993Foreign goods were covered even before the clarificatory amendments; fund-utilisation objections did not invalidate the levy. (¶¶ 50–53, 64–67, 140–141)
- Sections 2(23), 2(25) and 2(26), Customs Act, 1962Import ends on crossing the customs barrier and release for home consumption, before the distinct local-entry taxable event considered here. (¶¶ 86, 99–105)
Held
- The broad phrases covering entry from any place outside a local area or State included foreign territory. Reading in a limitation to places within India would rewrite clear charging provisions. The Bihar amendments expressly mentioning foreign goods were clarificatory and by way of abundant caution. (¶¶ 54–67, 144(i))
- Under the pre-101st-Amendment constitutional scheme, entry tax fell within State competence under Entry 52 and did not encroach on Union foreign-trade or customs fields. Customs duties and local entry taxes involved separate taxable events. Import ended upon customs clearance for home consumption; transport onward to the importer’s factory did not continue that immunity. (¶¶ 68–105, 144(ii)–(iv))
- The American original-package doctrine did not apply in India. Goods released for home consumption were not exempt from otherwise applicable State taxes merely because they remained in their original packages or had yet to reach their destination. (¶¶ 106–123, 144(v))
- Omitting an express reference to customs duty in purchase value did not exclude imported goods: the inclusive incidental-charge language covered it. Entry 52 did not require collection solely by local authorities; collection and distribution machinery were matters of legislative policy. A plant in knocked-down condition was a collection of machinery covered by the Orissa Schedule. (¶¶ 124–139, 144(vi)–(viii))
- The Article 266 objection to Bihar fund utilisation did not invalidate the tax. Orissa writ petitioners could apply within thirty days to revive their dismissed petitions and plead discrimination under Article 304(a) according to Jindal Stainless; no liberty for fresh petitions was granted. (¶¶ 140–143, 145(vi))
Result
Orissa appeals and transferred case, Patna appeals and Parisons writ petition dismissed; Jharkhand State appeal and Kerala State appeals allowed, with the Kerala Division Bench reversed and Single Judge restored. Orissa petitioners could seek revival within thirty days for Article 304(a) claims. Parties to bear their own costs.