# STATE OF KERALA AND OTHERS v. FR. WILLIAM FERNANDEZ ETC. ETC. {Civil Appeal Nos. 3381-3400of1998)

- **Citation:** [2017] 13 S.C.R. 663
- **Court:** Supreme Court of India
- **Decided:** 2017-10-09
- **Case number:** Civil Appeal Nos. 3381-3400of1998
- **Bench:** A. K. Sikri, Ashok Bhushan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-kerala-and-others-v-fr-william-fernandez-etc-etc-civil-appeal-nos-3381-31929
- **Pages:** 88

## Headnote

A
B
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
C
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 of goods 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 D
competence to impose entry tax under Entry 52 List 11 is fallacious
- Constitution of India - 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, 199 3 - 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).
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
663
H
664
SUPREME COURT REPORTS
(2017] 13 S.C.R.
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
c
D
E
F
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
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.
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.
Entry Tax -
Non-inc/usicn of custom duty in the definition
of purchase value in the statute of entry tax - Held: Such noninclusion 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
G legislative field reserved for Parliament under Entry 41 and under
Entry 83 of Lisi 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 Ent

## Text

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[2017] 13 S.C.R. 663
STATE OF KERALA AND OTHERS
v.
FR. WILLIAM FERNANDEZ ETC. ETC.
{Civil Appeal Nos. 3381-3400of1998)
OCTOBER 09, 2017
[A. K. SIKRI AND ASHOK BHUSHAN, JJ.]
A
B
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
C
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 of goods 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 D
competence to impose entry tax under Entry 52 List 11 is fallacious
- Constitution of India - 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, 199 3 - 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).
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
663
H
664
SUPREME COURT REPORTS
(2017] 13 S.C.R.
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
c
D
E
F
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
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.
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.
Entry Tax -
Non-inc/usicn of custom duty in the definition
of purchase value in the statute of entry tax - Held: Such noninclusion 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
G legislative field reserved for Parliament under Entry 41 and under
Entry 83 of Lisi 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
STATE OF KERALA v. FR. WILLIAM FERNANDEZ
665
Constitution of India - Art.286 - Restriction on imposition
A
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 B
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.
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
tax is to be collected.
c
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 D
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
E
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.
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
F
G
H
666
SUPREME COURT REPORTS
[2017] 13 S.C.R.
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 of the List JI, if it does, no further question
B
c
D
E
F
arises and attack on the ground of legislative competence must fail.
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
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'
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.
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 -
Thus, a plant which is imported in knocked out condition is covered
by the Part JI of Schedule of Orissa Act, 1999.
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
of petitioner that s.4 indicates that the tax levied under the Act would
G 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 of fend and utilisation of funds received
from the collection of entry lax - The creation of fund and its
H
utilisation can in no manner effect the levy of the entry tax and the
STATE OF KERALA v. FR. WILLIAM FERNANDEZ
667
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.
Words and phrases - Word 'any' - Connotation of - Held:
Word 'any' is a word of very wide meaning and excludes any B
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
. HELD: 1. Whether Entry Tax Legislations contemplated
levy of Entry Tax on Imported goods.
c
1.1 The plain and literal construction when put to Section 3
read with Section 2(d) of Orissa Entry Tax Act, 1999 clearly D
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)
E
F
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 H
668
SUPREME COURT REPORTS
[2017] 13 S.C.R.
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,
c
D
63) [704-Ji)-E; 707-E-H)
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.
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
G 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
H did not exclude goods coming from outside the territory of India
STATE OF KERALA v. FR. WILLIAM FERNANDEZ
669
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; 709A]
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]
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
D
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
670
SUPREME COURT REPORTS
(2017] 13 S.C.R.
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
B
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
C
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 of Kamptee 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
H
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)
STATE OF KERALA v. FR. WILLIAM FERNANDEZ
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.
3.2 Article 286 of the Constitution provides for restrictions
as to imposition of tax on sale or purchase of goods. The subjectmatter of laws made by Parliament and legislatures of the States
as per Article 246 read with Seventh Schedule and Article 245
B
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
submissions of the writ petitioners on the strength of Section
5(3) that even first sale after the import should be treated during
E
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
F
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 G
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
672
A
B
SUPREME COURT REPORTS
(2017] 13 S.C.R.
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.
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
D 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
E payment of the customs duty due to the Central Government.
F
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
G 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; 729H A-CJ
STATE OF KERALA v. FR. WILLIAM FERNANDEZ
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
B
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 C
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)
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.
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674
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B
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SUPREME COURT REPORTS
[2017) 13 S.C.R.
Brown v. The State of Maryland 6 L.Ed. 678; Adolph
Low v. Alexander Austin 20 L.Ed. 517; Michelin Tire
Corporation v. WL. Wages, Tax Commissioner 46 L.Ed.
2D 495; Joanne Limbach Tax Commissioner of Ohio v.
The Hodiven & Allison Company 80 L.Ed. 2D 356 -
referred
1 to.
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
C 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
D 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]
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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
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
H tax which ought to be collected through local bodies. It is the
. .
STATE OF KERALA v. FR. WILLIAM FERNANDEZ
675
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 preC
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.
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.
7. Expression "machinery and equipment" as used in the
schedule of Orissa Act 1999
The submissiOn for the petitioner was that the plant which
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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
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[2017) 13 S.C.R.
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)
c
D
E
F
G
H
Advance Law Lexicon by P. Ramanatha Aiyar
3'4 Edition - referred to.
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)
Jaora Sugar Mi l/s(P) Ltd. v. State of Madhya Pradesh
and Ors. [1996) l SCR 523 - referred to.
9. Plea of discrimination under Article 304(a) of Constitution
of India: ' Liberty is given to petitioners to raise the plea of
discrimination under Article 304(a) in accordance with the law as
laid down by Nine Judges Bench in Jindal Stainless Ltd. The
ends of justice would be served, if liberty is granted to the
petitioners ~o revive their writ petitions by making a proper
application before the High Court. [Paras 142, 143)[748-C, G, HJ
Mis Bharati Airtel Ltd v. Assessing Authority Orissa
Entry Tax & Anr. 2017 (12) SCALE 515 ; State of UP
and Ors v. Mis Indian Oil Corporation Ltd. & Etc 2017
(6) SCALE 540; Mis. Steel Authority of India Ltd. v.
State of Orissa & Anr. Civil Appeal arising out of SLP
(C) No. 18405 of 2008 - referred to.
Brown v. State of Maryland 6 LED 678 - referred to.
Case Law Reference
2016 (11) SCALE 1
(19511 SCR 682
[2014) 12 SCR 1037
referred to
relied on
relied on
Para3
Para 61
Para 61
STATE OF KERALA v. FR. WILLIAM FERNANDEZ
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
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3381F
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,
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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, 1605960, 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
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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.
·· The Judgment of the Court was delivered by
ASHOK BHUSHAN, J. I. Leave granted.
F
2. 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
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[2017] 13 S.C.R.
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.
3. 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:
'"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)
4. 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
of few of the appeals of each State. The parties shall be referred to as
described in the High Courts.
State of Orissa
5. 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.
G
6. 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,
H
use or sale therein and matters incidental thereto and connected therewith.
STATE OF KERALA v. FR. WILLIAM FERNANDEZ
681
[ASHOK BHUSHAN, J.)
7.