STATE OF KERALA & Ors. v. FR. WILLIAM FERNANDEZ ETC. ETC

State of Travancore-Cochin & Ors. v. Shanmugha Vilas 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 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 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 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 E H 672 SUPREME COURT REPORTS (2017] 13 S.C.R. A B 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. 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; 729- F H A-CJ STATE OF KERALA v. FR. WILLIAM FERNANDEZ 673 ITC Ltd. v. Agricultural Produce Market Committee & Ors. (2002) 9 SCC 232 : [2002] 1 SCR 441 - followed. A

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 [Paras 106, 118, consumption, sale and use cannot be accepted. 123] [730-E; 738-B; 739-F)