State Of Kerala And Others vs Fr.William Fernandez Etc Etc

4. As noted above this batch of appeals consists of appeals from   the   judgments   of   Orissa   High   Court,   Patna   High   Court, Kerala   High  Court   and   Jharkhand  High   Court.  Large   number   of appeals   have   been   filed   questioning   the   different   judgments rendered by different High Courts. For deciding this batch of appeals 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.

5. In the appeals arising out of the judgments of the High 7 Court of 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.

10. Large number of civil appeals have been filed against the judgment dated 18.02.2008. It is not necessary to notice facts of   different   cases.   The   writ   petitioners   were   using raw­material   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. 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.

11. A   subsequent   judgment   dated   9.10.2012   delivered   by   the Orissa High Court in Writ Petition No.15519 of 2010 and other connected writ petitions have   given rise to large number of civil   appeals.   The   leading   writ   petition   in   which   judgment dated 09.10.2012 was delivered was writ petition No.15519 of 2010   ­Tata   Steel   Limited   vs.   State   of   Orissa   &   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, divisions across the State of Orissa. 10 The writ petitioner carries on business in mining as well as manufacturing of Ferro­Chrome and Ferro­Manganese at different plants   in   the   State   of   Orissa.   For   the   ready   reference   the pleadings   in   paragraph   3   of   the   writ   petition   needs   to   be extracted which is to the following effect:

17. The   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.,   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 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 14 further   threatened   to   resort   to   coercive   measures   if   the 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.   Counter­affidavit   and rejoinder­affidavits were filed to the writ petitions and vide judgment   dated   9.10.2012   the   High   Court   dismissed   the   writ petition.

18. The writ petitioner has set up a factory at Sector 'B', Kalunga   Industrial   Estate   as   an   100%   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   manufacture   of   the   refractory   products,   the   petitioner requires   imported   raw   materials,   stores   and   spares,   trading 15 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 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 of India. The petitioner was under the bona fide belief that it was not required to pay entry tax on the goods imported from abroad. Further,   the   petitioner   effected   a   payment   under   protest   of Rs.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:

19. The writ petition filed by the petitioner has been partly allowed 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. Transferred   Case   No.149   of   2013   –   M/s.   Paradeep  Phosphates Ltd. vs. State of Orissa and ors.

20. The Transfer Petition (C) No.530 of 2012 was filed by the petitioner,   M/s.   Paradeep   Phosphates   Ltd.   praying   for   the transfer of Writ Petition No.16541 of 2007 pending in the High Court of Orissa  at Cuttack. The transfer petition was allowed by this Court on 23.07.2013 on which this T.C. No.149 of 2013 has been registered. The petitioner is engaged in manufacture of different types of chemical fertilizers like DAP, MOP, NPK. 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   petitioner's   factory   without   using   any infrastructure facility provided by the Government of Orissa. Petitioner has a plant at Paradeep under the Revenue District 17 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   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 of India.

22. The writ petitioner is a Government of India Undertaking, engaged   in   production   of   alumina   and   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 18 Jurisdiction Case No.72 of   2001 challenging the validity of 1999 Act on several grounds. The Division Bench of the High Court   vide   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:

24. The petitioner company during the course of its business 19 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. 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   09.10.2012   in   Writ   Petition No.15519 of 2010 holding that levy of entry tax on imported goods   was   within   the   purview   of   Orissa   Act,   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 the assessment order passed by the Joint Commissioner of Sales Tax dated 20.10.2012. Civil   Appeal   arising   out   of   SLP(C)No.36486   of   2010   –   M/s. Bajrangbali   Alloys   Pvt.   Ltd.   vs.   Commissioner,  Sales   Tax   & Anr.

33. 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   products   by   its   integrated steel plant at Jamshedpur in the State of Jharkhand. For the purpose of manufacturing activities, company is importing coal from Australia and Newzealand in pursuant to several foreign contracts executed with foreign parties which comes to Haldia and   Paradeep   Ports   in   India   and   from   there   said   coal   is 27 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   schedule.     Notification   dated 23.03.2002 was issued levying the entry tax on imported coal. A   memorandum   was   issued   by   Commissioner   of   Commercial   Tax. Petitioner   prayed   for   quashing   a   part   of   the   Notification dated 23.3.2002 by which entry tax was sought to be levied by the   State   of   Jharkhand   on   imported   coal   and   other consequential reliefs have been claimed.

56. The definition of Section 2(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, Section 2(h) which is to the following effect:

86. The   Customs   Act,   1962   defines   the   terms   “import”, “imported goods”  and “importer” in Sections 2(23), 2(25) and 2(26) respectively, which are as follows;­ “2(23)   “import”   with   its   grammatical variations   and   cognate   expressions,   means bringing   into   India   from   a   place   outside India;”  2(25) “Imported goods” means any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption;

In   our   opinion   the   power   of   the   Provincial Legislatures   to   levy   a   tax   on   the   sale   of goods extends to sales of every kind, whether first sales or not; and we regret that we are unable   to   agree   with   the   contrary   opinion which   has   been   expressed   by   the   High Court....”  62

105.   In   view   of   the   foregoing   discussions,   we   are   of   the clear opinion that taxing event with regard to levy of customs duty by Parliament and levy of entry tax by States under Entry 52   List  II   are  entirely  different  and  separate.     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 is no invalidity in levy of entry tax by the States.

Original/Unbroken Package Theory

2. To that which declares that Congress shall have  power  'to  regulate commerce  with  foreign nations, and among the several States, and with the Indian tribes.'”

Chief   Justice   Taney's   opinion   in   the   License Cases,   5   How   504,   12   L   Ed   256   (1847),   was carefully   analyzed,   with   the   Court   concluding that   that   opinion   had   been   misread   in   Low.

Hooven   I   held   that,   under   the   Clause,   a nondiscriminatory   state   ad   valorem   personal property   tax   could   not   be   imposed   until   the imported goods had lost their status as imports by being removed from their original packages. This decision was among the progeny of Low v. Austin   for   it,   too,   was   decided   on   the original­package   doctrine.   Thus,   Hooven   I   is inconsistent with the later ruling in Michelin that such a tax is not an "Impost or Duty" and therefore   is   not   prohibited   by   the   Clause. Although  Hooven I  was  not  expressly overruled in Michelin, it must be regarded as retaining no   vitality   since   the   Michelin   decision.   The conclusion   of   the   Supreme   Court   of   Ohio   that Hooven   I   retains   current   validity   in   this respect   is   therefore   in   error.   A   contrary ruling would return us to the original­package doctrine.   So   that   there   may   be   no misunderstanding,   Hooven   I,   to   the   extent   it espouses that doctrine, is not to be regarded as authority and is overruled.”

123.   In view of the foregoing discussions, we conclude that goods   imported   after   having   been   released   from   customs barriers   are   not   immuned   from   any   kind   of   State   taxation, which fall equally on other similar goods and the submission 99 of the learned counsel 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.

NON­INCLUSION OF CUSTOM DUTY IN PURCHASE VALUE

127. We thus do not find any substance in the submission of petitioner that non­inclusion of custom duty in definition of purchase   value   leads   to   conclusion   that   entry   tax   is   not payable on entry tax.

Whether entry tax legislations are not covered by Entry 103 52 List II?

131.   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 106 widely interpreted and no restricted meaning of an entry has to be taken to fetter the legislative power of the Union or State.

135.  We thus do not find any substance in the submission of the   learned   counsel   for   the   petitioner   that   entry   tax legislation is not covered by Entry 52 List II.

EXPRESSION “MACHINERY AND EQUIPMENT” AS USED IN THE SCHEDULE OF ORISSA ACT 1999

143.   Learned   counsel   appearing   for   the   State   of   Orissa   has opposed the prayer of the petitioner seeking liberty to raise the issue. It is contended that petitioners have not raised the   relevant   issues   nor   pleaded   in   support   of   the   plea   of discrimination   under   Article   304(a).   The   parameters   under which entry tax can violate the Article 304(a) has now been conclusively   laid   down   by   Nine   Judges   Bench   in  Jindal Stainless Ltd.(supra).  We are thus of the view that liberty be 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.(supra).   We, however, are of the view that for the above purposes, it is not   necessary   to   grant   any   liberty   to   file   a   fresh   writ petition at this stage and at this distance of time. The ends of   justice   shall   be   served,   if   liberty   is   granted   to   the petitioners to revive their writ petitions by making a proper 114 application   before   the   High   Court.   In   the   writ   petitions which   have   been   dismissed   by   the   Orissa   High   court   against which present appeals are decided, the liberty to revive such petition and to urge ground under Article 304(a) is granted which can be availed only within the period of 30 days from the date of this judgment.

The judgment of the Division Bench holding that no entry tax was leviable on the vehicle imported from territories outside the country is set aside, restoring the judgment of the learned Single Judge.

(v) Writ Petition 574 of 2003, Parisons Agrotech Pvt. Ltd vs. State of Kerala & Ors. is dismissed.

146.  Parties shall bear their own costs.