Entry tax on imported goods and knock-down machinery upheld, but unscheduled raw materials and spares were excluded.

Entry tax under the Orissa Entry Tax Act, 1999 applies to goods imported from outside India after they cross the customs barrier and enter a local area for consumption, use or sale; the levy is not barred by Articles 246 or 286, and it operates in a field distinct from customs duty. A paper plant and machinery imported in knock-down condition was treated as machinery for Schedule purposes and was held liable to entry tax. By contrast, raw materials, spares and components not included in the Schedule could not be taxed merely because they were brought into the local area, and the absence of a Schedule entry was decisive.

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Issues: (i) Whether entry tax under the Orissa Entry Tax Act, 1999 can be levied on goods imported from outside the country and whether such levy is barred by Articles 246 and 286 of the Constitution of India and the Union field relating to customs; (ii) Whether a paper plant and machinery imported in knock-down condition is liable to entry tax as machinery under the Act; (iii) Whether the specified raw materials, spares and components imported from outside the country or purchased from outside the State, but not included in the Schedule, are liable to entry tax.

Issue (i): Whether entry tax under the Orissa Entry Tax Act, 1999 can be levied on goods imported from outside the country and whether such levy is barred by Articles 246 and 286 of the Constitution of India and the Union field relating to customs.

Analysis: The taxable event under the entry tax law is entry of goods into a local area for consumption, use or sale therein, whereas customs duty is attracted on importation until the goods cross the customs barrier. The constitutional restriction in Article 286 applies to tax on sale or purchase in the course of import and does not control the State's power under Entry 52 of List II. The levy under the State Act and customs duty operate in distinct fields, and there is no legislative overlap with Entry 83 of List I. On the plain language of Section 3, read with the definitions in the Act, imported goods are not excluded from the charging provision, and the measure of tax in Section 2(j) does not curtail the scope of the levy. The Court also held that imported goods may validly bear entry tax after clearance from customs and entry into the local area.

Conclusion: The levy of entry tax on goods imported from outside the country is constitutionally valid and is not barred by Articles 246 or 286 of the Constitution of India.

Issue (ii): Whether a paper plant and machinery imported in knock-down condition is liable to entry tax as machinery under the Act.

Analysis: The plant was brought in parts only because of the practical mode of transport, but in substance it remained a combination of machinery intended for industrial use. Entry 9 of Part II of Schedule I covers machinery and equipment, including spare parts and components used in manufacture. Applying the ordinary meaning of machinery and the language of the Schedule, the Court treated the knock-down plant as machinery rather than as an exempted unscheduled item.

Conclusion: The knock-down plant and machinery are liable to entry tax.

Issue (iii): Whether the specified raw materials, spares and components imported from outside the country or purchased from outside the State, but not included in the Schedule, are liable to entry tax.

Analysis: The Court examined the items listed by the petitioner and found that they were not covered by the Schedule to the Act. Since the levy is confined to scheduled goods, goods not included in the Schedule cannot be subjected to entry tax merely because they are brought into the local area. The absence of a Schedule entry is decisive, and the taxing statute cannot be enlarged by implication.

Conclusion: The specified raw materials, spares and components not included in the Schedule are not liable to entry tax, and the petitioner's challenge succeeds on this issue.

Final Conclusion: The challenge to the levy on imported goods failed in substance, but relief was granted in respect of the unscheduled raw materials and components. The writ petitions were dismissed except to the limited extent of the petition involving unscheduled items, and the connected matters were disposed of accordingly.

Ratio Decidendi: Entry tax under Entry 52 of List II is attracted by the entry of scheduled goods into a local area after crossing the customs barrier, and the charging provision cannot be narrowed by the measure of tax or by customs-law restrictions applicable to import duty.

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