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TMI Blog2024 (3) TMI 1253X X X X Extracts X X X X X X X X Extracts X X X X ..... from the definition of instrument. It creates an entitlement in the consignee, i.e., the Petitioners herein or any person named by them in the DO, to take delivery of the goods lying in any dock or port, in any warehouse in which the goods are stored, or deposited on rent or hire or upon any wharf etc. The definition of instrument includes every document by which any right or liability is, or purports to be created, transferred, limited, extended, extinguished, or recorded. Certain documents have been specifically excluded from the definition. A DO is not one of them. Once the goods reach the destination port, they are unloaded and stored in a warehouse or storage as directed by transacting parties. In the meantime, the consignee or his agent presents a document called the BoE also containing a description of the goods matching that contained in the BoL and other details to the customs authorities. It is on the basis of the BoE that customs duty payable is computed and paid by the consignee. Upon evidence of payment of customs duty, and also its own charges, the shipper then issues the DO saying that the custodian of the goods may hand the goods over to the consignee (as there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DO in no manner encroaches upon the parliamentary legislature in Entry 83 of List I of the VIIth Schedule. Shipper s lien on the goods - The DO in the present circumstances has nothing to do with the customs duty nor the clearance by the customs authority for domestic consumption. Dr Saraf candidly says that if the Petitioners are able to bye-pass the requirement of a DO, the State will not have any claim of stamp in such a situation. But the moment there is a DO, the same will not be valid or accepted by the custodian without proof of payment of the stamp duty. DO is not a document of title under Article 29 of the MSA and hence, it is not an instrument - It is a DO which entitles the person named therein to take delivery of the goods after discharging the dues of a shipper. It is only after the shipper s charges are cleared that his lien on the goods is extinguished. A right to possession of the goods is distinct from ownership of the goods. Although title to goods includes ownership and possession, the former may exist without the latter. Ownership denotes de jure possession, but another person may be in de facto possession of the goods. The distinction between title and possessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly exclusive documents. Thus, there is no statutory conflict and the requirement of reading down the provision does not arise. Since we hold as such, the further question of granting refund of payments made by the Petitioners towards stamp duty is redundant. All interim applications pending therein also stand disposed. - G.S. PATEL NEELA GOKHALE, JJ. WRIT PETITION NO. 1494 OF 2023 WITH WRIT PETITION NO. 3884 OF 2021, WRIT PETITION NO. 532 OF 2022, WRIT PETITION (L) NO. 487 OF 2022, WRIT PETITION (L) NO. 504 OF 2022, WRIT PETITION NO. 781 OF 2018, WRIT PETITION NO. 1163 OF 2022, WRIT PETITION (L) NO. 2342 OF 2023, WRIT PETITION NO. 1157 OF 2022 WITH INTERIM APPLICATION (L) NO. 15764 OF 2022, WRIT PETITION NO. 1132 OF 2022, WRIT PETITION NO. 1574 OF 2023, WRIT PETITION NO. 1290 OF 2023, WRIT PETITION NO. 1013 OF 2023, WRIT PETITION (L) NO. 5871 OF 2023, WRIT PETITION NO. 1996 OF 2018, WRIT PETITION (L) NO. 7193 OF 2023, WRIT PETITION (L) NO. 7239 OF 2023, WRIT PETITION NO. 1090 OF 2023, WRIT PETITION NO. 3321 OF 2023, WRIT PETITION (L) NO. 8607 OF 2023, WRIT PETITION (L) NO. 8950 OF 2023, WRIT PETITION NO. 4218 OF 2022, WRIT PETITION NO. 3364 OF 2022, WRIT PETITION NO. 3375 OF 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ST) NO. 2756 OF 2023 WITH INTERIM APPLICATION (ST) NO. 7672 OF 2022 WITH INTERIM APPLICATION (ST) NO. 20895 OF 2023, WRIT PETITION NO. 6977 OF 2022, WRIT PETITION NO. 7521 OF 2022, WRIT PETITION NO. 7508 OF 2022, WRIT PETITION NO. 10167 OF 2022, WITH WRIT PETITION NO. 6040 OF 2021 WITH INTERIM APPLICATION NO. 251 OF 2023 WITH INTERIM APPLICATION NO. 250 OF 2023, WRIT PETITION NO. 11041 OF 2022, WRIT PETITION NO. 11352 OF 2022, WRIT PETITION NO. 11419 OF 2022, WRIT PETITION NO. 11351 OF 2022, WRIT PETITION NO. 9621 OF 2021, WRIT PETITION NO. 12581 OF 2022, WRIT PETITION NO. 12770 OF 2022, WRIT PETITION NO. 13006 OF 2022, WRIT PETITION NO. 12696 OF 2022, WRIT PETITION NO. 121 OF 2013, WITH INTERIM APPLICATION NO. 4064 OF 2023 IN WRIT PETITION NO. 121 OF 2013, WRIT PETITION NO. 152 OF 2023, WRIT PETITION NO. 153 OF 2023, WRIT PETITION NO. 2584 OF 2023, WRIT PETITION NO. 3657 OF 2023, WRIT PETITION NO. 4823 OF 2023 Viraj Profiles Ltd, Tata Autocomp Systems Ltd, Indexone Infracon and Logistics Private Ltd, West India Continental Oil Fats Private Limited, Pratapbhai K Kanabar, Pratibha A Gokhale, Narendra D Upadhyay, Indexone International Private Limited, JSK Industries Private Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd, Sukhesh Marketing Pvt Ltd, Ram Ratna Wires Limited, Dhanuka Agritech Limited, Balkrishna Industries Ltd, Rihen Harshad Mehta, Jupiter Dyechem Private Limited, C.J. Shah and Company, CJS Specialty Chemicals Private Limited, Sanjay Chemicals India Private Limited, Frigiorifico Allana Private Limited, Allanasons Private Limited, Allana Consumer Products Private Limited, RR Kabel Limited, Nehalkumar Hasmukhrai Gandhi, R Nandlal and Sons, R.R. Innovative Private Limited, Vital Organics, Ruchi Soya Industries Limited, Patanjali Foods Limited, Paari Chem Resources LLP, Athena Tradewinds Private Limited, Jabil Circuit India Private Limited, Waaree Energies Limited, Indo Amines Limited, Versus The State of Maharashtra, Inspector General of Registration and Controller of Stamps, Commissioner of Customs (General), Principal Commissioner of Customs (Preventive), Mumbai Port Authority, Chief Controlling Revenue Authority Maharashtra State, DV Developers LLP, DRT Concur CFS, All Cargo Logistics, Bureau of Immigration, Union of India, Punjab National Bank, The Commissioner of Customs (Imports), The Additional Commissioner (Education), Tariff Manager, Bombay Port Trust (MBPT), Mumbai Interna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 420/2023, WP/4824/2022, WP/1494/2023, WP/1546/2023 , WP/463/2023 WP/16934/2023 in WP/2858/2022. in WP/1254/2023, WPST/381/2023, IAST/6623/2023, WP/1253/2023, WP/1252/2023, WP/1251/2023, WP/1250/2023, WP/1925/2022, WP/2580/2023, WP/2091/2022, WP/4356/2021, IA/19548/2022, IA/30038/2022, IAST/16012/2023, IAST/3354/2023 IAST/2756/2023,IAST/7672/2022, WP/6977/2022, WP/7521/2022, WP/7508/2022, WP/10167/2022, WP/6040/2021, IA/251/2023, IA/250/2023, WP/11041/2022, WP/11352/2022, WP/11419/2022, WP/11351/2022, WP/9621/2021, WP/12581/2022, WP/12770/2022, WP/13006/2022, WP/12696/2022, WP/152/2023, WP/153/2023, WP/2584/2023 in WP/122/2023. : Dr Birendra B Saraf, Advocate General, with Kedar Dighe, AGP, Vaibhav Charalwar. Jyoti Chavan, AGP. Sukanta Karmakar, AGP. PP Kakade, GP, Ms S R Crasto, AGP PN Diwan, AGP. Abhay L Patki, Addl. GP. Amit Shastri, AGP. MA Sayed, AGP. Himanshu Takke, AGP. LT Satelkar, AGP. PH Kantharia, GP. Manish Upadhye, AGP. For Respondent State in WP/1607/2023 WP/9266/2023. : Mrs AA Purav, AGP. For Respondent state in WP/9229/2023. : Mrs PJ Gavhane, AGP. For Respondent state in WP/880/2013. : Mr VM Mali, AGP. For Respondent state in WP/2727/2018. : Mr AI Patel, Addl. GP. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of stamp duty on DOs. (i) The lead Petitioner, a company registered under the Companies Act, 1956, is engaged in the business of manufacturing, trading, service and distribution of textile machinery. The other Petitioners are also bodies corporate engaged in their respective and varied business activities, but all of them, during the course of their business, import goods from outside the territories of India and are required by the State to pay stamp duty on the DOs in order to receive delivery of the imported goods. (ii) The 1st Respondent in all the Petitions is the State of Maharashtra through its Revenue Ministry and the other Respondents include the Inspector General of Registration and Controller of Stamps and the Chief Controlling Revenue Authority, Customs Authorities having jurisdiction over individual Petitioners in their respective customs areas and the Mumbai Port Authority-a body corporate registered under the Major Port Trusts Act, 1963 dealing with imports at the Mumbai Port. Some private Respondents are arrayed in few petitions, but no relief is sought against them, and none is granted hence their description is not detailed herein suffice the same appears in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any person in respect of the goods. (vi) An appeal was carried to the Division Bench of the Gujarat High Court by the State of Gujarat. While upholding the decision of the learned Single Judge, the Division Bench, however, modified it to the limited extent of holding that it is not necessary that in all cases a DO requires instructions by the Bailor to the Bailee (meaning the carrier to the consignee) to deliver goods bailed to the person named in the DO. At times, a Bill of Lading is also an order relating to delivery of goods as is evident from Regulation 16 of Gujarat Maritime Board (Lading and Wharfage) Regulations, 1956. Thus, the appeal of the State was rejected with the aforesaid limited modification. We are told that the State of Gujarat has carried a Special Leave Petition before the Supreme Court, against the judgment and Order of the Division Bench. Notice is issued on the SLP, and the petition is pending. vii) Encouraged by the decision of the Gujarat High Court, the Petitioners assail the levy of stamp duty on DOs in the State of Maharashtra on various grounds, one of them obviously alleging discrimination between importers in the State of Gujarat, who are exempted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitutional on the ground that under Article 246(1) read with Entry 41 and 83 of the List I of Schedule VII of the Constitution, the State Legislature lacks the legislative competence to levy such stamp duty on any document which is part of the course of import of such goods into the territory of India. The entire field of legislation in this regard is within the sole legislative competence of the Parliament. (ii) According to the Petitioners, DOs are nothing but an adjunct/extension to the BoL, and hence, in essence, it is a levy of stamp duty on a BoL which does not fall within the purview of the definition of the term instrument under the MSA. (iii) It is further argued that it is the BoL and not a DO that transfers the title in the goods. The BoL constitutes evidence of receipt of goods by the carrier/shipper; it is a document of title to the goods; and it is evidence of the terms and conditions of the contract of carriage. (iv) The BoL is expressly excluded from the definition of the term instrument as defined in Section 2(l) of the MSA and hence, the State Government lacks the power to levy stamp duty on a BoL. (v) A combined reading of Entry 63 of List II and Entry 91 of Lis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn, delivers them to the buyer. Hence, from the conjoint reading of these two provisions, goods are in the course of the import till they are delivered to the buyer. (xiii) The nomenclature used to describe a document is not a decisive factor to determine the character of the document. Thus, the nomenclature of Delivery Order as an entitlement to delivery is nothing but an endorsed BoL, which entitles the consignee to take delivery of the goods. 6. The Petitioners placed reliance on the following decisions of various courts to support their contentions: 1. C Govindarajulu Naidu Co, v State of Madras Anr. 1952 SCC OnLine Mad 229. 2. State of AP v National Thermal Power Corpn Ltd Ors (2002) 5 SCC 203. 3. United States v Hvoslef 237 US 1 (1915). 4. Fairbank v United States 181 US 283 (1901). 5. Brown Ors v The State of Maryland 25 US 419 (1827)1 6. Anglo Chilean Nitrate Sales Crop. V Alabama 288 US 218 (1933). 7. Ashok Tanwar Anr v State of HP Ors. (2005) 2 SCC 104. 8. Indian Tourist Development Corporation ltd v Assistant Commissioner of Commercial Taxes Anr. (2012) 3 SCC 204. 9. Kiran Spinning Mills v Collector of Customs (2000) 10 SCC 228. 10. AV Fernandez v State of Kerala AIR 195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase of goods . The very language of that Article clearly implies that the object is to place restrictions on the legislative power of the State with respect to imposition of taxes on sales and purchases of goods after the introduction of GST regime on the supply of goods. (iii) List I contemplate a separate tax on sales and purchase of goods. List II acknowledges tax on sales and purchases being distinct and independent of stamp duty on instrument . Article 286 of the Constitution does not restrict the power of the State Government to impose taxes contemplated in List II and not covered in List I. Thus, he submits, the challenge to legislative competence of the State relying on Article 286 of the Constitution is completely misplaced and misconceived. (iv) The MSA does not levy stamp duty on a transaction but always on an instrument . The mere fact of computation of stamp duty on the basis of value of property or otherwise does not make the tax on transaction. (v) The definition of instrument in Section 2(l) of the MSA is not exhaustive. Article 29 of Schedule I of the MSA defines Delivery Order in respect of goods. It has been understood to be an instrument since the enactment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question arises for our consideration: (i) Whether the State of Maharashtra has the legislative competence to levy, impose and collect stamp duty on a Delivery Order, an instrument defined in Section 2(l) of the Maharashtra Stamp Act, 1958, chargeable with duty as mentioned in Article 29 of the First Schedule in the Maharashtra Stamp Act, 1958? 10. For easy and immediate reference, the relevant provisions of the Constitution of India are extracted as under: 246. Subject-matter of laws made by Parliament and by the Legislatures of States. (1) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the Union List ). (2) Notwithstanding anything in clause (3), Parliament, and, subject to clause (1), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the Concurrent List ). (3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n accordance with the provisions of Chapter VIII. (2) The person having custody of any imported goods in a customs area, whether under the provisions of sub-section (1) or under any law for the time being in force, (a) shall keep a record of such goods and send a copy thereof to the proper officer; (b) shall not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permission in writing of the proper officer or in such manner as may be prescribed. (3) Notwithstanding anything contained in any law for the time being in force, if any imported goods are pilfered after unloading thereof in a customs area while in the custody of a person referred to in sub-section (1), that person shall be liable to pay duty on such goods at the rate prevailing on the date of delivery of an arrival manifest or import manifest or, as the case may be, an import report to the proper officer under section 30 for the arrival of the conveyance in which the said goods were carried. 46. Entry of goods on importation. (1) The importer of any goods, other than goods intended for transit or transhipment, shall make entry thereof by presenting electro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthenticity and validity of any document supporting it; and (c) compliance with the restriction or prohibition, if any, relating to the goods under this Act or under any other law for the time being in force. (5) If the proper officer is satisfied that the interests of revenue are not prejudicially affected and that there was no fraudulent intention, he may permit substitution of a bill of entry for home consumption for a bill of entry for warehousing or vice versa. 13. The relevant provisions of the Indian Contract Act 1872 read as under: 148. Bailment bailor and bailee defined. A bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the bailor . The person to whom they are delivered is called, the bailee . Explanation . If a person already in possession of the goods of another contracts to hold them as a bailee, he thereby becomes the bailee, and the owner becomes the bailor of such goods, although they may not have been delivered by way of bailment. 160. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the pith and substance rule, if a law is in its pith and substance within the competence of the Legislature which has made it, it will not be invalid because it incidentally touches upon the subject lying within the competence of another Legislature. While discussing the expression with respect to in Article 246 of the Constitution, the Court has further explained that the expression indicates the ambit of the power of the respective Legislature to legislate as regards the subject matters comprised in the various Entries included in the legislative Lists. Hence, where the entry describes an object of tax, all taxable events pertaining to the object are within that field of legislation unless the event is specifically provided for elsewhere under a different legislative sphere. Thus, the Court has to discover the true character and nature of the legislation while deciding the validity of the legislation. While applying the doctrine of pith and substance to interpret the legislative lists, what requires to be seen is whether an enactment substantially falls within the powers expressly conferred by the Constitution upon the Legislature which enacted it. If it does, it cannot be hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive behind customs duty is to safeguard each nation s economy, jobs, environment, residents etc., by regulating the movement of goods in and out of any country. The primary purpose of customs duty is also to raise revenue. The provisions of the Act indicate its primary objectives which include restricting imports to conserve foreign exchange, protecting imports and exports of goods, achieving the policy objectives of the Governments, regulating export, to safeguard domestic trade, to protect revenue of resources, to protect the industries in India from unfair competition, to prevent smuggling of goods and activities of related nature and to prevent dumping of goods. Duties of customs including export duties fall within List I of Schedule VII of the Constitution. 16. In view of the objects of each enactment and applying the settled tests to the facts and circumstances in the present case, what is to be seen is whether there is any impermissible encroachment by the State on the field occupied by Parliamentary legislation, or whether there is any overlapping. 17. A plain reading of the taxing provision of the MSA suggests that a DO mentioned in Article 29 is indeed an instrument. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied as distinct and not an integral part of an import but more as consequence of import. 21. The definition of imported goods is relevant in this context. Section 2(25) of the Customs Act reads thus: 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. Section 2(11) reads as under: customs area means the area of customs station or a warehouse and includes any area in which imported goods or export goods are ordinarily kept before clearance by customs authority. 22. These definitions demonstrate that the goods are cleared for home consumption only when cleared by customs authority. The customs authority clears the goods as soon as customs duty is paid. The BoE is presented for computation of the customs duty. Once the customs duty is paid, the import process so far as the customs authorities and the Customs Act is concerned ends. The DO is then issued by the shipper upon proof of payment of customs duty and its own charges. The DO does not form part of the chain of the import process and the taxing event occurs beyond the course of import. As Dr Saraf puts it, if a consignee can take de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port had come up for consideration in several decisions of this Court and had been the subject-matter of adjudication in variegated factual setups concerning the transactions and the dealings of the parties involved. Before entering into all the necessary niceties, we may usefully notice that the phrase sale in the course of import carries three essential features (i) that there must be a sale; (ii) that goods must actually be imported into the territory of India; and (iii) that the sale must be part and parcel of the import. A sale would become part and parcel of import if it either occasions such import or if it occurs by way of a transfer of document of title to the goods before the goods cross the customs frontiers of India. 25. Having taken note of the essential features of the phrase sale in the course of import , we may now refer to the cited decisions, to find the expositions therein and examine their applicability to the present case. 25.1. In the Constitution Bench decision of this Court in J.V. Gokal Co., the petitioner company entered into two contracts on 24-3-1954 and 15-4-1954 with the Government of India for selling two consignments of sugar-One of 9500 long tons of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position vis- -vis the import-sale can be summarised thus (1) The course of import of goods starts at a point when the goods cross the customs barrier of the foreign country and ends at a point in the importing country after the goods cross the customs barrier; (2) the sale which occasions the import is a sale in the course of import; (3) a purchase by an importer of goods when they are on the high seas by payment against shipping documents is also a purchase in the course of import, and (4) a sale by an importer of goods, after the property in the goods passed to him either after the receipt of the documents of title against payment or otherwise, to a third party by a similar process is also a sale in the course of import. 25. In the matter of State of Travancore-Cochin Ors (supra), relied upon by the Petitioners, the Constitution Bench of the Supreme Court was dealing with appeals from an order of the High Court of Travancore-Cochin quashing assessments severally made on the respondents therein under the Travancore-Cochin General Sales Tax Act. While considering the extent of protection of Article 286(1)(b) of the Constitution of India available to the Respondents on cashew nut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments while the goods are in transit are a characteristic feature of foreign trade and as they take place in the course of import as defined above, and are regarded commercially as incident to the import transaction, they fall within the terms of clause (1)(b) and would be entitled, in our view, to the protection of that clause, if the State is constitutionally competent to tax such sales, as to which we express no opinion. Our conclusions may be summed up as follows: (1) Sales by export and purchases by import fall within the exemption under article 286 (1)(b). This was held in the previous decision. (2) Purchases in the State by the exporter for the purpose of export as well as sales in the State by the importer after the goods have crossed the customs frontier are not within the exemption. (3) Sales in the State by the exporter or importer by transfer of shipping documents while the goods are beyond the customs frontier are within the exemption, assuming that the State power of taxation extends to such transactions. 26. The ratio in the above decision does not aid the Petitioners. In fact, the process of transfer of title in the goods in the course of import is separate, indep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of India obviously cover the period of time during which the goods are on their import or export journey. We respectfully agree with the aforesaid observations of the learned Judges. The course of the import of the goods may be said to begin when the goods enter their import journey i.e. when they cross the customs barrier of the foreign country and end when they cross the customs barrier of the importing country. 12. The next question is whether the sales by the petitioner to the Government of India are sales in the course of import. From the facts narrated supra, it is seen that the petitioner, pursuant to the earlier contracts entered into with the Government of India, delivered the shipping documents, including the bill of lading to the Government against payment when the goods were on the high seas. In view of the foregoing discussion, it should be held that the sales fall under the fourth principle and therefore they were sales that took place in the course of import of the goods into India. A bill of lading is a writing, signed on behalf of the owner of the ship in which goods are embarked, acknowledging the receipt of the goods, and undertaking to deliver them at the end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said to begin when the goods enter their import journey, i.e., when they cross the customs barrier of the foreign country and end when they cross the customs barrier of the importing country. 29. Petitioners have also placed reliance on the decision in the matter of State of Kerala Ors v. Fr. William Fernandez Ors (supra). This judgment also pertains to entry tax levied on goods imported from different countries and brought into the local area of a State. The legislative competence of the State Legislature to impose entry tax on the goods imported entering into local area of a State was questioned in this case. 95. As noted above, the restriction in the legislative 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. The restriction of Article 286 does not ipso facto be placed while considering the legislative field of the State under Entry 52 and by virtue of Article 286 no restriction can be put on the legislative competence of the State in the field as defined under Entry 52. However, the concept underlined in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nues for ensuring the realisation of the customs duties. 107. 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 the States under List II Entry 52 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. 30. Viewed from another perspective, the Petitioners appear to be equating the phrase customs frontier with a geographical boundary. Correctly understood, and as clearly explained by the Supreme Court in more than one decision, the customs frontier is a concept in a time sequence, viz., that point in the process where the taxing and jurisdictional remit of the customs ends. This has nothing at all to do with the physical or geographical borders. This is the point Dr Saraf makes when he says there is no prohibition on where a stamp duty tax may be applied it is possible even at dockside, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standing, the shipper is not bound to direct release of the goods. Thus, there is a requirement of a DO issuing a release order by the shipper to the custodian/warehouse declaring that all its dues are settled and the lien it holds is extinguished. The DO in the present circumstances has nothing to do with the customs duty nor the clearance by the customs authority for domestic consumption. Dr Saraf candidly says that if the Petitioners are able to bye-pass the requirement of a DO, the State will not have any claim of stamp in such a situation. But the moment there is a DO, the same will not be valid or accepted by the custodian without proof of payment of the stamp duty. 33. Another contention raised by the Petitioners is that a DO is not a document of title under Article 29 of the MSA and hence, it is not an instrument . Section 2(l) of the MSA itself defines an instrument which includes every document which creates any right or liability but specifically does not include certain documents mentioned therein including a BoL. As discussed above, it is a DO which entitles the person named therein to take delivery of the goods after discharging the dues of a shipper. It is only after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchase and sale are effected which is struck at. It is the instrument whereby any property upon the sale thereof is legally or equitably transferred and the taxation is confined only to the instrument whereby the property is transferred. If a contract of purchase or sale or a conveyance by way of purchase and sale, can be, or is, carried out without an instrument, the case would not fall within the section and no tax can be imposed. Taxation is confined to the instrument by which the property is transferred legally and equitably transferred. 36. Finally, we come to the charge of discrimination between importers in the State of Gujarat and those in Maharashtra in view of the decision of the Gujarat High Court in the matter of State of Gujarat (supra) as well as Essar Steel Ltd (supra). This decision was on a bunch of petitions wherein several importers in the State of Gujarat challenged notices issued by the Authorities and relevant guidelines related to charging stamp duty on BoE. The question before the Court was whether stamp duty was liable to be paid on the basis of BoE and such BoE was a DO in respect of goods. The goods in that case, were directly transferred through pi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mportation is required under Sec. 46 enabling the importer of goods to present to the proper officer a bill of entry for home consumption or warehousing. But it does not automatically become delivery order as distinct and different from the clearance of the goods. 76. We hereby hold that by presentation of bill of entry merely on clearance of goods is given for home consumption or for warehousing, and is distinct and different from that of delivery of goods. 37. The Division Bench further went on to hold that BoL is a writing signed on behalf of the owner of the ship in which the goods are embarked acknowledging the receipt of goods and undertaking to deliver them at the end of the voyage subject to such conditions as may be mentioned in the BoL. Thus, the Court has held a BoL to be a DO thereby modifying the decision of the Single Judge to this limited extent. The Division Bench, however, relied upon Regulation 16 of the Gujarat Maritime Board (Landing and Wharfage) Regulations, 1956. Regulation 16 reads as thus: 16. Delivery and admittance of goods on production of delivery order and shipping order: (1) The goods landed at a landing place shall be delivered by the Port Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in the State of Maharashtra for the reasons mentioned above. The Petitioners attempt to question the legislative competence of the State of Maharashtra to levy stamp duty on a DO is spurred by judicial intervention by the Gujarat High Court in a related matter and thus, fails. Conclusion : 41. In view of the foregoing discussion, we hold that the action of the State of Maharashtra in levying stamp duty on DO as provided in Article 29 of Schedule I of the MSA is well within the legislative competence of the State and does not intrude upon the legislative domain of the Parliament as reserved in Entries 41 and 83 of List I of Schedule VII of the Constitution of India and is not ultra vires Article 246(1), 286(1)(b) and 286(2) of the Constitution of India. 42. The alternative prayer of the Petitioners to read down Article 29 of Schedule I of the Stamp Act of 1958 to not apply to a DO issued in respect of goods imported in Maharashtra is untenable. As held by the apex court in the matter of The Authorised officer, Central Bank of India vs Shanmugavelu [2024] 2 SCR 12., the rule of reading down is to be used for a limited purpose of making a particular provision workable and to brin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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