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The tax in respect of goods has sometimes been referred to as a tax on an

aspect of goods, and sometimes a taxable event. But there can be no


overlapping in the field of taxation and if such a tax is specifically provided
for in a legislative entry, the same effectively narrows the field of taxation
available under other related entries. The State therefore cannot, under the
guise of levying tax under any of the entries of the State List, impinge on the
exclusive power of the Union under any of the entries of the Union List. The
State, therefore, while exercising the power under Entry 52 of the State List
i.e. while levying tax on the entry of the goods into a local area for
consumption, sale or use therein, cannot levy tax on the fields covered by the
Union List or cannot impinge the exclusive power of the Union to levy tax or
duties under the Union List. Therefore, the State while levying tax under
Entry 52 of List II cannot entrench upon the power of the Union to levy tax or
duties on certain transactions and/or events which fall within the exclusive
domain of the Union by virtue of the specific entry in List I of the VIIth
Schedule to the Constitution of India.
Articles 245 and 246 distribute legislative powers between Parliament and
the State Legislature as per the three lists set forth in the VIIth Schedule to
the Constitution of India. Entry 41 deals with trade and commerce with
foreign countries, import and export across customs frontiers, definition of
customs frontiers. Entry 83 deals with duties of custom including export
duties. Thus, Union is empowered to make any law with regard to trade and
commerce with foreign countries as well as the levy of the duties of custom.
The duty of customs is leviable on the import of the goods into India. All levy
connected or related to the import of the goods is within the exclusive
domain of the Union.
When goods are imported from abroad, the transaction is a single transaction
commencing with agreement of sale with overseas suppliers and terminating
when the act of importation is for use in the local area of the State. It is the
entry into a local area for use or consumption that gives rise to a levy. Entry
52 of the State List does not contemplate levy of entry tax on goods imported
from outside the country inasmuch as the same would amount to levy of tax
on import of goods into the country which is a subject matter covered by
Entry 83 of List I of VIIth Schedule to the Constitution of India.
The object of insertion of Entries 41 and 83 in the Union List is to place the
import as well as the foreign trade beyond the taxing powers of the State. It
is Parliament alone which can make laws with respect to foreign trade. If the
import or export transactions are to be subjected to any duties or taxation, it
is only the Union which can impose such a tax. A transaction which amounts
to import of goods into the territory of India cannot be converted into entry of
goods into a local area so as to empower the State to levy entry tax on such
import from outside the country. If such an interpretation is given to Entry 52
of List II of the VIIth Schedule to the Constitution of India, the very purpose of
Entries 41 and 83 of the List I of the Constitution of India shall become otiose.
Further Article 286 of the Constitution of India also puts restrictions upon the
imposition of tax on the sale or purchase of goods where such sale and
purchase inter alia takes place in course of import into the territory of India or
export of the goods outside the territory of India. The object and purpose of
putting such restriction on the power of the State to impose tax in course of
import into the territory of India or export of the goods outside the territory of
India is in conformity with entry 41 of List I of Seventh Schedule of
Constitution of India by which trade and commerce with foreign country in
the course of import and export of goods has been kept within the exclusive
domain of the Union.