Doctrine of original package
On these considerations, there is really nothing else to be said on the question before us, but in view of the very great stress laid upon the American doctrine of “original package”, it seems necessary to deal with what that doctrine means and under what conditions it was evolved. The wide meaning of ‘import’ on which reliance on behalf of the petitioner was adopted for the first time by Marshall C. J. in ‘Brown v. Maryland’, (1827) 25 U. S. 419 in which the facts were these. The state of Maryland had passed an Act prohibiting importers of foreign goods from selling their goods without taking a license for which a certain amount had to be paid. The question which was raised in that case was that the Act was repugnant to the provisions of the constitution which provided that “no State shall without the consent of Congress allow any imposts or duties on imports or exports except what may be absolutely necessary for executing its inspection laws.” In the course of his judgment, Marshall. C. J. observed ‘inter alia’ as follows:
“There is no difference, in effect, between a power to prohibit the sale of an article and a power to prohibit its introduction into the country. The one would be a necessary consequence of the other. No goods would be imported if none could be sold. No object of any description can be accomplished by laying a duty on importation, which may not be accomplished with equal certainty by laying a duty on the thing imported in the hands of the importer.” (P. 439)
The learned Chief Justice further observed:
“sale is the object of importation, and is an essential ingredient of that intercourse, of which importation constitutes a part. It is as essential an ingredient, as indispensable to the existence of the entire thing, then, as importation itself. It must be considered as a component part of the power to regulate commerce. Congress has a right, not only to authorise importation, but to authorise the importer to sell.” (p. 447).
Upon principles so stated, what is known as the “original package” doctrine was evolved in America, which was applied not only to commodities imported from foreign countries but also to commodities which were the Subject of inter-state ‘commerce. This doctrine laid down that importation was not over so long as the goods were in the original package and hence a State had no power to tax imports until the original package was broken or there was one sale while the goods were still in the original package. The principle upon which this doctrine was founded is explained by Marshall C. J. in the case referred to in these Words:
“There must be a point of time when the prohibition ceases, and the power of the State of tax commences; we cannot admit that this point of time is the instant that the articles enter the country. It is sufficient for the present to say, generally, that when the importer has so acted upon the thing imported that it has become incorporated and mixed up with the mass of property in the country, it has, perhaps, lost its distinctive character as an import, and has become subject to the taxing power of the State; but while remaining the property of the importer, in his warehouse, in the original form of package in which it was imported, a tax upon it is too plainly a duty on imports to escape the prohibition in the Constitution,” (p. 441) 11.
The doctrine was reiterated in a number of cases, and in Leisy v. Hardin’, (1890) 135 U.S 100, it was laid down that:
“the importers had the right to sell in the original packages unopened and unbroken, articles brought into the State from another State or territory notwithstanding a statute of the State prohibiting the sale of such articles except for purposes mentioned therein and under a licence from the State.”
The American writers have however pointed out the difficulty which arose from time to time in applying the “original packages” doctrine, since sometimes very intricate questions arose before the courts, such as whether the doctrine applied to the larger cases only or to the smaller packages contained therein, or whether it applied to the smaller paper packages of cigarettes taken from loose piles of packages at the factory and transported in baskets. The difficulty in applying the doctrine was particularly experienced in working prohibition schemes, and to combat its mischief and uncertainty, new legislative measures had to be passed by the congress like the Wilson Act, WebbKenyon Act, etc. I do not wish to pursue the matter, but wish only to point out that the doctrine has no place in this country, having regard to the scheme of legislation that has been outlined in the Government of India Act, 1935 and in the present Constitution, in which the various entries in the Legislative Lists have been expressed in Clear and precise language. In ‘The Province of Madras v. Boddu Paidanna and Sons’, 1942 F C R 90, Gwyer C. J. while expressing his profound respect for the views expressed by Marshall C. J. in ‘Brown v. Maryland (supra)’, mildly hinted that it was easier to follow the line of reasoning of Thompson J. in his dissenting judgment in that case and concluded with the following remarks:
“Next, it is to be observed that the American Constitution also provides that congress alone has power “to regulate commerce with foreign nations, among the several States, and with the Indian tribes”; and it was held that the Maryland tax was no less repugnant to this provision also. Marshall C. J. asked:”To what purposes should the power to allow importation be given, unaccompanied with the power to authorise the sale of the thing imported? congress has a right, not only to authorise importation, but to authorize the importer to sell. What does the importer purchase, if he does not purchase the privilege to sell?” On this view of the commerce Clause, it would indeed be difficult to recognize the right of the State to impose a tax upon the first sale of the commodity, at any rate so long as it remained in the importer’s hands. In the Indian Constitution Act no such question arises; and the right of the Provincial Legislature to levy a tax on sales can be considered without any reference to so formidable a power vested in the Central Govt. Lastly, the prohibition in the American Constitution is against the laying of “any imposts or duties on imports or exports”, the prohibition is not merely against the laying of duties of customs, but is expressed in what we conceive to be far wider terms; and it does not appear to us that it would necessarily follow from the principle of the Maryland decision that in India the payment of customs duty on goods imported from abroad or the payment of an excise duty on goods manufactured or produced in India can be regarded as conferring some kind of license or title on the importer or manufacturer to sell his goods to any purchaser without incurring a further liability to tax. That was the view which commended itself to the court in the ‘Maryland Case’ and it was a view adopted and argued before us. The analogy with the American case is an attractive one; but for the reasons which we have given we are wholly unable to accept it.” (p. 106-7).