Case: Punjab Dairy Development Board  Vs. Cepham Milk Specialities Ltd.

620] repugnancy must exist as a fact and not as a mere possibility. In the absence of any specific order or provision the question of repugnancy cannot arise. Admittedly, the Central Legislation levies no cess or fee. Thus, there can be no question of repugnancy if a fee were to be levied. 13. While the High Court was wrong in these conclusions, the question would still remains whether the levy was a tax or a fee. In the view which we are taking, and which is set out hereinafter, it is not necessary for us to decide this question. We have the question open. 14. We find that the High Court was, however, right in concluding that the levy, even if it be a fee, is arbitrary and discriminatory. The levy is ostensibly for the purpose of co-ordination between organizations engaged in dairy sector and to develop modern dairy farming technology. However, the levy is on milk plants at the rate of 10 paise per litre of the licenced capacity. The term milk plant has been defined under Section 2(d) to mean a milk handling, processing or manufacturing unit registered under the Milk and Milk Products Order, 1992 of the Government of India. The Order has been issued under the Essential Commodities Act. Under this Order, only milk plants having an installed capacity for handling milk in excess of 10,000 litres per day or milk products in excess of 500 tones per annum require registration. Thus, only such milk plants, i.e. milk plants which have an installed capacity to handle 10,000 litres per day or who produce milk products in excess of 500 per annum have to pay cess. Further, the levy is not on the basis of actual production but on the licenced capacity of their plants. Thus if a milk plant had a licenced capacity of 40,000 litres, even though the actual consumption was only 10,000 litres, they would still have to pay cess at the rate of 10 paise per litre on 40,000 litre. It could not be denied that milk production and consumption vary from month to month and from season to season. Irrespective of such variation and without any regard to the actual production or consumption, the levy is on the installed capacity only. The levy was for the purposes of uplifting the standards of the Dairy Industry. Yet there is no levy on the farmers or co-operative societies, who produces the milk, nor on plants whose installed capacity is less than 10,000 litres per day. No rational explanation could be given as to why the levy was only on these plants. The only explanation given was that these plants could apply for reduction of the installed capacity in case they were not capable of using their entire capacity. It was stated that on such an application being made they would be allowed to reduce their installed capacity. We are not impressed by this explanation. One fails to understand why a milk plant should apply for reducing its capacity. It may consume, as per its capacity in seasons when that quantity of milk is available, but it may not be able to consume, as per its capacity in seasons or at times when milk of that quantity is not available. Further, due to temporary closure of some machines for purposes of repairs or maintenance they maybe consuming less during a particular period. Further, even if there is no production/consumption and even if the plant is shut down the cess would still have to be paid. This would be so even if the closure is for more than six months in any particular year. Irrespective of what their consumption/production is, these plants would have to continue to pay cess at the rate of 10 paise per litre of their installed capacity. We find that such a levy is arbitrary. 15. We also find that the levy is discriminatory. There is no levy on the farmers and co-operative societies, who produce the milk and/or milk plants whose capacity is less than 10,000 litres per day. No explanation is given which justified this discrimination. Faced with this situation, it was submitted that this Court could read down the Act. It was submitted that from the definition of the term milk plant in Section 2(d) of the Act, the words which was registered under the Milk and Milk Products Order, 1992 be deleted. It was submitted that the words licenced capacity in Section 12 be also deleted. It was submitted that it is settled law that wherever it is possible to uphold legislation by reading it down the Court must do so. 16. There can be no dispute with the principle that if possible the provision of the Statute must be saved by, if necessary, reading them down. However, in this case, we are unable to accept this submission. As stated above, the Act has been amended in 2004. This levy is already abolished. At present, the purchase tax is again being levied. For the period during which the Act subsisted, it is not possible for us to read it down inasmuch as it would now affect persons, who never went to Court because during the period it existed it did not apply to them. Such parties are not before Court. We thus see no reason to delete the words as suggested on behalf of the Appellants. 17. It was next submitted that the ground that the Act is discriminatory and violative and, therefore, liable to struck down, has not been taken in the Writ Petitions. We are unable to accept this submission. In our view, the Writ Petitions contain the necessary averments and these have also been met in the reply of the Respondents. 18. Thus, even though the reasoning of the High Court may be erroneous, the ultimate result is that the levy of cess requires to be struck down as being arbitrary and discriminatory. In this view of the matter, we see no reason to interfere.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]11. In our view, the law is quite well settled. As the High Court has itself noticed the principles laid down in M/s Kishan Lal Lakhmi Chands case (supra) have been diluted by subsequent decisions. It has been held that the observations in the above case are obiter. This being the position, the High Court was not correct in following the principles laid down in M/s Kishan Lal Lakhmi Chands case (supra)12. Even otherwise we find that the High Court was wrong in concluding that the field was already occupied by a Central Legislation, namely, the Industries (Development and Regulation Act, 195114. We find that the High Court was, however, right in concluding that the levy, even if it be a fee, is arbitrary and discriminatory. The levy is ostensibly for the purpose oforganizations engaged in dairy sector and to develop modern dairy farming technology. However, the levy is on milk plants at the rate of 10 paise per litre of the licenced capacity. The term milk plant has been defined under Section 2(d) to mean a milk handling, processing or manufacturing unit registered under the Milk and Milk Products Order, 1992 of the Government of India. The Order has been issued under the Essential Commodities Act. Under this Order, only milk plants having an installed capacity for handling milk in excess of 10,000 litres per day or milk products in excess of 500 tones per annum require registration. Thus, only such milk plants, i.e. milk plants which have an installed capacity to handle 10,000 litres per day or who produce milk products in excess of 500 per annum have to pay cess. Further, the levy is not on the basis of actual production but on the licenced capacity of their plants. Thus if a milk plant had a licenced capacity of 40,000 litres, even though the actual consumption was only 10,000 litres, they would still have to pay cess at the rate of 10 paise per litre on 40,000 litre. It could not be denied that milk production and consumption vary from month to month and from season to season. Irrespective of such variation and without any regard to the actual production or consumption, the levy is on the installed capacity only. The levy was for the purposes of uplifting the standards of the Dairy Industry. Yet there is no levy on the farmers ore societies, who produces the milk, nor on plants whose installed capacity is less than 10,000 litres per day. No rational explanation could be given as to why the levy was only on these plants. The only explanation given was that these plants could apply for reduction of the installed capacity in case they were not capable of using their entire capacity. It was stated that on such an application being made they would be allowed to reduce their installed capacity. We are not impressed by this explanation. One fails to understand why a milk plant should apply for reducing its capacity. It may consume, as per its capacity in seasons when that quantity of milk is available, but it may not be able to consume, as per its capacity in seasons or at times when milk of that quantity is not available. Further, due to temporary closure of some machines for purposes of repairs or maintenance they maybe consuming less during a particular period. Further, even if there is no production/consumption and even if the plant is shut down the cess would still have to be paid. This would be so even if the closure is for more than six months in any particular year. Irrespective of what their consumption/production is, these plants would have to continue to pay cess at the rate of 10 paise per litre of their installed capacity. We find that such a levy is arbitrary15. We also find that the levy is discriminatory. There is no levy on the farmers ande societies, who produce the milk and/or milk plants whose capacity is less than 10,000 litres per day. No explanation is given which justified this discrimination. Faced with this situation, it was submitted that this Court could read down the Act. It was submitted that from the definition of the term milk plant in Section 2(d) of the Act, the words which was registered under the Milk and Milk Products Order, 1992 be deleted. It was submitted that the words licenced capacity in Section 12 be also deleted. It was submitted that it is settled law that wherever it is possible to uphold legislation by reading it down the Court must do so16. There can be no dispute with the principle that if possible the provision of the Statute must be saved by, if necessary, reading them down. However, in this case, we are unable to accept this submission. As stated above, the Act has been amended in 2004. This levy is already abolished. At present, the purchase tax is again being levied. For the period during which the Act subsisted, it is not possible for us to read it down inasmuch as it would now affect persons, who never went to Court because during the period it existed it did not apply to them. Such parties are not before Court. We thus see no reason to delete the words as suggested on behalf of the Appellants18. Thus, even though the reasoning of the High Court may be erroneous, the ultimate result is that the levy of cess requires to be struck down as being arbitrary and discriminatory. In this view of the matter, we see no reason to interfere.