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2004 (8) TMI 380 - SUPREME COURTWhether the levy was a tax or a fee - Held that:- Appeal dismissed. 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 organisations engaged in the 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 licensed 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. This 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 tonnes 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 which produce milk products in excess of 500 tonnes per annum have to pay cess. Further, the levy is not on the basis of actual production but on the licensed capacity of their plants. Thus if a milk plant had a licensed 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 litres.
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