TMI Blog2004 (8) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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. - Civil Appeal No. 1741-1753 of 2002, Civil Appeal No. 1728-1740 of 2002, & 5407 of 2004, - - - Dated:- 20-8-2004 - VARIAVA S.N. AND ARIJIT PASAYAT JJ. Harbhagwan Singh, Advocate-General for Punjab, Ms. Rajeeta Raj, Additional Advocate-General (Bimal Roy Jad, Ms. Sunita Pandit and Ms. Naresh Bakshi, Advocates, with them), for the appellants in C.A. Nos. 1728 to 1740 of 2002. H.L. Sibal and T.S. Doabia, Senior Advocates (Amit Sibal, Siddhartha Dave, Ms. Vibha Datta Makhija, Sandeep Suri, Pravir Chowdhury and Prabirananda Chowdhary, Advocates, with them), for the respondents. K.K. Venugopal, Senior Advocate (Krishnan Venugopal, A. Raghunath, Uday N. Tiwary, Prasad Vijay Kumar and A.D. Sikri, Advocates, with him), for the appellant in C.A. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The High Court held that there was no special service being provided to the milk plants in the milk shed areas and that there was no evidence to show that the levy would be used for the benefit of the milk plants. The High Court notes that the principles laid down in Kishan Lal Lakhmi Chand's case (1993) Supp 4 SCC 461 have been diluted in subsequent decisions but still prefers to follow the ratio laid down in that case. The High Court also holds the levy to be illegal and invalid as the State Legislature has impinged upon a field that was already occupied by a Central legislation, namely, the Industries (Development and Regulation) Act, 1951. The High Court holds that both the legislations are aimed at improvement in production and marketing by employing suitable equipments and materials. The High Court holds that both the legislations are aimed at training personnel for running the facilities. The High Court holds that the functions of the Board are not, in pith and substance, any way different from those assigned to the Development Councils. The High Court also holds that as far as the milk plants are concerned, there is no direct benefit to them and that, therefore, the levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for promotion of the dairy industry for socio-economic uplift of milk producers; (v) to establish centres in rural areas for demonstration in the manner in which programmes can be taken up; (vi) to plan and formulate policies for quick genetic upgradation and development of milk animals, where necessary, by arranging for transfer of technology from abroad with Government of India's prior approval; (vii) to arrange and import new varieties of fodder seeds to increase the yield and nutrition of fodder crops and also equipment or machinery for their harvesting and conservation; (viii) to take requisite measures to increase consumption of drinking milk and milk products through proper advertisement and other related channels of media; (ix) to provide assistance of any kind to enhance the scope of export of dairy products; (x) to plan and execute programmes of high level education, research and training in dairy technology and husbandry; (xi) to secure funds from the State Government and the other agencies; and (xii) to exercise the necessary authority in respect of all matters, which are incidental and ancillary to the aforesaid for attaining the objectives of the B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tio set out in Kishan Lal Lakhmi Chand's case (1993) Supp 4 SCC 461, has been held by this Court to be obiter and that the High Court was wrong in relying upon the ratio laid down in that case. In support of this, reliance was placed upon a case of Krishi Upaj Mandi Samiti v. Orient Paper and Industries Ltd. (1995) 1 SCC 655. Reliance was also placed upon B.S.E. Brokers' Forum v. Securities and Exchange Board of India [2001] 104 Comp Cas 506. (2001) 3 SCC 482. Reference was made to the cases of Sreenivasa General Traders v. State of Andhra Pradesh (1983) 4 SCC 353, City Corporation of Calicut v. Thachambalath Sadasivan (1985) 2 SCC 112 and Sirsilk Ltd. v. Textiles Committee (1989) Supp 1 SCC 168. 11.. On the other hand, on behalf of the first respondent it was submitted that the High Court has correctly held it to be a tax and not a fee. Reliance was placed upon Commissioner, Hindu Religious Endowments v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt AIR 1954 SC 282. [1954] SCR 1005, M.P.V. Sundararamier and Co. v. State of Andhra Pradesh [1958] 9 STC 298 (SC). [1958] SCR 1422 and Municipal Corporation of Delhi v. Mohd. Yasin [1983] 142 ITR 737 (SC). (1983) 3 SCC 229. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 produce 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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