Licensed-capacity cess on milk plants was held arbitrary and discriminatory; repugnancy with Central law was not established.

State legislation was not repugnant to the Industries (Development and Regulation) Act, 1951 merely because both operated in the dairy sector; actual inconsistency with a Central enactment was required, and none was shown. The cess on milk plants based on licensed capacity was arbitrary and discriminatory because it taxed installed capacity rather than actual production or use, imposed a burden on a limited class of units, and lacked a rational nexus with the object of the law. The court declined to read down the levy after its abolition. The challenge on occupied field failed, the cess was not sustained, and the question whether the impost was a tax or a fee remained open.

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Issues: (i) Whether the State legislation was invalid on the ground that the field was already occupied by the Industries (Development and Regulation) Act, 1951 and therefore repugnant; (ii) Whether the cess levied on milk plants on the basis of licensed capacity was arbitrary and discriminatory.

Issue (i): Whether the State legislation was invalid on the ground that the field was already occupied by the Industries (Development and Regulation) Act, 1951 and therefore repugnant.

Analysis: Repugnancy must exist in fact and not as a mere possibility. In the absence of any specific provision in the Central law levying a cess or fee, there was no basis to hold that the State enactment was overridden merely because both laws touched the dairy sector or related activities. The State law could not be struck down on a speculative plea of occupied field.

Conclusion: The challenge on the ground of occupied field and repugnancy failed.

Issue (ii): Whether the cess levied on milk plants on the basis of licensed capacity was arbitrary and discriminatory.

Analysis: The levy was imposed not on actual production or consumption, but on the licensed capacity of registered milk plants above the statutory threshold. This created an unequal burden on a limited class of units, while excluding farmers, co-operative societies, and smaller plants. The burden continued even during periods of low production, closure, repair, or non-use, without any rational nexus shown between the measure of levy and the object of the enactment. The suggested reading down was declined because the cess had already been abolished and such rewriting would affect persons not before the Court.

Conclusion: The cess was arbitrary and discriminatory and could not be sustained.

Final Conclusion: The appeals failed and the striking down of the cess was left undisturbed, though the question whether the impost was a tax or a fee was not finally decided.

Ratio Decidendi: A levy imposed on installed or licensed capacity, without a rational basis linked to the object of the law and without equal treatment of similarly situated persons, is arbitrary and discriminatory; repugnancy cannot be inferred unless there is actual inconsistency with a Central enactment.

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