Goa State Co-Op Milk Producers Union LTD. vs. State Of Goa Through Chief Secretary And 2 Ors.

Held

The Court held that the Goa Cess on Fluid Milk (Control) Act, 2000, and the Goa Cess and Fluid Milk (Control) Rules, 2001, are constitutionally valid. Regarding Issue 1, the Court rejected the contention of lack of legislative competence and violation of Article 301, finding the Act to be within the State legislature's competence. The Court reasoned that the Act's pith and substance relate to the user of State facilities and infrastructure, and any incidental encroachment on other fields is to be ignored. The Court also found that the Milk and Milk Product Order, 1992, did not occupy the same field as the State legislation. Regarding Issue 2, the Court held that Rule 3 is not ultra vires Section 4 of the Act. The Court interpreted 'consumption' in Section 4 broadly to include various stages, including sale, and concluded that the Rule, by determining the rate of cess on milk meant for sale, which is a step towards consumption and involves the use of State infrastructure, is consistent with the parent Act. The Court upheld the validity of the Act and Rules, dismissing the petition.

Facts

The petitioner, Goa State Co-operative Milk Producers Union Limited, sought a declaration that the Goa Cess on Fluid Milk (Control) Act, 2000, and Rule 3 of the Goa Cess and Fluid Milk (Control) Rules, 2001, were unconstitutional and void. The petitioner also sought a refund of Rs. 1,09,19,313/- with interest, claiming it was recovered without legal validity. The High Court had earlier directed that the collection of cess would be subject to the outcome of the petition, with a provision for refund with interest if the petitioner succeeded. The petitioner argued that the levy lacked legislative competence, violated Article 301 of the Constitution, and was repugnant to the Essential Commodities Act, 1955. Further challenges were raised regarding the Act's validity post the 101st Constitutional Amendment.

Key Issues

1. Whether the Goa Cess on Fluid Milk (Control) Act, 2000, and specifically Section 4 thereof, is unconstitutional and void due to lack of legislative competence of the State legislature, particularly in light of the 101st Constitutional Amendment and the omission of Entry 52 and Entry 54 from List II of the Seventh Schedule, and whether it violates Article 301 of the Constitution without being saved by Article 304. The petitioner argued that the levy, imposed on the sale of milk, falls outside the State's competence post-amendment and is not saved by Article 304 as Presidential assent was not obtained. The respondents contended there is a presumption of constitutionality and the State has competence. 2. Whether Rule 3 of the Goa Cess and Fluid Milk (Control) Rules, 2001, is ultra vires the parent Act, specifically Section 4, by imposing cess on milk brought into the State for sale, which is distinct from the 'consumption' predicate in Section 4. The petitioner argued that Rule 3 imposes cess on a different predicate (sale) than Section 4 (consumption), making it inconsistent and beyond the scope of the Act. The respondents argued that 'consumption' is a wide term encompassing sale and that the Rule correctly determines the rate for milk meant for sale and subsequent consumption, utilizing State infrastructure.