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2008 (10) TMI 583 - HC - VAT and Sales TaxYeast from molasses - refund of the trade tax which the opposite parties have realised from the petitioner through Sugar Mills on the purchase of molasses - whether the State Government is already charging tax from the petitioner under the U.P. Sheera Niyantran Adhiniyam, 1964, which is a Special enactment for molasses only and as such under the provisions of U.P. Trade Tax Act, 1948 no tax can be realised from the petitioner as it will amount to double taxation on the sale of same product i.e. molasses by the State Government under two different enactments? Held that - Sri J.N. Mathur, learned Additional Advocate General has fairly conceded that administrative charges collected by the Sugar Mills on the purchase of the molasses by the petitioner is a tax. He has also conceded that the U.P. Sheera Niyantran Adhiniyam, 1964, being a Special enactment will override the provisions of the U.P. Trade Tax Act, which is a general Act providing for collection of taxes on sale and purchase of goods. The petitioner is entitled for the refund of the trade tax which was illegally realised and collected by the opposite parties on the purchase of the molasses through Sugar Mills of the State of U.P. subsequent to 10.3.2003.
Issues Involved:
1. Whether the administrative charges on molasses under the U.P. Sheera Niyantran Adhiniyam, 1964 constitute a tax. 2. Whether the U.P. Sheera Niyantran Adhiniyam, 1964, being a Special Act, overrides the U.P. Trade Tax Act, 1948. 3. Whether the petitioner is entitled to a refund of the trade tax paid on the purchase of molasses. Issue-wise Detailed Analysis: 1. Administrative Charges as Tax: The petitioner contended that the administrative charges levied under the U.P. Sheera Niyantran Adhiniyam, 1964, are a form of tax. This assertion was supported by the Supreme Court's rulings in Commissioner of Central Excise, Meerut v. Kisan Sahkari Chinni Mills Ltd. and Commissioner of Central Excise, Lucknow, U.P. v. Chhata Sugar Co. Ltd., which confirmed that administrative charges on molasses are indeed a tax. The Additional Advocate General also conceded this point, affirming that these charges are not fees but taxes. 2. Special Act vs. General Act: The petitioner argued that the U.P. Sheera Niyantran Adhiniyam, 1964, being a Special Act, takes precedence over the U.P. Trade Tax Act, 1948, a general enactment. This principle was supported by multiple Supreme Court decisions, including Belsund Sugar Co. Ltd. v. State of Bihar and others and Gobind Sugar Mills Ltd. v. State of Bihar and others. The Additional Advocate General conceded that the Special Act should prevail over the general Act. The court referenced the case of M/s. D.S.M. Group of Industries and another v. Chairman, Trade Tax Tribunal, U.P. and others, where it was held that molasses is not taxable under the U.P. Trade Tax Act, 1948, and the Special Leave Petition against this judgment was dismissed by the Supreme Court. 3. Entitlement to Refund: The petitioner sought a refund of the trade tax paid on molasses, arguing that paying both administrative charges and trade tax constituted double taxation. The court noted that the petitioner paid the trade tax under protest, and after the Supreme Court's decision, it was clear that molasses should not be taxed under the U.P. Trade Tax Act. The Supreme Court in Mafatlal Industries Ltd. and others v. Union of India and others emphasized that unlawful tax collection must be refunded. The court concluded that the petitioner is entitled to a refund of the trade tax paid after the Supreme Court's dismissal of the Special Leave Petition on 10.3.2003. Judgment: The court ruled in favor of the petitioner, stating that the U.P. Sheera Niyantran Adhiniyam, 1964, being a Special Act, overrides the U.P. Trade Tax Act, 1948. Consequently, the trade tax collected on molasses was deemed illegal. The court ordered the opposite parties to refund the trade tax collected from the petitioner on the purchase of molasses from 10.3.2003 onwards. The petitioner was instructed to submit the details of the tax paid within one month, and the refund was to be processed within two months thereafter. The court did not award any costs. Conclusion: The court's decision reinforced the principle that a Special Act prevails over a general Act, and unlawful tax collections must be refunded. The petitioner was entitled to a refund of the trade tax paid on molasses, as the administrative charges already constituted a tax under the Special Act.
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