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2013 (6) TMI 55 - HC - VAT and Sales TaxAdministrative charges on occupier of a sugar factory - rate not exceeding five rupees per quintal on the molasses sold or supplied by him being enhanced to Rs.11/- per quintal - Petitioner s alleges that the State Government is already charging taxes from the petitioner under the U.P. Sheera Niyantran Adhiniyam, 1964, which is the special enactment for molasses only as such, under the U.P. Trade Tax Act or VAT Act, no tax should be realised as, it amounts to double tax under two different enactments - Held that - As decided in M/s. SAF Yeast Company Private Limited. Vs. State of U.P. and another 2008 (10) TMI 583 - ALLAHABAD HIGH COURT it cannot be said that the State was unaware that molasses is not taxable under the U.P. Trade Tax Act. The action of the opposite parties in collecting and realising the trade tax from the petitioner on the purchase of molasses from various Sugar Mills in the State of U.P. subsequent to the dismissal of Special Leave Petition in State of U.P. and others v. D.S.M. Group of Industries & another 2003 (3) TMI 665 - SUPREME COURT is arbitrary, illegal and unjust. Thus the petitioner is entitled for the refund. As during the pendency of the special appeal before Hon ble Supreme Court 2010 (3) TMI 933 - SUPREME COURT the decision of the Division Bench of this Court, has not been stayed by the Hon ble Supreme Court except providing by interim measure that there will be stay on refund and in case the assessee succeeds in the appeal, it would be entitled to interest which would be imposed on the State at the final hearing of the matter. The respondents shall not realise tax on molasses but shall keep an account of molasses purchased/sold during the pendency of appeal so that in any case, the appeal fails by the judgment of Hon ble Supreme Court, the petitioner shall be held liable to pay tax in accordance with law.
Issues:
1. Interpretation of U.P. Sheera Niyantran Adhiniyam, 1964 regarding administrative charges on molasses. 2. Alleged imposition of double tax under different enactments. 3. Application of the judgment in M/s. SAF Yeast Company Private Limited v. State of U.P. 4. Stay on refund and entitlement to interest as per the interim order of the Supreme Court. Interpretation of U.P. Sheera Niyantran Adhiniyam, 1964 regarding administrative charges on molasses: The petitioner, engaged in manufacturing cattle feed from molasses, challenged the imposition of administrative charges under Section 7-A of the U.P. Sheera Niyantran Adhiniyam, 1964. The Act mandates the occupier of a sugar factory to pay administrative charges to the State Government on molasses sold or supplied. The petitioner argued that the State Government was already levying taxes under this Act, making additional taxation under different statutes unjustifiable. The Court referred to a previous judgment that declared the collection of trade tax on molasses post a specific date as arbitrary and illegal, entitling the petitioner to a refund of the unlawfully collected tax. Alleged imposition of double tax under different enactments: The petitioner contended that the imposition of taxes under the U.P. Sheera Niyantran Adhiniyam, 1964, alongside other tax statutes like the U.P. Trade Tax Act or VAT Act, amounted to double taxation. The Court acknowledged the petitioner's argument but emphasized that administrative charges and taxes might be applicable under the VAT Act if not exempted. The matter was pending before the Supreme Court, which granted leave and expedited the hearing, with a stay on the refund subject to the final outcome of the appeal. Application of the judgment in M/s. SAF Yeast Company Private Limited v. State of U.P.: The Court referred to a Division Bench judgment in the case of M/s. SAF Yeast Company Private Limited v. State of U.P., where it was held that the State's collection of trade tax on molasses post a specific date was unlawful. The Court directed the State to refund the unlawfully collected tax and prohibited further trade tax realization on molasses purchases. The Supreme Court granted leave in the matter, with a stay on the refund pending the appeal outcome. Stay on refund and entitlement to interest as per the interim order of the Supreme Court: The Supreme Court granted leave in the appeal, with a stay on the refund of the unlawfully collected tax. However, if the assessee succeeded in the appeal, they would be entitled to interest imposed on the State. The High Court disposed of the writ petition in line with the Division Bench judgment and the interim order of the Supreme Court, ensuring that tax realization on molasses was halted pending the appeal's final outcome. The respondents were directed to maintain records of molasses transactions during the appeal process to enforce tax liability if the appeal failed.
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