2014 (4) TMI 915 - HC - VAT and Sales Tax

Liability of entry tax to the manufacturer of sugar or the taxing department and for releasing the same in view of the policy and notification issued in exercise of powers u/s 4 (B) of the U.P. Tax on Entry of Goods Act, 2000 exempting form entry tax on non-levy sugar manufactured in a new unit effect of exemption being taken away - Held that - The State has not been able to indicate any supervening public interest, which required the scheme to be withdrawn and that the petitioners are entitled to the limited protection of the exemptions at this stage, which they were enjoying on the date when the policy is said to have been revoked i.e.4th June, 2007 Directed that no coercive steps shall be taken against the petitioners for realization of the administrative charges, entry tax, VAT and purchase tax, till the date of listing - writ petition dismissed Decided in favour of assessee.

Issues Involved:
1. Seizure of sugar by authorities on the pretext of entry tax liability.
2. Exemption on entry tax under Sugar Industry Promotion Policy, 2004.
3. Revocation of policy and its impact on dealers.
4. Legal interpretation of notification dated 20th May, 2005.
5. Writ petition No. 2686 (M/B) of 2008 and its interim order.
6. Decision on the writ petition challenging authorities' actions.

Analysis:
1. The petitioners, a trading company and its manager, raised concerns over authorities seizing sugar, alleging entry tax liability. The petitioners contended that they were purchasing sugar from a group entitled to entry tax exemption under the Sugar Industry Promotion Policy, 2004. However, the State Government revoked the policy in 2007, leading to disputes regarding tax obligations on sugar purchases.

2. The petitioners highlighted the notification dated 20th May, 2005, which exempted dealers from entry tax on non-levy sugar from new or expanded manufacturing units under the policy. The exemption was subject to conditions, including furnishing a certificate from the manufacturing unit and refraining from paying tax to the manufacturer directly.

3. The State Government's revocation of the 2004 policy raised questions about the legality of authorities' actions against dealers benefiting from the earlier incentives. The court noted the ongoing writ petition (No. 2686 (M/B) of 2008) filed by a company affected by the policy change, which resulted in an interim order protecting dealers from coercive measures for tax recovery.

4. The court analyzed the notification's language, emphasizing that dealers purchasing from units covered under the 2004 policy were exempt from entry tax. The court referred to the revocation's impact on dealers' tax liabilities and the need for compliance with the conditions specified in the notification for claiming the exemption.

5. In the interim order of writ petition No. 2686 (M/B) of 2008, the court acknowledged the petitioners' entitlement to protection under the previous policy's exemptions until a final decision was reached. The court restrained authorities from taking coercive actions for tax recovery against the petitioners pending the resolution of the main writ petition.

6. Consequently, the court disposed of the present writ petition, directing authorities not to take coercive steps for entry tax recovery from the petitioners if they provided the necessary certificate related to sugar purchases under the 2004 policy. The court's decision was subject to the outcome of the pending writ petition challenging the authorities' actions, ensuring the petitioners' protection until a final resolution was reached.

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