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2013 (4) TMI 323 - HC - VAT and Sales TaxDouble taxation under the U.P. Sheera Niyantran Adhiniyam, 1964 & under the U.P. Trade Tax Act or VAT Act - Refund - Held that - we dispose of the instant writ petition finally in terms of the Division Bench judgment of this Court in the case of 2008 NTN (Vol. 38) 296 M/s. SAF Yeast Company Private Limited. Vs. State of U.P. and another, read with interim order passed by the Hon ble Supreme Court dated 8.3.2010 (supra). The benefit of the present order shall be subject to final outcome of pending appeal in the Hon ble Supreme Court. During the pendency of the special appeal before Hon ble Supreme Court, we provide that 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. Allegation of double taxation under U.P. Trade Tax Act and VAT Act. 3. Refund of trade tax collected on molasses post a specific court judgment. 4. Stay on refund and interest imposition by the Supreme Court pending appeal. Interpretation of U.P. Sheera Niyantran Adhiniyam, 1964: The petitioner, engaged in manufacturing cattle feed from molasses, challenged the imposition of administrative charges under Section 7-A of the Act by the State Government. The Act mandates the payment of administrative charges by the occupier of a sugar factory on molasses sold or supplied, with the rate being enhanced to Rs. 11 per quintal. The petitioner argued that this Act is a special enactment for controlling molasses and that no additional tax should be levied under the U.P. Trade Tax Act or VAT Act to avoid double taxation. The court referenced a previous judgment allowing a similar writ petition and directing the refund of unlawfully collected trade tax on molasses post a Supreme Court decision. Allegation of Double Taxation: The petitioner contended that the State Government's collection of taxes under the U.P. Sheera Niyantran Adhiniyam, 1964, along with potential taxation under the U.P. Trade Tax Act or VAT Act, amounted to double taxation under distinct enactments. The court, citing a previous ruling, held that such double taxation was arbitrary, illegal, and unjust. Consequently, the court ordered the refund of trade tax collected post a specific date, emphasizing the petitioner's entitlement to the refund of unlawfully realized taxes. Refund of Trade Tax Post Court Judgment: In line with the previous court decision, the present writ petition was disposed of, adhering to the judgment that directed the State not to levy trade tax on molasses purchases. The court specified that the benefit of the order would be contingent upon the final outcome of the pending appeal in the Supreme Court. Additionally, the court directed the respondents to maintain records of molasses transactions during the appeal's pendency to ensure compliance with any future tax liabilities if the appeal outcome favored the State. Stay on Refund and Interest Imposition by Supreme Court: The Supreme Court granted leave for appeal and expedited the hearing while imposing a stay on the refund of taxes. However, in the event of the assessee succeeding in the appeal, the State would be liable to pay interest as determined during the final hearing. The Division Bench's decision, which favored the petitioner, remained in effect pending the Supreme Court's final ruling, ensuring that tax collection on molasses was halted during the appeal process.
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