Special molasses control law barred trade tax levy, and unlawfully collected tax had to be refunded under Article 265.

Where a special statutory regime governing molasses occupied the field, the general trade tax law could not validly be applied to the same purchase transaction. The Court accepted that the administrative charges under the U.P. Sheera Niyantran Adhiniyam, 1964 operated as the controlling levy, so trade tax on molasses was unsustainable. Relying on Article 265, it held that tax collected without authority of law could not be retained by the State and had to be restored. The petitioner was therefore entitled to refund of trade tax unlawfully realised after 10.03.2003, and further collection was restrained.

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Issues: Whether trade tax could be levied and collected on molasses purchased by the petitioner when administrative charges were already being recovered under the special molasses control enactment, and whether the petitioner was entitled to refund of the trade tax collected after the law had been settled against such levy.

Analysis: The dispute turned on the effect of the U.P. Sheera Niyantran Adhiniyam, 1964, under which administrative charges on molasses were treated as tax, and the U.P. Trade Tax Act, 1948, which was invoked to levy trade tax on the same transaction. The Court accepted that the special enactment occupied the field in relation to molasses and that the general trade tax law could not override it. It further relied on the principle that Article 265 of the Constitution of India forbids collection of tax without authority of law, and that an unlawful levy collected by the State must be restored to the person from whom it was taken. In view of the earlier binding position that molasses was not taxable under the trade tax law, continued collection after the dismissal of the earlier challenge was held to be illegal and unjust.

Conclusion: Trade tax could not validly be realised from the petitioner on the purchase of molasses, and the petitioner was entitled to refund of the amount collected after 10.03.2003.

Final Conclusion: The writ petition was allowed in part, with relief confined to restraining further trade tax collection on molasses and directing refund of the tax unlawfully realised after the relevant date.

Ratio Decidendi: Where a special statutory regime governing molasses operates in the same field, a general sales or trade tax levy on the same transaction is unsustainable, and tax collected without authority of law must be refunded under Article 265 of the Constitution of India.

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