2013 (5) TMI 762 - HC - VAT and Sales Tax

Court protects sugar traders from entry tax on purchases per revoked policy; emphasizes compliance with exemption conditions.

The court ruled in favor of the petitioners engaged in sugar trading, granting protection against coercive measures for entry tax realization on sugar ... Seizure of sugar - Entry tax demand - Held that:- Dispose of this writ petition with the direction that no coercive steps shall be taken against the petitioner by the respondents-authorities for realization of entry tax towards its sugar purchase from any of the unit covered under Sugar Industry Promotion Policy, 2004, provided requisite certificate is produced by the petitioner before the concerned authorities. However, this order will be subject to the final outcome of writ petition No. 2686 (M/B) of 2008 pending before this court. Issues:1. Seizure of sugar by authorities on the pretext of entry tax liability.2. Exemption on entry tax under the Sugar Industry Promotion Policy, 2004.3. Revocation of policy and its impact on dealers.4. Interim order in Writ Petition No. 2686 (M/B) of 2008.5. Interpretation of notification dated May 20, 2005.6. Decision on the writ petition challenging the actions of authorities.Analysis:1. The petitioners, engaged in sugar trading, raised concerns about authorities seizing sugar under the pretext of entry tax liability to manufacturers or the taxing department. They argued that the respondents were demanding undertakings due to a notification from May 20, 2005, which exempted entry tax on non-levy sugar from specific manufacturing units under the Sugar Industry Promotion Policy, 2004.2. The petitioners highlighted that the State Government had promised incentives, including entry tax exemption, under the 2004 policy. However, in 2007, the policy was revoked, impacting dealers purchasing sugar from the designated manufacturing units. The court noted the importance of the notification dated May 20, 2005, which exempted new units from entry tax, subject to specified conditions.3. The authorities defended their actions post-policy revocation, stating that the incentives were withdrawn, justifying the seizure of sugar. The court acknowledged the arguments but emphasized that the petitioners were entitled to protection under the exemptions they enjoyed before the policy revocation, as seen in the interim order of Writ Petition No. 2686 (M/B) of 2008.4. Referring to the interim order in Writ Petition No. 2686 (M/B) of 2008, the court directed that no coercive steps should be taken against the petitioners for entry tax realization on sugar purchases from units covered by the 2004 policy. The petitioners were required to provide the necessary certificate to authorities, with the decision subject to the final outcome of the ongoing writ petition.5. The court extensively analyzed the notification dated May 20, 2005, which outlined the conditions for entry tax exemption on non-levy sugar from specific manufacturing units. The interpretation of this notification was crucial in determining the applicability of exemptions and the obligations of the dealers in furnishing certificates to the assessing authorities.6. Ultimately, the court disposed of the writ petition, ensuring protection for the petitioners against coercive measures for entry tax realization, provided they complied with the conditions specified in the notification. The decision was contingent upon the final resolution of Writ Petition No. 2686 (M/B) of 2008, underscoring the importance of the ongoing legal proceedings in determining the rights of the parties involved.