Tax recovery on molasses stayed pending Supreme Court appeal, while purchaser liability remained subject to final outcome.

Tax on molasses under the VAT/trade tax regime was treated as not realisable during the pendency of the Supreme Court appeal, in line with the earlier Division Bench view that such tax was not recoverable and that illegally collected tax was refundable. The protection was made subject to the Supreme Court's final determination and interim order, so the purchasers' ultimate liability remained open. The respondents were directed to maintain accounts of molasses purchased and sold to preserve the position for enforcement in accordance with law if the appeal was decided against the assessee.

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Issues: Whether tax on molasses could be realised from the petitioner under the VAT / trade tax regime despite the levy of administrative charges under the U.P. Sheera Niyantran Adhiniyam, 1964, and whether the writ petition should be disposed of in terms of the earlier Division Bench decision subject to the Supreme Court's interim order.

Analysis: The controversy was treated as covered by the earlier Division Bench judgment holding that trade tax was not realisable on purchase of molasses and directing refund of tax illegally collected. The Court accepted that the respondents could not realise tax on molasses during the pendency of the matter, but noted that the purchasers' liability would remain subject to the final decision of the Supreme Court in the pending appeal. The Court also recorded that the respondents should keep account of molasses purchased and sold so that liability could be enforced in accordance with law if the Supreme Court ultimately decided against the assessee.

Conclusion: The petitioner was granted protection against realisation of tax on molasses during the pendency of the Supreme Court appeal, and the writ petition was disposed of in terms of the earlier Division Bench ruling and the Supreme Court's interim order.

Final Conclusion: The challenge was not independently re-adjudicated on fresh reasoning, but the petitioner obtained interim relief against tax recovery on molasses, with the entire arrangement made subject to the final result of the pending appeal.

Ratio Decidendi: Where a prior binding decision has held that tax is not recoverable on molasses, and that decision has not been stayed except to the limited extent of refund, the Court may restrain tax recovery pending the Supreme Court's final determination while preserving accounts for possible future liability.

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