Molasses tax recovery stayed during appeal, with account maintenance required to preserve any future liability

Trade tax on molasses was treated as not immediately recoverable under the VAT/trade tax regime, in line with an earlier Division Bench view that such tax could not be realised and that refund of amounts already collected was warranted. The High Court also noted the Supreme Court's interim stay on refund in the pending appeal, and therefore directed that tax on molasses should not be realised during the appeal. At the same time, the respondents were required to maintain accounts of molasses purchased and sold so that liability could be enforced if the appeal ultimately failed. Relief was thus made conditional on the final outcome of the pending appeal.

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Issues: Whether tax on molasses could be realised under the VAT/trade tax regime in view of the levy of administrative charges under the U.P. Sheera Niyantran Adhiniyam, 1964, and the effect of the pending appeal and interim order of the Supreme Court.

Analysis: The dispute was treated as covered by an earlier Division Bench decision which had held that trade tax on purchase of molasses could not be realised and that refund of tax already collected was warranted. The present matter was disposed of in terms of that precedent, but the Court also took note of the Supreme Court's interim order staying refund in the pending appeal. On that basis, the Court directed that tax on molasses should not be realised during the pendency of the appeal, while the respondents were required to maintain accounts of molasses purchased and sold so that liability could be enforced if the appeal ultimately failed.

Conclusion: The petitioner was granted relief against immediate realisation of tax on molasses, but the relief remained subject to the final outcome of the pending appeal before the Supreme Court.

Final Conclusion: The writ petition was disposed of by following the earlier Division Bench view and the Supreme Court's interim arrangement, with protection against tax recovery during the appeal and preservation of accounts for possible future liability.

Ratio Decidendi: Where the issue is governed by binding precedent and the Supreme Court has granted an interim stay affecting refund, the High Court may dispose of the writ consistently with that precedent while making the relief subject to the final outcome of the pending appeal.

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