After enactment of GST, administrative Charges on Molasses can not be levied-Judgment

After enactment of GST, administrative Charges on Molasses can not be levied under the provision of the U.P. Sheera Niyantran Adhiniyam 1964-Allahabad High Court  stays the demand. 

ABCAUS Case Law Citation:
ABCAUS 2259 (2018) (03) HC

In a recent judgment the Allahabad High Court has stayed the Administrative Charges on sale of Molasses under the provision of the U.P. Sheera Niyantran Adhiniyam, 1964 when alternatively petitioners agreed to pay GST.

Molasses is an important raw material for distillers, which produces industrial alcohol and raw material for chemical industries. Earlier, the UP Government along with the said Administrative Charges the provision of the U.P. Sheera Niyantran Adhiniyam, 1964, was also charging the Trade Tax on the sale and supply of molasses.

In an earlier round of litigation, administrative charges was claimed to be a tax and as such, petitions had been filed before the Hon’ble High Court challenging the demand of Trade Tax along with Administrative Charges as being double taxation.

A Division Bench of the Hon’ble High Court had held that the demand of Trade Tax on purchase of molasses was arbitrary illegal and unjust and accordingly allowed the Writ Petition directing refund of the amount of trade tax collected.

The matter travelled to the Supreme Court which stayed the refund but held that if ultimately the assessee succeeds in the appeal, it would be entitled to interest on the refund.

The said matter is still pending before the Supreme Court

Now, in the instant case, the petitioner, in vuew of the provisions of GST had filed the writ petition seeking restrain on the levy of said Administrative Charges on sale and supply of molasses.

Goods and Service Tax has been implemented with effect from 1.7.2017 under the 101st Constitutional Amendment and Entry 54 of List II Seventh Schedule of the Constitution has since been amended.

Further, in exercise of powers under Article 246A of the Constitution of India and amended Entry 54 of List II of Seventh Schedule, the State Government and the Central Government enacted the UPGST Act, 2017 and Central GST Act, 2017 respectively.

The Hon’ble High Court observed that as a result of the aforesaid amendments and implementation of the new Acts, GST alone is to be applied on supply or services of all goods.

The contention of the petitioner was that once the realization of tax has been subject to maintenance of separate accounts, the demand by the respondents of GST, as also Administrative Charges, would again amount to double taxation, although as of date the demand of Trade Tax has already been quashed by the High Court.

The petitioners prayed for stay on the demand of Administrative Charges, as they are ready and willing to pay the GST at the rate of 28% (14% Central GST and 14% UPGST). However, they agree to maintain separate accounts and even the State would make an endeavour to keep a separate account for sale/purchase/supply of molasses.

The Hon’ble High Court, as an interim measure, provided that the UP Government shall not demand any Administrative Charges, provided the the petitioner continue to deposit GST as demanded both by the Central

and the State Government under the said enactments

It was also directed that separate accounts for sale/supply/purchase of molasses shall be maintained both by the petitioner as also the State who shall abide by final outcome of the Writ Petition.