The Supreme Court has decided to look into the issue of levy of trade tax on molasses.
The controversy relating to levy of tax on molasses and imposition of penalty for non-payment of tax on sale of molasses has been raised before the apex court by the Uttar Pradesh government.
A Bench headed by Justice SH Kapadia recently admitted a couple of petitions filed by the Uttar Pradesh government challenging the Allahabad High Court ruling that held as illegal the levy of trade tax on molasses, a by-product produced during manufacture of sugar.
Sugar companies, including Dhampur Sugar Mills Ltd, had moved the high court challenging such levy of trade tax on the ground that trade tax cannot be levied on sale of molasses as the by-product was being subjected to administrative charges under the UP Sheera Niyantran Adhiniyam 1964.
As per the notification issued under the UP Trade Tax Act, 1948, the sales of molasses was taxable at 12% and any administrative charges paid by a sugar factory was recoverable from the buyers.
The state government in its petition said the 1948 Act gave powers to authorities to levy tax on sale and purchase of goods and commodities including molasses and trade tax is to be paid by the sellers on every transaction and the same may or may not be recovered or passed on to the buyers.