Sugar mills Vs UP govt: SC stays HC order till Aug 5

The Supreme Court today stayed till August 5 the Allahabad High Court order in the dispute between leading sugar producers, including Bajaj Hindusthan, Balrampur Chini, and the UP government on levy on captive consumption and supply of molasses.

A bench of justices D K Jain and A K Ganguly stayed the judgement of the high court till August 5, the next date of hearing, after the state government moved the apex court.

"There would be stay on final orders of the reassessment," the court said. Besides Bajaj Hindustan and Balrampur Chini Mills, Dhampur Sugar Mills and Triveni Industries are a party to the dispute.

In March this year, the high court had set aside an amendment by the state government to the UP Molasss Control Act and said that the state did not have the power to levy on captive consumption, supply or transfer of molasses.

Molasses is used for various purposes from making rum to ethanol after fermentation.  Ethanol is widely used as bio fuel and is blended with petrol.

The high court had said that the provisions of the UP Molasses Amendment Act of 2009 were invalid and directed that proceedings taken under the amended provisions by the authorities against the sugar companies were illegal.

The high court had also held that the state government cannot put a rider of sugar producers to reserve 30% of their molasses to distilleries for manufacturing country liquor.

The high court had held the act did not empower the state government to reserve molasses. It also objected government policy to the distillers to use the left over molasses for making high-end India Made Foreign Liquor (IMFL).

Opposing the high court order, the state government submitted that such measures were done in public interest for the proper control of storage, gradation and regulation of transfer, supply and distribution  of molasses.

"The observations and directions by the high court in the judgment are unwarranted unreasonable and unacceptable in law, which have in effect severely handicapped and curtailed the regulatory functions and powers of the authorities, in regard to the supply and distribution of molasses in the State of
Uttar Pradesh," said the state government in its petition filed through advocate Ravi P Mehrotra.