M/S. Vishnu Priya Modern Rice Mill vs. The State Of Andhra Pradesh

Held

The Court held that the by-products, such as husk, broken rice, and bran, retained by the petitioner under clause 22 of the agreement with the A.P. State Civil Supplies Corporation Limited, do not form part of the consideration for the custom milling of paddy. The Court's reasoning was based on the observation in W.P. No.45971 of 2018, which stated that the absence of specific mention of by-products as part of the consideration indicated they were not included. The Court found the clause in the present case to be akin to the one in the previous judgment. Therefore, the petitioner cannot be made excisable to tax on the value of these by-products as part of the milling consideration. However, the Court clarified that the petitioner would be liable to pay tax on the sale of these by-products. The impugned assessment order was set aside in so far as it levied GST on the value of the by-products treating them as part of the consideration.

Facts

The petitioner, a rice miller, challenged an order dated 18.09.2018 passed by the 3rd respondent (authority) levying GST of ₹6,98,718/-. The tax was imposed for the alleged non-disclosure of turnover relating to consideration from custom milling of paddy. The petitioner argued that by-products like husk, broken rice, and bran, which they were allowed to retain by the Civil Supplies Department, were not part of the consideration for milling. This retention was voluntary and not a part of the milling charges. The petitioner relied on a previous order of the High Court in W.P. No.45971 of 2018, which dealt with a similar issue concerning clause 22 of an agreement with the A.P. State Civil Supplies Corporation Limited.

Key Issues

1. Whether the value of by-products (husk, broken rice, bran) retained by the petitioner, as per clause 22 of the agreement with the A.P. State Civil Supplies Corporation Limited, constitutes 'consideration' for the custom milling of paddy, thereby attracting GST liability under the relevant provisions of the GST Act. Petitioner's arguments: The petitioner contended that the by-products were allowed to be retained voluntarily and were not part of the consideration for milling. They relied on the High Court's decision in W.P. No.45971 of 2018, which held that similar retained by-products were not part of the consideration. The petitioner argued that the value of these by-products should not be subject to GST as part of the milling charges. Revenue's arguments: The judgment records no specific arguments from the revenue or State. The Government Pleader for Commercial Tax was heard.