M/S. Hindustan Agro Products LTD vs. The Union Of INDIA

Held

The Court allowed the writ petition, following a previous order dated November 20, 2020, passed by a Division Bench in W.P.No.45971 of 2018. The operative portion of that prior order set aside the levy of GST on the value of by-products (broken rice, bran, and husk) by treating them as part of the consideration paid for milling paddy. The reasoning was that the by-products should not be considered part of the consideration for milling services. The present writ petition was allowed in terms of that earlier judgment, meaning the impugned order levying GST on by-products was set aside. No costs were awarded. The issue of whether the objections were properly considered was implicitly decided in favor of the petitioner by setting aside the order based on the precedent.

Facts

The petitioner filed a writ petition challenging an order dated May 30, 2019, passed by the third respondent (CGST authority). The order levied GST on customized milling and its by-products and did not properly consider the petitioner's objections filed on August 20, 2018, to a show cause notice. The petitioner sought to declare this action illegal, arbitrary, and violative of constitutional provisions and principles of natural justice. Alternatively, the petitioner requested the fourth respondent (Civil Supplies Corporation) to pay or bear the GST liability and set aside the impugned order. The dispute pertains to the tax period leading up to the impugned order.

Key Issues

1. Whether the action of the third respondent in levying GST on customized milling and its by-products, and not properly considering the petitioner's objections, is illegal, arbitrary, unjust, improper, and violative of Articles 14 and 19(1)(g) of the Constitution of India and the APGST Act, 2017, and principles of natural justice? Petitioner's contention: The petitioner argued that the impugned order was illegal and arbitrary, violating constitutional rights and principles of natural justice. They specifically challenged the levy of GST on customized milling and its by-products and the inadequate consideration of their objections to the show cause notice. Revenue's contention: The judgment records that learned counsel for both parties submitted that the issue involved is squarely covered by a previous order of the Division Bench of the High Court in W.P.No.45971 of 2018. No specific arguments were recorded for the revenue beyond this submission.