M/S. Vasavi Modern Rice Mill vs. The Assistant Commissioner (State Taxes)

Held

The Court allowed the Writ Petition, setting aside the assessment order dated November 30, 2018, passed by the 1st respondent. This order had levied GST on the value of by-products, namely broken rice, bran, and husk, by treating them as part of the consideration paid to the petitioner for the custom milling of paddy. The Court's reasoning was based on the common ground that the issue was squarely covered by the decision of a Co-ordinate Bench in W.P.No.4801 of 2021. The ratio decidendi is that if a previous judgment of a Co-ordinate Bench squarely covers the issue, the present petition should be decided in similar terms. The operative direction was to set aside the impugned assessment order. However, the Court clarified that the petitioner remains liable to pay tax on the sale of by-products if they are statutorily taxable. No costs were awarded. The issue of whether the 2nd Respondent Corporation should bear the liability was implicitly resolved by setting aside the assessment order against the petitioner.

Facts

The petitioner, M/s. Vasavi Modern Rice Mill, challenged a rectification order dated January 9, 2019, passed by the Assistant Commissioner (State Taxes) for the period July 2017 to June 2018. This rectification order revised an assessment order dated November 30, 2018. The petitioner sought to declare the rectification order illegal, arbitrary, and without jurisdiction, and to set it aside. Alternatively, they sought a declaration that they are not liable for GST on by-products retained by the Andhra Pradesh State Civil Supplies Corporation (2nd Respondent), or that the Corporation should bear the liability. The core dispute revolves around the taxability of by-products like broken rice, bran, and husk, which were treated as part of the consideration for custom milling of paddy.

Key Issues

1. Whether the rectification order dated 09.01.2019, revising the assessment order dated 30.11.2018, passed by the 1st Respondent (Assistant Commissioner) is illegal, arbitrary, contrary to law, in gross violation of principles of natural justice, and without authority of law and jurisdiction, as contended by the Petitioner? 2. Whether the Petitioner is liable to pay GST on the by-products (broken rice, bran, and husk) retained by the 2nd Respondent Corporation, or in the alternative, whether the 2nd Respondent Corporation should bear the liability if it is held to be payable, as contended by the Petitioner? The Petitioner argued that the rectification order was illegal and passed without jurisdiction and in violation of natural justice. The Revenue contended that the by-products were part of the consideration for custom milling and thus exigible to GST. The Court noted that the issue was squarely covered by a previous decision of a Co-ordinate Bench in W.P.No.4801 of 2021 (M/s. Vaasavi AGR Food Industries vs. The Assistant Commissioner, State Taxes-II and others).