M/S. Sri Dhana Lakshmi Raw And Boiled Rice Mill vs. The Assistant Commissioner

Held

The Court allowed the writ petition, setting aside the assessment order dated August 30, 2019, passed by the 1st respondent (Assistant Commissioner). The reasoning was based on the common ground at the Bar that the issue was covered by a decision of a Co-ordinate Bench dated February 26, 2021, in W.P.No.4801 of 2021. The Court held that the levy of GST on the value of by-products (broken rice, bran, and husk) by treating them as part of the consideration paid to the petitioner for custom milling of paddy was incorrect. The ratio decidendi is that if a similar issue has been decided by a Co-ordinate Bench, the present case should follow that precedent. The operative direction was to set aside the impugned assessment order. The Court also clarified that the petitioner remains liable to pay tax on the sale of by-products if they are statutorily taxable. No costs were awarded. No issues were expressly left undecided.

Facts

The petitioner, M/s. Sri Dhana Lakshmi Raw & Boiled Rice Mill, filed a writ petition seeking to set aside an order dated August 30, 2019, passed by the Assistant Commissioner (State Taxes), Nellore-1 circle. This order levied Goods and Services Tax (GST) for the period July 2017 to March 2018 on by-products (broken rice, bran, and husk) retained by the 2nd Respondent Corporation. The petitioner argued that these by-products should not be considered part of the consideration for custom milling of paddy and thus not liable for GST. Alternatively, they sought for the Corporation to bear the liability if found payable. The respondents included the Assistant Commissioner, the A.P. State Civil Supplies Corporation and its District Manager, the State of Andhra Pradesh, and the Union of India.

Key Issues

1. Whether the order dated August 30, 2019, passed by the Assistant Commissioner (State Taxes) levying GST on by-products retained by the 2nd Respondent Corporation is illegal, arbitrary, contrary to law, and in violation of principles of natural justice, as per the petitioner's contention. 2. Whether the petitioner is liable to pay GST on the by-products retained by the 2nd Respondent Corporation, or alternatively, if the 2nd Respondent Corporation should bear the liability. Petitioner's arguments: The petitioner contended that the order was illegal, arbitrary, and passed without jurisdiction and in violation of natural justice. They argued that the by-products retained by the Corporation were not part of the consideration for custom milling and therefore not subject to GST. They sought to set aside the order or have the Corporation bear the liability. Respondents' arguments: The judgment records common ground at the Bar that the issue is 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). No specific arguments from the respondents are detailed in the judgment, other than their participation in the proceedings.