M/S. Sri Vijaya Sai Traders vs. The Assistant Commissioner (St)

Held

The High Court allowed the writ petition at the admission stage, setting aside the impugned assessment order dated October 28, 2020, passed by the respondent no.1. The Court held that the levy of GST on the value of by-products, namely broken rice, bran, and husk, treating them as part of the consideration paid to the petitioner for milling paddy, was contrary to law. The reasoning was based on previous orders of the Court in similar matters, specifically W.P.No.45971 of 2018 and subsequent common orders. The Court found that the issue was covered by these prior decisions. The operative direction was to set aside the impugned order to the extent it levied GST on the by-products. The Court also noted that this order would be subject to the ultimate decision of the Hon'ble Supreme Court, as the Government had filed an appeal in a similar case. No costs were awarded.

Facts

The petitioner, M/s. Sri Vijaya Sai Traders, filed a writ petition challenging an assessment order dated October 28, 2020, passed by the Assistant Commissioner (ST), Bhimavaram Circle. The order pertains to the tax period July 2017 to November 2018 under the CGST Act, 2017. The petitioner contested the levy of GST on the value of broken rice, bran, and husk generated during the milling of paddy. These by-products were retained by the petitioner as compensation for supplying their own rice to the third respondent to make up for shortfalls in yield, in addition to milling charges of Rs. 15 per quintal. The petitioner argued that this levy was illegal, without jurisdiction, and contrary to law.

Key Issues

1. Whether the levy of GST on the value of broken rice, bran, and husk, retained by the petitioner as compensation for milling paddy and making up for shortfalls in yield, is contrary to law, facts, without jurisdiction, and illegal, under the CGST Act, 2017? Petitioner's Contention: The petitioner argued that the assessment order was illegal and without jurisdiction. They relied on previous High Court orders, specifically W.P.No.45971 of 2018 and subsequent common orders in related writ petitions, which had dealt with similar issues. The petitioner sought to have the impugned assessment order set aside and directed the third respondent to pay the GST liability. Respondents' Contention: The respondents, represented by the Government Pleader, Commercial Tax, and Standing Counsel for Civil Supplies, did not present any specific arguments against the petitioner's claim in the judgment. However, it was noted that the Government had moved the Hon'ble Supreme Court in a similar matter where notices had been issued.