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 28.10.2020 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 the paddy, was contrary to law. The reasoning followed the precedent set by earlier orders of the same High Court, specifically the order dated 20.11.2020 in W.P.No.45971 of 2018 and the common order dated 17.12.2020 in other writ petitions. The ratio decidendi is that such by-products, retained as compensation for milling services and to cover yield shortfalls, should not be subject to GST as part of the consideration for milling. The operative direction was to set aside the impugned order concerning the levy on by-products. The Court also noted that this order would be subject to the ultimate decision of the Hon'ble Supreme Court, where the Government has filed an appeal against similar orders.

Facts

The petitioner, M/s. Sri Vijaya Sai Traders, filed a writ petition challenging an assessment order dated 28.10.2020, passed by the Assistant Commissioner (ST), Bhimavaram Circle. The order pertains to the tax period July 2017 to November 2018 under the SGST Act, 2017. The dispute concerns the levy of GST on the value of broken rice, bran, and husk, which were obtained during the milling of paddy belonging to the third respondent. The petitioner retained these by-products as compensation for supplying their own rice to the third respondent to make up for shortfalls in paddy yield, in addition to milling charges of Rs. 15/- per quintal. The petitioner argued that this levy was contrary to law and without jurisdiction.

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 supplying their own rice to make up for yield shortfalls, is contrary to law, facts, without jurisdiction and authority, and illegal, under the SGST Act, 2017? Petitioner's Contention: The petitioner argued that the assessment order was illegal and without jurisdiction. They relied on previous orders of the High Court, specifically an order dated 20.11.2020 in W.P.No.45971 of 2018 and a common order dated 17.12.2020 in other writ petitions, which dealt with similar issues. Revenue's Contention: The judgment does not explicitly record arguments made by the respondents. However, it notes that the Government has moved the Hon'ble Supreme Court against similar orders, where notices have been issued.