M/S. Sri Satya Sai Durga Traders vs. The Assistant Commissioner (St)
Held
The High Court allowed the writ petition, setting aside the impugned assessment order dated 31.10.2020, insofar as it related to the levy of GST on the value of by-products (broken rice, bran, and husk). The Court reasoned that this issue was covered by previous orders of the High Court, specifically the order dated 20.11.2020 in W.P.No.45971 of 2018 and subsequent common orders. The ratio decidendi is that by-products retained by a miller, in lieu of compensation for making up for shortfalls in milling yield, are not to be treated as part of the consideration for milling services for the purpose of GST levy. The operative direction was to set aside the impugned order to the extent of the levy on by-products. The Court also noted that this order would be subject to the ultimate decision of the Supreme Court, as the Government had filed an appeal in a similar matter.
Facts
The petitioner, M/s. Sri Satya Sai Durga Traders, filed a writ petition challenging an assessment order passed by the Assistant Commissioner (ST), Bhimavaram Circle. The order, dated 31.10.2020, pertained to the tax period July 2017 to November 2018 under the SGST Act, 2017. The petitioner was aggrieved by the levy of GST on the value of broken rice, bran, and husk, which were by-products obtained during the milling of paddy belonging to the third respondent. These by-products were allowed to be 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 contended this levy was contrary to law, facts, 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 making up for shortfalls in rice yield, is legally sustainable under the SGST Act, 2017? The petitioner argued that the assessment order was illegal, without jurisdiction, and contrary to facts, as the by-products retained were not part of the consideration for milling services but rather compensation for a shortfall in the milling process. The petitioner relied on previous High Court orders dealing with similar issues. The respondents, represented by the Assistant Solicitor General and Government Pleader, Commercial Tax, did not present specific arguments in the judgment text but were present for the hearing. The judgment notes that the Government has moved the Supreme Court in a similar matter where notices have been issued.
Sections Cited
SGST Act 2017
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL JUDGMENT Dt: 25.10.2021
(Per Hon’ble Sri Justice Ahsanuddin Amanullah)
Heard Mr. G.Narendra Chetty, learned counsel for the petitioner, Mr. Sekhar, learned Government Pleader, Commercial Tax, for the respondents no.1 and 2, Mr. P.Hema Chandra, learned Standing Counsel, Civil Supplies, for the respondent no.3
2
and Mr. Harinath N., learned Assistant Solicitor General appearing for the respondent
The judgment continues below.
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