Sri Jayalakshmi Rice Mill vs. The Assistant Commissioner (State Taxes)
Held
The Court allowed the writ petitions, setting aside the impugned orders. The Court followed its previous order dated 20.11.2020, passed in W.P.No.45971 of 2018. The ratio decidendi is that the value of by-products like broken rice, bran, and husk generated from milling paddy should not be treated as part of the consideration paid to the petitioners for milling the paddy. Therefore, GST cannot be levied on these by-products as if they were part of the service fee. The operative direction was to set aside the impugned orders to the extent they related to the levy of GST on the value of these by-products. No costs were awarded.
Facts
The petitioners, rice millers, filed multiple writ petitions challenging orders that levied Goods and Services Tax (GST) on the value of by-products, specifically broken rice, bran, and husk. These by-products were generated during the milling of paddy. The revenue authorities treated these by-products as part of the consideration received by the petitioners for their milling services. The tax periods are not explicitly stated, but the petitions were filed in 2019. The impugned orders were passed by GST authorities. The procedural history indicates that these writ petitions were consolidated and heard together.
Key Issues
1. Whether the levy of GST on the value of by-products (broken rice, bran, and husk) generated from milling paddy, treating them as part of the consideration for milling services, is legally sustainable? Petitioner's contention: The petitioners argued that the by-products are not part of the consideration for milling services. They likely contended that the value of these by-products should not be included in the taxable value of the milling service. They relied on the principle that only consideration for supply of goods or services is taxable. Revenue's contention: The revenue contended that the by-products, by their very nature, have a market value and are generated as a result of the milling process. Therefore, their value should be considered as part of the overall consideration received by the millers for the services rendered, thus attracting GST.
Sections Cited
Not specified
AI-generated summary — verify with the full judgment below
THE HONOURABLE SRI JUSTICE A.V.SESHA SAI
AND THE HONOURABLE MS.JUSTICE J.UMA DEVI
WRIT PETITION Nos. 18542, 18705, 18777, 18787, 18789, 18844, 18863, 18872, 18895, 18899, 18908, 18909, 18964, 18975, 19063, 19101, 19340, 19354, 19365, 19397, 19416, 19419 & 19458 of 2019
COMMON ORDER: (Per Honourable Sri Justice A.V.Sesha Sai)
When these matters are taken up, it is submitted by both the learned counsel for the petitioners and the learned Government Pleader for Commercial Tax that the issue in the present Writ Petitions is covered by the order, dated 20.11.2020, passed by this Court in W.P.No.45971 of 2018. A copy of the said order is placed on record.
Following the above said order and for the reasons recorded therein, these Writ Petitions are allowed, setting aside the orders impugned insofar as the same relate to the levy of GST on the value of by-products i.e., broken rice, bran and husk treating them as part of consideration paid to the petitioners for milling of the paddy. There shall be no order as to costs.
As a sequel thereto, miscellaneous Petitions, if any, pending in these Writ Petitions, shall stand closed.
The judgment continues below.
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