M/S. Sri Sal Srinivasa Modern Rice Mill vs. The Assistant Commissioner (State Taxes)

Held

The High Court allowed the writ petition, setting aside the assessment order passed by the 1st respondent. The Court followed its previous order in W.P.No.45971 of 2018, holding that the GST levied on the value of by-products (broken rice, bran, and husk) by treating them as part of the consideration for custom milling of paddy was incorrect. The reasoning was based on the precedent established in the earlier writ petition. The Court clarified that the petitioner would still be liable to pay tax on the sale of these by-products if they are statutorily taxable. The operative direction was to set aside the impugned assessment order. No specific issue was left undecided, as the matter was disposed of based on the established precedent.

Facts

The petitioner filed a writ petition challenging an assessment order passed by the 1st respondent. This order levied Goods and Services Tax (GST) on the value of broken rice, bran, and husk, which were obtained by the petitioner from the custom milling of paddy. The petitioner argued that the issue was covered by a previous order of the High Court in W.P.No.45971 of 2018, dated 20.11.2020. The learned Government Pleader for Commercial Tax, representing the respondents, did not dispute this submission. The assessment order treated these by-products as part of the consideration paid for custom milling.

Key Issues

1. Whether the by-products of custom milling, namely broken rice, bran, and husk, can be considered as part of the consideration for custom milling services, thereby attracting GST, as per the provisions of the CGST Act, 2017 and relevant notifications. Petitioner's contention: The petitioner argued that the subject matter of the writ petition is squarely covered by the High Court's order in W.P.No.45971 of 2018, dated 20.11.2020, and therefore, the same relief should be granted. The petitioner implicitly argued that the by-products are not part of the consideration for custom milling and thus not taxable in the manner levied. Revenue's contention: The learned Government Pleader for Commercial Tax representing the respondents did not dispute the petitioner's submission regarding the applicability of the previous High Court order. This implies the revenue did not present a counter-argument against the petitioner's reliance on the precedent.