M/S Chakka Srinivasa Rao vs. The Assistant Commissioner

Held

The Court allowed the writ petition and set aside the assessment order passed by the 1st respondent. The Court found that the issue was covered by its previous order in W.P.No.45971 of 2018. The reasoning was that the by-products, namely broken rice, bran, and husk, obtained from custom milling of paddy, were treated as part of the consideration paid to the petitioner. The Court held that the levy of GST on the value of these by-products, in the manner done by the 1st respondent, was incorrect based on the precedent. The ratio decidendi is that by-products of custom milling, if not statutorily taxable in themselves, cannot be treated as part of the consideration for the primary service of milling to levy GST, unless they are independently taxable. The operative direction was to set aside the assessment order. However, the Court clarified that the petitioner remains liable to pay tax on the sale of these by-products if they are statutorily taxable. No specific issue was left undecided.

Facts

The petitioner filed a writ petition challenging an assessment order passed by the 1st respondent, which levied Goods and Services Tax (GST) on the value of broken rice, bran, and husk. These by-products 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 contention. The 1st respondent is the authority that passed the assessment order under challenge. The amount in dispute is not explicitly stated.

Key Issues

1. Whether the assessment order passed by the 1st respondent, levying GST on the value of broken rice, bran, and husk obtained from custom milling of paddy, is liable to be set aside? Petitioner's contention: The petitioner argued that the subject matter of the writ petition is squarely covered by the order of this Court in W.P.No.45971 of 2018, dated 20.11.2020, and therefore, a similar order should be passed in the present case. No specific provisions of the GST Act were explicitly named in the argument, but the challenge pertains to the levy of GST on by-products of custom milling. Revenue's contention: The learned Government Pleader for Commercial Tax representing the respondents did not dispute the petitioner's submission that the matter was covered by the previous High Court order. No specific arguments or reliance on authorities were recorded for the revenue.