M/S Sri Satya Deva Traders vs. The Assistant Commissioner (St)

Held

The Court allowed the writ petitions, following its previous order in W.P.No.45971 of 2018. The assessment orders passed by the 1st respondent, which levied GST on the value of by-products (broken rice, bran, and husk) by treating them as part of the consideration for custom milling of paddy, were set aside. The Court clarified that the petitioners would still be liable to pay tax on the sale of these by-products if they are statutorily taxable. The ratio decidendi is that by-products obtained from custom milling, when not explicitly part of the consideration for the milling service, should not be taxed as such, unless they are otherwise statutorily taxable. The operative direction was to set aside the impugned assessment orders.

Facts

The petitioners filed these writ petitions challenging assessment orders passed by the 1st respondent. These orders levied Goods and Services Tax (GST) on the value of broken rice, bran, and husk, which were obtained by the petitioners as by-products from the custom milling of paddy. The petitioners 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 petitions were heard by the High Court.

Key Issues

1. Whether the assessment orders levying GST on the value of broken rice, bran, and husk obtained from custom milling of paddy, treating them as part of the consideration, are valid? (Question of law). The petitioners argued that the issue is squarely covered by the High Court's order in W.P.No.45971 of 2018. The respondents, represented by the learned Government Pleader for Commercial Tax, did not dispute the petitioners' submission regarding the applicability of the previous order.