M/S. Chakka Srinivasa Rao vs. The Assistant Commissioner (St)

Held

The Court allowed the writ petitions, setting aside the assessment orders passed by the 1st respondent. The Court reasoned that the issue was covered by its previous order in W.P.No.45971 of 2018. The assessment orders had levied GST on the value of by-products (broken rice, bran, and husk) by treating them as part of the consideration for custom milling. The ratio decidendi is that by-products obtained from custom milling, in the context of the cited precedent, should not be automatically considered as part of the consideration for the milling service for the purpose of levying GST, unless they are otherwise statutorily taxable as separate supplies. The operative direction was to set aside the impugned assessment orders. However, the Court clarified that the petitioners remain liable to pay tax on the sale of these by-products if they are statutorily taxable as independent supplies. No specific issue was left undecided.

Facts

The petitioners filed a batch of writ petitions challenging assessment orders passed by the 1st respondent (authority not explicitly named but implied to be a GST authority). These orders levied GST on the value of broken rice, bran, and husk, which were obtained by the petitioners as by-products from custom milling of paddy. The petitioners contended 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 tax periods and the specific amounts in dispute are not explicitly stated in the provided text. The procedural history involves the filing of these writ petitions and their subsequent hearing.

Key Issues

1. Whether the by-products of custom milling, namely broken rice, bran, and husk, obtained by the petitioners, are to be treated as part of the consideration for custom milling services and thus exigible to GST, or if they are separate taxable supplies. This issue turns on the interpretation of the relevant provisions of the GST Act concerning the valuation of supply and the nature of by-products in a milling contract. Petitioner's Contention: The petitioners argued that the subject matter of these writ petitions is squarely covered by the order of this Court in W.P.No.45971 of 2018, dated 20.11.2020, and therefore, the same relief should be granted. Revenue's Contention: The learned Government Pleader for Commercial Tax representing the respondents did not dispute the petitioners' submission regarding the applicability of the previous High Court order.