M/S. Lakshmi Priya Rice Mill vs. The Assistant Commissioner (State Taxes)

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 of custom milling, unless otherwise statutorily taxable, cannot be treated as part of the consideration for the primary service of milling for the purpose of GST levy. The operative direction was to set aside the impugned assessment orders.

Facts

These writ petitions were filed by multiple petitioners challenging assessment orders passed by the 1st respondent (authority levying GST). The core issue revolved around the levy of 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 matter was covered by a previous order of the High Court in W.P.No.45971 of 2018, dated 20.11.2020. The Government Pleader for Commercial Tax, representing the respondents, did not dispute this assertion. The petitions were heard together.

Key Issues

1. Whether the assessment orders levying GST on the value of broken rice, bran, and husk obtained from custom milling of paddy are valid, considering the precedent set by this Court in W.P.No.45971 of 2018. (Question of law) Petitioner's contention: The subject matter is squarely covered by the order passed by this Court in W.P.No.45971 of 2018, dated 20.11.2020, and therefore, the same order should be applied to these petitions. Revenue's contention: The Government Pleader for Commercial Tax did not dispute the petitioners' submission that the matter was covered by the aforementioned High Court order.