M/S. Korada Govinda Rao vs. Assistant Commissioner Of State Tax
Held
The Court allowed the writ petitions, setting aside the appellate orders passed by the 2nd respondent and the assessment orders passed by the 1st respondent. The Court held that the by-products (broken rice, bran, and husk) obtained from custom milling of paddy were not to be treated as part of the consideration paid for custom milling. The reasoning followed the precedent set in W.P.No.45971 of 2018. The ratio decidendi is that the value of by-products generated from milling cannot automatically be considered as part of the consideration for the milling service unless specifically established otherwise. The operative direction was to set aside the impugned orders. The Court clarified that the petitioners remain liable to pay tax on the sale of these by-products if they are statutorily taxable. No specific issue was left undecided.
Facts
The petitioners filed two writ petitions challenging appellate orders passed by the 2nd respondent, which confirmed assessment orders passed by the 1st respondent. These assessment orders levied Goods and Services Tax (GST) on the value of broken rice, bran, and husk. These by-products were obtained by the petitioners 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 Government Pleader for Commercial Tax did not dispute this fact. The petitions were heard by a bench of Justices U. Durga Prasad Rao and J. Uma Devi.
Key Issues
1. Whether the by-products of custom milling, namely broken rice, bran, and husk, are to be treated as part of the consideration paid for custom milling of paddy, thereby attracting GST on their value. This question turns on the interpretation of the relevant provisions of the GST Act concerning the definition of supply and consideration. The petitioners contended that the issue is squarely covered by the High Court's order in W.P.No.45971 of 2018, dated 20.11.2020. The revenue, represented by the Government Pleader for Commercial Tax, did not dispute the applicability of the previous order.
Sections Cited
Not explicitly mentioned in the judgment text provided.
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HON'BLE SRI JUSTICE U. DURGA PRASAD RAO AND HON’BLE MS. JUSTICE J. UMA DEVI
WRIT PETITION Nos.758 and 1087 of 2021
COMMON ORDER: (per UDPR,J)
These two writ petitions are filed challenging the appellate orders passed by the 2nd respondent in confirming the assessment orders passed by the 1st respondent levying GST on the value of broken rice, bran and husk obtained by the petitioners on custom milling of the paddy.
Heard learned counsel for petitioners, Sri K.V.J.L.N.Sastry, learned Government Pleader for Commercial Tax representing on behalf of respondents 1 to 3, learned Assistant Solicitor General, representing on behalf of 4th respondent and Sri P.Hema Chandra, learned standing counsel representing on behalf of 5th respondent.
When the matter is taken up for hearing, learned counsel for petitioners would submit that the subject matter in these writ petitions is squarely covered by the order passed by this Court in W.P.No.45971 of 2018, dated 20.11.2020 and the same order may be passed in these writ petitions also. Learned Government Pleader for Commercial Tax representing on behalf of respondents has not disputed the said fact.
Foll
The judgment continues below.
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