Sri Sai Lakshmi vs. The Assistant Commissioner

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 reasoned that the issue was squarely covered by its previous order in W.P.No.45971 of 2018. The ratio decidendi is that by-products of custom milling, such as broken rice, bran, and husk, should not be treated as part of the consideration for the custom milling service itself, unless they are otherwise statutorily taxable as separate supplies. 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.

Facts

The petitioners filed two writ petitions challenging appellate orders passed by the 2nd respondent, which confirmed assessment orders from 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 contention.

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 for custom milling services, thereby attracting GST, or if they are separate taxable supplies. This issue turns on the interpretation of the relevant provisions of the GST Act concerning the scope of supply and consideration. The petitioners contended that the subject matter is covered by this Court's prior order in W.P.No.45971 of 2018, implying that the by-products should not be taxed as part of the milling consideration. The respondents, represented by the Government Pleader for Commercial Tax, did not dispute the applicability of the prior order.