M/S. Sri Ramanjaneya Modem 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 Court set aside the assessment orders passed by the 1st respondent. These orders had levied GST on the value of by-products, namely broken rice, bran, and husk, by treating them as part of the consideration paid to the petitioners for the custom milling of paddy. 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, when not explicitly part of the consideration for milling services, should not be subject to GST as if they were. 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, the GST authority. The 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 during 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, representing the respondents, did not dispute this fact. 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? (Question of law) The petitioners contended that the subject matter of 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 therefore, the same order should be applied. The revenue or State, through the Government Pleader for Commercial Tax, did not dispute the petitioners' contention that the matter was covered by the aforementioned High Court order.