M/S Chitti Kumar Sri Varaha Lakshminarasimha Swami Mr And Gn Il Mill vs. The Assistant Commissioner (State Taxes)
Held
The Court allowed the writ petitions at the admission stage. It followed its previous order dated 20-11-2020 in W.P.No.45971 of 2018. The Court set aside the impugned orders to the extent they levied GST on the value of by-products (broken rice, bran, and husk) by treating them as part of the consideration paid to the petitioners for milling paddy. The reasoning was that these by-products were not to be considered as part of the consideration for the milling service. The ratio decidendi is that by-products generated from a primary service, if not explicitly part of the consideration for that service, should not be taxed as such. The operative direction was to set aside the impugned orders concerning the levy of GST on by-products. No costs were awarded. Miscellaneous petitions pending in these writ petitions were closed.
Facts
The petitioners filed three writ petitions challenging orders that levied Goods and Services Tax (GST) on the value of by-products, specifically broken rice, bran, and husk. These by-products were generated during the milling of paddy. The impugned orders treated these by-products as part of the consideration received by the petitioners for their milling services. The petitioners contended that these by-products should not be subject to GST as they were not part of the consideration for milling. The matters were heard at the admission stage.
Key Issues
1. Whether the by-products (broken rice, bran, and husk) generated from the milling of paddy can be treated as part of the consideration paid to the petitioners for milling services, thereby attracting GST? (Question of law, concerning the interpretation of consideration under GST law). Petitioner's Argument: The petitioners argued that the by-products were not part of the consideration for milling. They relied on the principle that only the actual consideration received for the supply of services should be taxed. Revenue's Argument: The learned Government Pleader for Commercial Tax submitted that the issue in these writ petitions is covered by a previous order of the High Court dated 20-11-2020 in W.P.No.45971 of 2018. No specific arguments were recorded for the revenue beyond this submission.
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Heard together (2 matters)
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HON’BLE SRI JUSTICE A.V.SESHA SAI & HON’BLE MS JUSTICE J.UMA DEVI
W.P.NOs.25829 OF 2020; 31 of 2021 and W.P.No.38 of 2021
COMMON ORDER: (Per AVSS,J)
When these matters are taken up, it is submitted by both the learned counsel for the petitioners and the learned Government Pleader for Commercial Tax that the issue in the present writ petitions is covered by the order, dated 20-11-2020, passed by this Court in W.P.No.45971 of 2018. A copy of the said order is placed on record.
Following the above said order and for the reasons recorded therein, these writ petitions are allowed, at the stage of admission, setting aside the orders impugned insofar as the same relate to the levy of GST on the value of by-products i.e., broken rice, bran and husk treating them as part of consideration paid to the petitioners for milling of the paddy. No costs.
Miscellaneous Petitions pending in the above writ petitions, if any, shall stand closed in consequence.
_______________ A.V.SESHA SAI,J
_______________ J.UMA DEVI,J
4TH JANUARY,2021 TSNR
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