M/S. Sri Sri Oorammathalli Modern Rice Mill vs. Assistant Commissioner Of State Tax

Held

The Court allowed the Writ Petition, following a previous order passed by a Division Bench of the same High Court in W.P.No.45971 of 2018. The previous order had set aside the levy of GST on the value of by-products, specifically broken rice, bran, and husk, when treated as part of the consideration paid for milling of paddy. The reasoning in the cited order was that these byproducts should not be considered as part of the consideration for the milling service. Consequently, the impugned assessment order in the present case, in so far as it related to the levy of GST on the value of these by-products, was set aside. The Court did not make any specific findings or directions regarding the GST on Custom Milled Rice charges, as the decision was based on the precedent concerning the byproducts.

Facts

The petitioner filed a Writ Petition seeking to quash an order dated 25.8.2020 passed by the 2nd Respondent, which confirmed an order dated 5.1.2019 by the 1st Respondent. These orders pertained to the tax period July 2017 to June 2018 under the CGST/Andhra Pradesh SGST Act. The petitioner challenged the levy of GST on the value of brokens, bran, and husk, which are byproducts retained during the milling of paddy for the 5th Respondent. The petitioner also sought directions for the 5th Respondent to pay GST at 5% on Custom Milled Rice charges. The petitioner is the entity being taxed, and the respondents represent the GST revenue authorities and the entity for whom milling was done.

Key Issues

1. Whether the Petitioner is liable to pay GST on the value of brokens, bran, and husk, which are retained as byproducts during the milling of paddy for the 5th Respondent, under the CGST/Andhra Pradesh SGST Act? The Petitioner argued that these byproducts are not part of the consideration for milling services and therefore not subject to GST. The Petitioner relied on a previous order of this Court. The Revenue (Respondent Nos. 1-3) did not record any specific arguments in the judgment provided, but their action of confirming the levy indicates they contended for the taxability of these byproducts. The 5th Respondent (for whom milling was done) also had a Standing Counsel present.