M/S. Sri Venkateswara Padmavathi Rice Mill vs. The Assistant Commissioner (St)

Held

The Court allowed the writ petition, following a previous order dated 20.11.2020 passed by a Division Bench in W.P.No.45971 of 2018. In that prior case, the assessment order was set aside insofar as it related to the levy of GST on the value of by-products (broken rice, bran, and husk) treated as part of the consideration paid for milling paddy. The ratio decidendi is that by-products retained by a miller as compensation for making up yield shortfalls, in addition to milling charges, should not be subject to GST as part of the consideration for milling services. The operative direction was to allow the writ petition in terms of the aforementioned prior order.

Facts

The petitioner filed a writ petition challenging an Assessment Order dated 28.10.2020, passed by the 1st respondent (authority), for the tax period July 2017 to November 2018 under the CGST Act, 2017. The challenge was specifically to the levy of GST on the value of broken rice, bran, and husk, which were obtained during the milling of paddy. These by-products were allowed to be retained by the petitioner as compensation for supplying their own rice to the 3rd respondent to make up for any shortfall in yield, in addition to milling charges of Rs. 15/- per quintal. The petitioner sought to set aside this order and direct the 3rd respondent to pay the GST liability.

Key Issues

1. Whether the levy of GST on the value of broken rice, bran, and husk, retained by the petitioner as compensation for milling paddy and making up for yield shortfalls, is contrary to law, facts, and without jurisdiction, under the CGST Act, 2017? The petitioner argued that the impugned Assessment Order was illegal and sought its setting aside. The revenue's contentions were not recorded in the judgment. The court noted that the issue was squarely covered by a previous Division Bench order.