M/S. Vijaya Krishna Rice Mill vs. The Assistant Commissioner (St)

Held

The Court allowed the writ petition, setting aside the impugned assessment order. The Court noted that the issue involved was squarely covered by a previous order of a Division Bench of the same High Court in W.P.No.45971 of 2018. In that prior case, the Division Bench had set aside an assessment order that levied GST on the value of by-products (broken rice, bran, and husk) by treating them as part of the consideration paid for milling paddy. The reasoning in the cited order was that such by-products, when retained by the miller as compensation, should not be treated as part of the consideration for milling. Therefore, following the precedent, the present writ petition was allowed in terms of the earlier judgment.

Facts

The petitioner filed a writ petition challenging an assessment order passed by the 1st respondent (authority) for the tax period July 2017 to November 2018. The challenge was specifically against the levy of GST on the value of broken rice, bran, and husk, which were obtained during the milling of paddy belonging to the 3rd respondent. These by-products were retained by the petitioner as compensation for supplying their own rice to the 3rd respondent to make up for any shortfall in yield. The petitioner sought to set aside the assessment 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 services, is contrary to law, facts, and without jurisdiction, as per the provisions of the CGST Act, 2017? Petitioner's contention: The petitioner argued that the assessment order was illegal and without jurisdiction, as it wrongly included the value of by-products retained as compensation for milling services in the taxable value. The petitioner sought a writ of mandamus to set aside the order. Revenue's contention: The judgment does not record any specific arguments made by the revenue or the 3rd respondent. However, the assessment order itself, which is under challenge, indicates the revenue's position that these by-products constitute part of the consideration for the milling service.