M/S. Adi Laxmi Industries vs. The Assistant Commissioner (S.T)

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 (broken rice, bran, and husk) when they were treated as part of the consideration paid for milling paddy. The reasoning was that such by-products, when retained by the portioner as compensation for shortfalls in yield, should not be subject to GST as if they were part of the milling charges. The operative direction was to set aside the impugned assessment order in so far as it related to the levy of GST on these by-products. No costs were awarded.

Facts

The petitioner filed a writ petition challenging an order passed by the 5th respondent, which confirmed an assessment order by the 1st respondent for the tax period July 2017 to March 2018. The dispute concerned 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 retained by the portioner as compensation for the shortfall in the yield of rice supplied by the petitioner to the 3rd respondent, in addition to milling charges. The petitioner sought to set aside this levy or, in the alternative, 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 portioner as compensation for shortfalls in rice yield, is contrary to law, facts, and jurisdiction? (Question of law and fact, concerning the nature of consideration under GST law). The petitioner argued that the levy was illegal and without jurisdiction. The revenue's contentions were not explicitly recorded in the judgment, but their position was to uphold the assessment order. The judgment noted that the issue was covered by a previous order of the High Court.