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

Held

The Court allowed the writ petition, following a previous order of 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 these were treated as part of the consideration paid for milling of paddy. The reasoning in the cited order, which this Court adopted, was that the levy on these by-products in the context of milling charges was incorrect. Consequently, the impugned assessment order, in so far as it related to the levy of GST on the value of the broken rice, bran, and husk, was set aside. The Court made no order as to costs. No specific issues were expressly left undecided.

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 core of the dispute was the levy of GST on the value of broken rice, bran, and husk generated during the milling of paddy. These by-products were retained by a 'portioner' as compensation or exchange for the petitioner supplying their own rice to the 3rd respondent to make up for any shortfall in yield. The petitioner argued that this levy was contrary to law, facts, and jurisdiction.

Key Issues

1. Whether the levy of GST on the value of broken rice, bran, and husk, retained by the portioner as compensation for the petitioner's rice supply to make up for yield shortfalls, is illegal and without jurisdiction, as per the provisions of the GST Act? Petitioner's contention: The petitioner argued that the impugned order levying GST on the by-products was contrary to law, facts, and jurisdiction. They sought to set aside this levy or, in the alternative, have the 3rd respondent pay the GST liability. Revenue/State's contention: The judgment records that learned counsel on both sides submitted that the issue was squarely covered by a previous order of the High Court in W.P.No.45971 of 2018. No specific arguments were detailed for the revenue or state beyond this submission.