Sri Venkata Balaji Modern Raw And Boiled Rice Mill vs. The Assistant Commissioner
Held
The Court allowed the writ petition, setting aside the impugned assessment order in so far as it related to the levy of GST on the value of by-products (broken rice, bran, and husk). The Court reasoned that the issue 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 precedent, the Court had held that the levy of GST on by-products treated as part of the consideration for milling paddy was unsustainable. The ratio decidendi is that byproducts retained by a miller, which are not explicitly part of the agreed consideration for milling services, are not subject to GST as part of the supply of milling service. The operative direction was to set aside the impugned assessment order to the extent of the levy on byproducts.
Facts
The petitioner filed a writ petition challenging an order dated March 24, 2020, passed by the 2nd respondent, which affirmed an order dated January 8, 2019, by the 1st respondent. The dispute pertains to the tax period of July 2017 to June 2018. The petitioner sought to set aside these orders, declare they are not liable for GST on byproducts retained by the 3rd respondent Corporation, or alternatively, direct the 3rd respondent to bear the liability. The impugned orders levied GST on byproducts retained by the petitioner for milling paddy.
Key Issues
1. Whether the levy of GST on byproducts (broken rice, bran, and husk) retained by the petitioner, treating them as part of the consideration for milling paddy, is legally sustainable? (Question of law turning on the interpretation of GST provisions related to supply and consideration). Petitioner's contention: The petitioner argued that the byproducts retained were not part of the consideration for milling services and therefore not exigible to GST. They sought to set aside the impugned orders and declare non-liability or shift the burden to the 3rd respondent. Revenue's contention: The revenue authorities contended that the retention of byproducts constituted a form of consideration for the milling service, making it liable for GST. They relied on the assessment orders passed by the 1st and 2nd respondents.
Sections Cited
Not specified in the judgment
AI-generated summary — verify with the full judgment below
THE HONOURABLE SRI JUSTICE C.PRAVEEN KUMAR AND THE HONOURABLE SRI JUSTICE R.RAGHUNANDAN RAO WRIT PETITION No.13135 OF 2020
ORDER:- (Per Hon’ble Sri Justice C.Praveen Kumar)
The present Writ Petition came to be filed under Article 226 of the Constitution of India seeking the following relief:- “……..to issue a Writ of Mandamus or any other appropriate Writ or order or direction, setting aside the order of the 2nd Respondent in AO.No.5178 dated 24.3.2020 affirming the order of the 1st respondent dated 8.1.2019 for the period July, 2017 to June, 2018, as illegal, arbitrary and contrary to law, in gross violation of principles of natural justice and without authority of law and jurisdiction, and set aside the same and consequently declare that the Petitioner is not liable to GST on the byproducts retained by the 3rd Respondent Corporation, or in the alternative, direct the 3rd Respondent Corporation to bear the liability if it is held to be payable, and pass….”
Heard Sri K.Srinivasa Rao, learned counsel for the petitioner, learned Government Pleader for Commercial Taxes appearing for respondent Nos.1, 2 and 5 and Sri P.Hemachandra, learned Stan
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