Vijaya Nagajyothi Rice Mill vs. The Assistant Commissioner (State Taxes) -Ii

Held

The Court allowed the writ petition, setting aside the impugned assessment order. The decision was based on the submission by learned counsel for both sides that the issue involved in this writ petition was squarely covered by a previous order of a Division Bench of the same High Court dated November 20, 2020, in W.P.No.45971 of 2018. The operative part of that prior order, which was adopted here, specifically set aside the levy of GST on the value of by-products (broken rice, bran, and husk) when treated as part of the consideration paid for milling paddy. The reasoning implicitly adopted is that such by-products are not part of the taxable consideration for the milling service. No costs were awarded.

Facts

The petitioner filed a writ petition challenging an order dated May 23, 2019, passed by the 1st Respondent (Central GST authority) for the period July 2017 to November 2018. The petitioner sought to set aside this order, declaring that they are not liable for GST on by-products retained by the 2nd Respondent Corporation. Alternatively, they requested the 2nd Respondent Corporation to bear the liability if it was found payable. The petitioner argued that the order was illegal, arbitrary, contrary to law, and passed in violation of natural justice and without jurisdiction. The revenue, represented by the Government Pleader for Commercial Taxes, was also a party.

Key Issues

1. Whether the levy of GST on the by-products (broken rice, bran, and husk) retained by the 2nd Respondent Corporation, treating them as part of the consideration for milling paddy, is legally sustainable? (Question of law) Petitioner's contention: The petitioner argued that the impugned order was illegal, arbitrary, and contrary to law, violating principles of natural justice and jurisdiction. They sought a declaration that they are not liable for GST on the by-products. They did not explicitly cite any specific provisions or precedents in the provided text, but their argument focused on the illegality and lack of authority for the levy. Revenue's contention: The revenue, represented by the Government Pleader for Commercial Taxes, did not present separate arguments in the judgment. However, the fact that an order was passed against the petitioner implies the revenue's stance was in favour of levying GST on the by-products.