M/S. Lakshmi Venkateswara Rice Traders vs. The Assistant Commissioner (St)
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 an assessment order concerning the levy of GST on by-products (broken rice, bran, and husk) by treating them as part of the consideration paid for milling paddy. The reasoning was that the levy on these by-products, in the context of compensation for milling and making up for shortfalls, was considered improper. The operative direction was to set aside the impugned assessment order in terms of the previous judgment. No costs were awarded. The issue of whether the by-products constituted 'consideration' for the milling service, attracting GST, was implicitly decided in favor of the petitioner by following the precedent.
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 under the CGST Act, 2017. 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. 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 from the milled paddy. 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 paddy and making up for shortfalls in their own rice supply, is contrary to law, without jurisdiction, and illegal, under the CGST Act, 2017? The petitioner argued that the assessment order was illegal and without jurisdiction, specifically concerning the levy of GST on the by-products. The revenue or State's arguments are not recorded in the judgment. The court noted that the issue was squarely covered by a previous Division Bench order.
Sections Cited
CGST Act, 2017
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HON’BLE SRI JUSTICE C. PRAVEEN KUMAR & HON’BLE SRI JUSTICE R. RAGHUNANDAN RAO
W.P. No. 24240 of 2020
O R D E R:- (Per Hon’ble Sri Justice C.Praveen Kumar)
This writ petition is filed for the following substantive relief: “….to issue a writ of mandamus holding that the impugned Assessment Order passed by the 1st respondent vide Ref.No.A2- 11/CMR/2019, dated 29.10.2020 for the tax period July, 2017 to November, 2018 under the CGST Act, 2017, insofar as it relates to the levy of GST on the value of the broken rice, bran and husk obtained in the course of Milling of the paddy of the 3rd respondent, allowed to be retained by the petitioner, in addition to the milling charges of Rs.15/- per quintal as compensation/exchange for the own rice supplied by the petitioner to the 3rd respondent to make up for the short fall in the yield, as contrary to law, facts, without jurisdiction and authority and illegal and consequently set aside the same and further direct the 3rd respondent to pay the GST liability on the petitioner either directly to the 1st respondent or to the petitioner.”
Heard the learned counsel for both the
The judgment continues below.
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