M/S. Vijaya Krishna Rice Mill vs. The Assistant Commissioner

Held

The Court held that the issue involved in the present writ petition is squarely covered by a previous order dated 20.11.2020 passed by a Division Bench of the same High Court in W.P.No.45971 of 2018. In that prior case, an assessment order was set aside insofar as it related to the levy of GST on the value of by-products (broken rice, bran, and husk) treating them as part of the consideration paid for milling paddy. Following this precedent, the present writ petition was allowed in terms of the aforementioned order. The operative direction was to set aside the impugned assessment order to the extent it levied GST on the by-products.

Facts

The petitioner filed a writ petition challenging an Assessment Order passed by the 1st respondent for the tax period July 2017 to November 2018 under the SGST Act, 2017. The challenge was specifically to the levy of GST on the value of broken rice, bran, and husk obtained during the milling of paddy. These by-products were retained by the petitioner as compensation or exchange for supplying their own rice to the 3rd respondent to make up for any shortfall in yield, in addition to milling charges of Rs. 15/- per quintal. The petitioner sought to set aside this 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 yield shortfall, is contrary to law, facts, and without jurisdiction? The petitioner argued that the Assessment Order was illegal and sought its setting aside. They contended that the by-products retained should not be subject to GST as part of the consideration for milling services. The revenue's argument is not explicitly recorded in the judgment, but it is implied that they supported the levy of GST on the by-products as part of the consideration received by the petitioner for milling services.