M/S. Sri Venkateswara Padmavathi Rice Mill vs. The Assistant Commissioner (St)

Held

The Court allowed the writ petition, holding that the issue was squarely covered by a previous order of a Division Bench of the same High Court dated 20.11.2020 in W.P.No.45971 of 2018. In that prior case, the assessment order impugned therein was set aside insofar as it related to the levy of GST on the value of by-products (broken rice, bran, and husk) treated as part of the consideration paid for milling paddy. The reasoning in the cited order, which the present Court adopted, was that such by-products, when retained by the miller as compensation, should not be treated as part of the consideration for the milling service for the purpose of GST levy. Consequently, the present assessment order was set aside to the extent it levied GST on the value of these by-products. The Court directed that a copy of the earlier order be annexed to the present order.

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 SGST Act, 2017. The challenge was specifically to the levy of GST on the value of broken rice, bran, and husk, which were obtained during the milling of paddy belonging to the 3rd respondent. These by-products were allowed to be retained by the petitioner as compensation 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, is contrary to law, facts, and without jurisdiction. This issue turns on the interpretation of the consideration for the milling service under the SGST Act, 2017. Petitioner's contention: The petitioner argued that the assessment order was illegal and without jurisdiction, seeking a mandamus to set it aside. They contended that the levy of GST on the by-products retained as compensation was improper. Revenue/State's contention: The judgment does not record any specific arguments made by the revenue or state. However, the assessment order itself implies their stance that the value of the by-products constituted part of the consideration for the milling service and was thus exigible to GST.