M/S. Sri Venkateswara Modern Rice Mill vs. The Assistant Commissioner (St)
Held
The Court allowed the writ petition, setting aside the impugned Assessment Order and consequential Recovery Proceedings. The Court found that the issue was squarely covered by a previous order of a Division Bench dated November 20, 2020, in W.P. No. 45971 of 2018. In that prior case, the Court had set aside a similar assessment order concerning the levy of GST on by-products like broken rice, bran, and husk, treating them as part of the consideration for milling. The ratio decidendi is that by-products retained by a miller as compensation for supplying their own rice to make up for yield shortfalls, rather than as payment for milling services, are not subject to GST as part of the milling charges. The operative direction was to set aside the impugned assessment order and recovery proceedings.
Facts
The petitioner filed a writ petition challenging an Assessment Order dated January 10, 2019, and consequential Recovery Proceedings dated November 18, 2020, passed by the first respondent. The challenge pertains to the levy of GST on the value of broken rice, bran, and husk retained by the petitioner from milling paddy. These by-products were retained as compensation for supplying their own rice to the third respondent to make up for yield shortfalls. The tax period in dispute is 2017-2018. The petitioner sought to set aside the impugned orders or direct the third 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 services and supplying their own rice, is contrary to law, facts, and without jurisdiction. The petitioner argued that the impugned assessment order, which levied GST on the by-products retained as compensation, was illegal. The petitioner contended that these by-products were not part of the consideration for milling but rather compensation for their own rice supplied to the third respondent to cover yield shortfalls. The revenue or State's arguments are not recorded in the judgment.
Sections Cited
CGST Act
AI-generated summary — verify with the full judgment below
HON’BLE SRI JUSTICE C. PRAVEEN KUMAR & HON’BLE SRI JUSTICE B. KRISHNA MOHAN
W.P. No. 23372 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 vide Ref.No. GSTIN: 37ABOPG7963M12T, dated 10.01.2019, consequential order of Recovery Proceedings dated 18.11.2020 passed by the 1st respondent for the tax period 2017- 2018, 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 paddy of the 3rd respondent allowed to be retained by the petitioner, in addition to the milling charges, 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 or in the alternative 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 f
The judgment continues below.
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