Sri Rama Rice Traders vs. The Asst. Commissioner St

Held

The Court allowed the writ petitions, setting aside the impugned orders. The Court followed its previous order dated 20-11-2020, passed in W.P.No.45971 of 2018. The reasoning, as per the referenced order, was that the levy of GST on the value of by-products like broken rice, bran, and husk, treating them as part of the consideration paid for milling paddy, was incorrect. The ratio decidendi is that by-products generated during the milling of paddy, such as broken rice, bran, and husk, are not to be treated as part of the consideration for the milling service itself, and thus, GST should not be levied on their value as such. The operative direction was to set aside the impugned orders to the extent they related to the levy of GST on the value of these by-products. No costs were awarded. No specific issue was left undecided.

Facts

Numerous writ petitions were filed before the High Court challenging orders related to the levy of Goods and Services Tax (GST). The petitioners are likely millers of paddy. The dispute centers on whether the value of by-products generated during the milling process, specifically broken rice, bran, and husk, should be treated as part of the consideration received by the petitioners for milling paddy, and thus subject to GST. The revenue authorities passed the impugned orders levying GST on these by-products. The procedural history indicates these petitions were filed in 2019 and 2020.

Key Issues

1. Whether the value of by-products (broken rice, bran, and husk) generated from milling paddy should be included as part of the consideration for the milling service, thereby attracting GST, under the relevant provisions of the CGST/SGST Act and Rules. Petitioner's contention: The petitioners argued that the by-products are not part of the consideration for milling services. They likely contended that the milling service is a distinct supply, and the by-products are either waste or generated incidentally, not as part of the agreed consideration for milling. They may have relied on principles of supply and consideration under GST law. Revenue's contention: The revenue contended that the by-products represent an additional consideration received by the millers for the overall service provided, and therefore, their value should be included in the taxable value of the milling service. They likely argued that the entire transaction, including the disposal of by-products, constitutes a single supply or that the by-products are intrinsically linked to the milling service.