M/S Sri Pavan Durga Raw Rice Mill vs. The Assistant

Held

The Court allowed the writ petitions, setting aside the impugned orders. The decision was based on the submission by both parties that the issue was covered by a previous order of the High Court dated 20-11-2020 in W.P.No.45971 of 2018. Following the reasoning and findings in that prior order, the Court held that the levy of GST on the value of by-products like broken rice, bran, and husk, by treating them as part of the consideration paid for the milling of paddy, was not sustainable. The ratio decidendi is that by-products of milling, in this context, are not to be construed as part of the consideration for the milling service itself. The operative direction was to set aside the impugned orders to the extent they related to the levy of GST on these by-products. No costs were awarded.

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 individuals or entities involved in milling paddy. The dispute centers on whether by-products generated during the milling process, specifically broken rice, bran, and husk, should be treated as part of the consideration received for milling services, thereby attracting GST. The revenue authorities passed the impugned orders. The petitioners sought to set aside these orders. The matters were listed for hearing, and both the petitioners' counsel and the Government Pleader for Commercial Tax submitted that the issue was covered by a previous order of the High Court dated 20-11-2020 in W.P.No.45971 of 2018.

Key Issues

1. Whether the by-products of paddy milling, namely broken rice, bran, and husk, constitute part of the consideration for the milling service attracting GST, thereby making them exigible to GST. The petitioners argued that these by-products are not part of the consideration for milling services. They contended that the consideration for milling is the fee paid for the service of milling paddy, and the by-products are distinct and separate from this consideration. The revenue, represented by the Government Pleader for Commercial Tax, argued that these by-products are intrinsically linked to the milling process and should be considered as part of the total value received by the millers for their services. The court was to decide if the impugned orders, which treated these by-products as part of the consideration for milling and levied GST accordingly, were legally sustainable.