M/S Chaitanya Traders vs. The Assistant

Held

The Court allowed the writ petitions. It held that the issue in the present writ petitions is covered by the Court's previous order dated 20-11-2020 in W.P.No.45971 of 2018. Following the reasoning and decision in that order, the Court set aside the impugned orders to the extent they related to the levy of GST on the value of by-products (broken rice, bran, and husk) by treating them as part of the consideration paid to the petitioners for milling of paddy. The ratio decidendi is that by-products of milling, in this context, are not to be treated as part of the consideration for the milling service for the purpose of GST levy. The operative direction was to set aside the impugned orders concerning the levy of GST on 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 engaged 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 have levied GST on the value of these by-products. The petitioners contend that these by-products are not part of the consideration for milling. The present writ petitions were taken up 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 paid to the petitioners for milling services, thereby attracting GST, as per the relevant provisions of the GST Act and Rules? Petitioner's contention: The petitioners argued that the by-products are not part of the consideration for milling. They relied on the previous order of the High Court in W.P.No.45971 of 2018, which they submitted covered the present issue. Revenue's contention: The revenue authorities contended that the by-products are indeed part of the consideration for the milling service and are therefore exigible to GST. They did not present any separate arguments beyond the general submission that the issue was covered by the previous order.