M/S. Sri Sai Balaji Rice Mill vs. The Assistant Commissioner (St)
Held
The Court allowed the writ petitions, setting aside the impugned orders to the extent they levied GST on the value of by-products (broken rice, bran, and husk). The Court followed its previous order dated 20.11.2020 in W.P.No.45971 of 2018. The reasoning was that the by-products were not to be treated as part of the consideration paid to the petitioners for milling the paddy. The ratio decidendi is that by-products generated during a service, which are not explicitly part of the agreed consideration for that service, are not subject to GST as part of that consideration. The operative direction was to set aside the impugned orders concerning the levy of GST on by-products. No issue was expressly left undecided.
Facts
The petitioners, engaged in the business of milling paddy, filed multiple writ petitions challenging orders that levied Goods and Services Tax (GST) on the value of by-products such as broken rice, bran, and husk. These by-products were treated by the revenue authorities as part of the consideration received by the petitioners for milling services. The tax period(s) are not explicitly stated but relate to the period when the impugned orders were passed. The impugned orders were passed by the Commercial Tax department. The procedural history indicates that these writ petitions were heard together.
Key Issues
1. Whether the levy of GST on the value of by-products (broken rice, bran, and husk) is legally sustainable when these by-products are generated during the milling of paddy and are not explicitly part of the consideration for the milling service. This issue turns on the interpretation of provisions related to the taxable supply and consideration under the GST law. Contentions: Petitioner: Argued that the by-products are not part of the consideration for milling services and therefore, GST should not be levied on their value. They likely relied on principles of supply and consideration under the GST Act. Revenue/State: Submitted that the issue is covered by a previous order of the High Court dated 20.11.2020 in W.P.No.45971 of 2018. They likely argued that the by-products constitute an indirect consideration for the milling service.
Sections Cited
CGST Act (implied by the nature of GST levy and consideration)
AI-generated summary — verify with the full judgment below
THE HONOURABLE SRI JUSTICE A.V.SESHA SAI
AND THE HONOURABLE SRI JUSTICE K.SURESH REDDY
WRIT PETITION Nos.8927, 8928, 8933, 8938, 8941, 8943, 8946, 8947, 8952, 8956, 8957, 8958, 8960, 8962, 8968, 8972, 8973, 8976, 8977, 8982, 8983, 8985, 8994, 9006, 9008, 9010, 9011, 9036, 9041, 9055, 9057, 9058, 9064, 9065, 9076, 9090, 9526, 9528, 9529, 9531, 9534, 9539, 9540, 9541, 9545, 9548, 9557 & 9575 of 2019 & 22710 of 2020
COMMON ORDER: (Per Honourable Sri Justice A.V.Sesha Sai)
When these matters are taken up, it is submitted by both the learned counsel for the petitioners and the learned Government Pleader for Commercial Tax that the issue in the present Writ Petitions is covered by the order, dated 20.11.2020, passed by this Court in W.P.No.45971 of 2018. A copy of the said order is placed on record.
Following the above said order and for the reasons recorded therein, these Writ Petitions are allowed, setting aside the orders impugned insofar as the same relate to the levy of GST on the value of by-products i.e., broken rice, bran and husk treating them as part of consideration paid to the petitioners for milling of the paddy. There shall be no ord
The judgment continues below.
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