Ravi Traders vs. The Assistant

Held

The Court allowed the writ petitions, setting aside the impugned orders. The Court's decision was based on its previous order dated 20.11.2020 in W.P.No.45971 of 2018, which covered the same issue. The ratio decidendi is that the value of by-products like broken rice, bran, and husk generated during paddy milling should not be treated as part of the consideration for the milling service itself, and therefore, GST should not be levied on them as such. The Court directed that the impugned orders be set aside specifically concerning the levy of GST on these by-products. No costs were awarded. The Court did not expressly leave any issue undecided.

Facts

These writ petitions were filed by multiple petitioners challenging orders passed by the revenue authorities. The core of the dispute revolved around the levy of Goods and Services Tax (GST) on the value of by-products, specifically broken rice, bran, and husk, which were generated during the milling of paddy. The revenue authorities treated these by-products as part of the consideration received by the petitioners for their milling services, thereby subjecting them to GST. The petitioners contested this classification and the consequent tax liability. The matters were consolidated for common adjudication.

Key Issues

1. Whether the value of by-products (broken rice, bran, and husk) generated from milling paddy should be treated as part of the consideration received by the petitioners for milling services, thereby attracting GST, as per the impugned orders of the revenue authorities? Petitioner's contention: The petitioners argued that these by-products were not part of the consideration for milling services. They likely contended that the milling agreement was for the service of milling paddy, and the by-products were incidental or separate items. They would have relied on principles of contract law and GST provisions to argue for a distinct treatment of these by-products. Revenue's contention: The revenue authorities contended that the value of these by-products constituted an integral part of the consideration received by the petitioners for the overall transaction of milling paddy. They likely argued that the petitioners benefited from these by-products, and their value should be included in the taxable supply of services.