M/S Sarvasiddhi Agrotech PVT. LTD vs. The Union Of INDIA And Ors

Facts

M/s Sarvasiddhi Agrotech Pvt. Ltd. (Petitioner) challenged orders passed by the Assistant Commissioner of GST (Adjudicating Authority) and the Joint Commissioner of Appeals (Appellate Authority). The Petitioner, engaged in supplying rice, was investigated based on intelligence that it was dealing in branded rice. A raid on its godown and premises led to the seizure of documents and stock. The Adjudicating Authority issued a Demand cum Show Cause Notice alleging the Petitioner supplied branded rice ('Aahar Normal', 'Aahar Gold', 'Aahar Premium') in 25 kg bags without paying GST for the period July 1, 2017, to July 17, 2018. The total taxable value was assessed at Rs. 27,28,85,021/-, with a tax demand of Rs. 1,03,35,028.50, plus interest and penalty. The Petitioner contended it supplied unbranded rice, that the seized stock was for internal use, and that it had forgone any actionable claim on the brand names. The Adjudicating Authority rejected these defenses, confirming the demand, interest, and penalty.

Held

The Court held that the Petitioner was liable to pay GST on the supply of branded rice. The conclusion was based on the assessment of materials on record, including seized documents, invoices, and a significant quantity of packaged branded rice found on the premises. The Court found that the tax was demanded not on the seized rice but on the quantity already supplied, as assessed from bill books and invoices. The Petitioner's defense that the seized rice was for internal use was not supported by evidence. Crucially, the Court referred to a Notification dated September 22, 2017, which amended the earlier notification. The amended provision expanded the scope of taxable supply to include goods put up in unit containers bearing a registered brand name OR bearing a brand name on which an actionable claim or enforceable right in a court of law is available. The Court found that the Petitioner's brands, even if unregistered, could lead to an actionable claim, and the Petitioner had failed to voluntarily forgo such a claim as required by the notification. Therefore, the Petitioner's appeal was dismissed.

Key Issues

1. Whether the Petitioner was supplying branded rice in unit containers, thereby attracting GST liability, under Section 74 of the CGST Act, 2017 and corresponding SGST Act provisions? - Petitioner's argument: The Petitioner argued that it was supplying unbranded rice and that the brands 'Aahar Normal', 'Aahar Gold', and 'Aahar Premium' were not registered brands, thus exempting its supplies from GST. It also contended that the seized rice was for internal use and not for taxable supply, and that no GST demand could arise without actual supply. - Revenue's argument: The Revenue contended that the Petitioner was indeed supplying branded rice in packaged units, as evidenced by seized documents, invoices, and the stock of branded rice found on the premises. They argued that the Petitioner had not voluntarily forgone any actionable claim or enforceable right in respect of the brands, as required by the relevant notification.