No GST on value of by-products i.e., broken rice, bran and husk treating them as part of the consideration paid to the petitioner to the milling charges
Assessment Order — Bye products retained are part of compensation and not of consideration — The petitioner, a Rice Miller, prayed for quashing Assessment Order dated 29.10.2018 for the tax period July, 2017 to February, 2018. The petitioner submitted that State Government through the Andhra Pradesh Civil Supplies Corporation -the respondent No. 4 procured paddy and gives to the rice mills for milling. As a consideration for milling, the respondent No. 4 pays charges at the rate of 15% per one quintal of paddy milled. As per the terms of the agreement, the respondent No. 4 allows the petitioner to retain the broken rice, bran and husk obtained in the course of milling of the paddy. The petitioner sells the said broken rice, bran and husk. The broken rice and husk are exempted from tax and hence, no GST was to be paid. But, the petitioner pays tax on the bran at the rate of 5%. The petitioner did not collect any GST from the 4th respondent. Hence, the 1st respondent cannot subject to tax any amount in excess of Rs. 15/-per quintal. The broken rice, bran and husk were given to the petitioner by the 4th respondent not as consideration, but in exchange for the own rice given by the petitioner to make up the shortfall of the rice after milling. At any rate even if the GST liability is attracted, the same has to be tacked to the 4th respondent who is the recipient of the services. The respondent submitted that the bye products which are retained can only be treated as part of consideration for the work agreed to be done. The court observed that the by-products form part of compensation but not consideration.
Held that:- The Hon’ble High Court allowed the Petition set aside the Assessment Order in so far as it relates to the levy of GST on the value of by-products i.e., broken rice, bran and husk treating them as part of the consideration paid to the petitioner for milling of the paddy.
No GST on value of by-products i.e., broken rice, bran and husk treating them as part of the consideration paid to the petitioner to the milling charges
Assessment Order — Bye products retained are part of compensation and not of consideration — The petitioner, a Rice Miller, prayed for quashing Assessment Order dated 29.10.2018 for the tax period July, 2017 to February, 2018. The petitioner submitted that State Government through the Andhra Pradesh Civil Supplies Corporation -the respondent No. 4 procured paddy and gives to the rice mills for milling. As a consideration for milling, the respondent No. 4 pays charges at the rate of 15% per one quintal of paddy milled. As per the terms of the agreement, the respondent No. 4 allows the petitioner to retain the broken rice, bran and husk obtained in the course of milling of the paddy. The petitioner sells the said broken rice, bran and husk. The broken rice and husk are exempted from tax and hence, no GST was to be paid. But, the petitioner pays tax on the bran at the rate of 5%. The petitioner did not collect any GST from the 4th respondent. Hence, the 1st respondent cannot subject to tax any amount in excess of Rs. 15/-per quintal. The broken rice, bran and husk were given to the petitioner by the 4th respondent not as consideration, but in exchange for the own rice given by the petitioner to make up the shortfall of the rice after milling. At any rate even if the GST liability is attracted, the same has to be tacked to the 4th respondent who is the recipient of the services. The respondent submitted that the bye products which are retained can only be treated as part of consideration for the work agreed to be done. The court observed that the by-products form part of compensation but not consideration.
Held that:- The Hon’ble High Court allowed the Petition set aside the Assessment Order in so far as it relates to the levy of GST on the value of by-products i.e., broken rice, bran and husk treating them as part of the consideration paid to the petitioner for milling of the paddy.