2021 (3) TMI 1443 - SCH - GST

Levy of GST on broken rice, bran and husk - consideration payable in terms of Section 2(31) of the Goods Service Tax Act 2017 - whether High Court has erred in holding that in terms of Clause 17 of the agreement, the consideration was only the price for milling of paddy, as fixed? - HELD THAT - Issue notice, returnable in eight weeks. Till the next date of listing, no coercive steps shall be taken against the petitioners on the basis of the impugned judgment and order of the High Court dated 20 November 2020 in WP No 45971 of 2018.

Summary

Issues involved:
1. Interpretation of Section 2(31) of the Goods Service Tax Act 2017 regarding the definition of "consideration."
2. Determination of whether the value of bi-products like broken rice, bran, and husk should be included in the consideration under Clause 17 of an agreement with a rice miller.
3. Jurisdiction of the High Court to entertain a petition under Article 226 of the Constitution without exhausting appeal remedies against assessment.

Analysis:

Issue 1: Interpretation of Section 2(31) of the Goods Service Tax Act 2017
The counsel for the petitioner argued that Section 2(31) of the Goods Service Tax Act 2017 defines "consideration" to include any payments made or to be made, whether in money or otherwise. The contention was that the value of broken rice, bran, and husk should be considered in determining the overall consideration payable under the Act. The High Court was criticized for allegedly misinterpreting the scope of consideration under Clause 17 of the agreement with the rice miller.

Issue 2: Inclusion of bi-products in the consideration
Under Clause 17 of the agreement, it was highlighted that the Corporation was obligated to pay milling charges fixed by the government to the rice miller. Additionally, Clause 22 specified that the mill would retain all bi-products, including broken rice, bran, and husk, indicating that the value of these by-products should be part of the consideration. The argument was made that the High Court's decision, which considered only the price for milling of paddy as fixed under the agreement, was erroneous.

Issue 3: Jurisdiction of the High Court
A significant point raised was the jurisdiction of the High Court in entertaining a petition directly under Article 226 of the Constitution without the respondents exhausting remedies through an appeal against the assessment. The counsel contended that the High Court's decision to entertain the petition without the exhaustion of appeal remedies was improper, suggesting that the respondents should have followed the appeal process before approaching the High Court.

In conclusion, the Supreme Court issued notice on the matter, returnable in eight weeks, granting permission for Dasti. The respondents were directed to file their counter affidavit within three weeks. Additionally, the Court ordered a stay on coercive actions against the petitioners based on the High Court's judgment until the next listing date.