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TMI Blog2020 (11) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-2019 15-10-2019 Not Attended 5. 13-2-2020 (final) 16-3-2020 Attended 3. Sri D. Balaji, Chartered Accountant and authorized representative of the firm (hereinafter referred to as 'A.R.') has appeared on earlier occasion and finally on 16-3-2020 for arguing the case. Finally, the appeal was heard by the Appellate Authority. Statement of facts :- 4. The appellant-M/s. Sri Kanaka Durga Rice and Flour Mill, Ravivalasa is an assessee on the rolls of the Assistant Commissioner (ST), M.G. Road East Circle, Vizianagaram Division, and doing the business of Paddy, Rice and by-products. 5. The assessing authority recorded in his order that on scrutiny of appellant returns and after obtaining certain information from Civil Supplies Department, he has opined that dealer need to be assessed under Section 74 of CGST/APGST Act, 2017, and passed orders accordingly after issuing a show cause notice. The AA further recorded that the appellant being a rice miller has received certain quantity of paddy from the civil supplies corporation and in turn milled the paddy so received after such milling the appellant supplies fixed quantity of rice to the Civil Supplies Department ir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Grounds of appeal :- 11. The grounds of appeal filed by appellant in the appeal are extracted hereunder : (1) The assessment order No. 3, dated 10-1-2019 passed by the Assistant Commissioner (ST), M.G. Road, East Circle, Vizianagaram District is contrary to the law and the facts of the case is so far as it is against the Appellant. (2) At the outset, the assessment order having been given without invoking any specific provision of the act is contrary to the legal position and for this ground alone the assessment order request to be set-aside. (3) Without prejudice to the above, the assessing officer's action is illegal and arbitrary and is against the spirit and letter of the GST Act for several reasons including requirement of pre-payment of tax for which no provision is there under GST Law, no basis for the estimate made by Assessing office etc., (4) If the department considers the value of other by-products as a part of service charges, then the department should take it up with the Government for raising an invoice for the total deemed value and the Government/Corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service is yet to complete as per agreement. 12. For these and any other grounds to be urged at the time of hearing your appellant prays for the deletion of the above mentioned additions. 13. The appellant craves leave to add, amend, alter or delete any of the grounds. Discussion : 14. Perused the grounds of appeal vis-a-vis the impugned orders passed by the assessing authority i.e. Assistant Commissioner (ST), M.G. Road East Circle, Vizianagaram Division. 15. At the time of hearing, the A.R. has appeared and reiterated the contentions set-forth in the grounds of appeal. The appellant basically attempted to point out that the AA has not invoked any specific provisions of Act, hence orders are not in tune with the legal position. The appellant further demanded that if the department considers the value of other by-products as a part of service charges, then the department should take it up with the Government for raising an invoice for the total deemed value and the Government/Corporation should pay the necessary GST on services, but the department cannot levy un-intended, un-collected and uncharged tax. The dealer is only an agent to collect the GST and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint towards a conclusion that the value of retaining goods by the miller shall nevertheless be considered as part of the value of supply with reference to the CMR job work service effected by the appellant like millers. 21. The appellant's point of objection that the AA has not invoked any specific provisions, is also against the findings recorded, because the AA has clearly recorded that he has relied on Section 15 of CGST/APGST Act, 2017 and also invoked Section 74 of CGST/APGST Act, 2017, for assessing the dealer, hence this particular contention of the appellant is rejected as not sustainable. Analysis of value of supply : " 'Customs milling Rice' is an arrangement where the Government (through its Civil Supplies Corporation) gets the Paddy milled into Rice. Thus, it is an agreement between Civil Supplies Corporation and Private Rice Mill owners to mill and convert the paddy into rice and the terms of a typical agreement consist of the following terms. (1) The paddy shall be milled into Rice. (2) That a set % (normally 65%) of paddy shall be accounted for and returned to Government into Rice. In case the actual rice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat is received by supplier, (d) Consideration need not be paid by recipient alone, the same can be paid by others/third party as well. (9) Therefore from the above definition of 'consideration' in the present Case is not only that portion that is received in cash i.e., 15/- per quintal but also that what is received by the rice miller in the form kind i.e., the residues left in the course of milling the rice Viz., broken rice, bran and Husk. (10) Determination of transaction value : As per section 15 of CGST/SGST Acts, "The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply". (11) In case of 'Customs Milling of Rice' price (Money that is received) is not the sole consideration as the consideration involves something in the form of other than cash hence the provision of section 15 cannot be applied to the above case and the valuation shall be based on the rules pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... described Above? (17) To resolve the above it is pertinent to distinguish the 'Supply' and 'Consideration' supply is what is provided by the supplier and consideration is what is provided by the supplier and consideration is what he get in return. In case of cash transactions, usually, supply will be either goods or services whereas consideration will be in the form of cash. However in case of non-cash transactions both supply and consideration could be goods or services. Such a cases are normally termed as 'Exchange' or 'barter'. In such a case what is supply and what is consideration depends on the perspective as to 'Whose point of reference' we are deciding. (a) To illustrate, if a farmer is giving 'Milk' to a dairy house and in return he collect some 'Ghee'. In this transaction (a) From the view point of dairy 'Ghee' is supplied and 'Milk' is consideration (b) From the view point of farmer 'Milk' is supplied and 'Ghee' is the consideration. (18) The taxable under GST Act is prescribed and is to be determined based on supply but not on consideration. (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... @ 5%. This tax amount can be availed by the rice Miller as ITC. Compliances by Rice Miller : (25) The rice miller is rendering the service of customs milling which is taxable service. Hence upon completion of the said service the rice miller shall raise a tax invoice as per the provisions of sec. 31. The valuation for the supply shall be determined as per the discussion above and the rate of tax is 5%. (26) In case the rice miller is unable to get the prescribed yield as the CMR agreement, then rice miller will replenish the shortfall by the rice he procures form the open market. In such a case, rice miller will procure rice on a bill of supply and the property in the goods shall pass on to the corporate. Hence to this extent rice Millers shall raise a bill of supply. (27) The rice miller may sell the goods, broken rice, bran etc., in the open Market later. At that time, he shall raise 'Bill of supply' for broken rice and 'Tax invoice' for bran as the case may be. He may also use bran for its internal fuel consumption, in which case no documents are required." 22. In view of the above analysis, it is clear that the value of by-products so retained by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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