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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 ..... nnection that bran is not exempted under CGST/APGST Act, 2017, resultantly the levy of tax on the sale value of such bran is to be upheld as sustainable and the tax so levied and impugned orders passed by the assessing authority is confirmed and the appeal to this extent is dismissed. The levy of tax by the assessing authority is confirmed - Appeal dismissed. - APL1900050 - Order No. 5180/2020 - Dated:- 24-3-2020 - Smt. P. Vaishnavi, Joint Commissioner (ST) Appellate Authority (ST) ORDER This is an appeal filed by M/s. Sri Kanakadurga Rice and Flour Mill, Ravivalasa Village, Gantyada Mandal, Vizianagaram District (hereinafter referred to as Appellant ) against the tax orders passed by the Assistant Commissioner (ST), M.G. Road East Circle, Vizianagaram Division (hereinafter referred to as Assessing Authority /for short A.A. ) for the tax periods from July, 2017 to June, 2018 under CGST/APGST Act, 2017 in GSTIN : 37APFPK3066G1ZW vide Orders-in-Order No. 3, dated 10-1-2019, disputing the levy of tax of ₹ 10,04,326/-. 2. The case is posted for hearing details are as under : Sl. No. Date of notice issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity of AO is as shown below; Consideration received/receivable towards Custom Milling of Paddy : S. No. Description Already assessed Quantity in quintals Actual Quantity in quintals Value in Rs. Tax @ 5% SGST-2.5% CGST-2.5% 1. CMR Charges @ ₹ 15/- per Quintal 5431.43 54314.3 814715 40736 2. Broken sale value @ ₹ 1100/- per Quintal 163 1630 1793000 69650 3. Bran sale value @ ₹ 1700/- per Quintal 435 4350 7395000 369750 4. Husk sale value @ ₹ 225/- per Quintal 1195 11950 2688750 134438 5. TOTAL TAX DUE ON SERVICES (2017-18) 12691465 634574 7. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne 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/Corporation should pay the necessary GST on services, but the department cannot levy un-intended, uncollected and un-charged tax. The dealer is only an agent to collect the GST and remit the same to the Government. (5) The deal ought not to have been subjected to a tax which was not leviable or collectable and there is no provision for deemed invoices in the GST law. (6) Without prejudice to the above, it ought to have been held that the procedure followed is in accordance with the law and fact, inasmuch as the dealer is having two types of the customers Viz., on set of customers for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders 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 remit the same to the Government. 16. Advancing this explanation, the appellant strongly professed that the value of supply supposedly adopted by AA is totally irrelevant to the facts of the issue, as such estimated value of by-products shall not be considered as consideration and not part of value of supply. 17. The appellant also alleged that the AA also missed to analyze both sides of the aspects and not allowed eligbile input tax in contradiction to his own interpretation. The appellant further averred that the transaction of custom milling is between the assessee and a Government Corporation which by no stretch of imagination can be considered as related parties and as such there is no need to invoke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n) 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 quantity falls short of the stipulated quantity the rice miller shall procure at his own cost and make good the shortfall. (3) The residues of 35% in the form of broken rice, husk and bran shall belong the rice miller only and there is no requirement to return the same to Government. (4) The rice millers will be paid an agreed amount per quintal (normally ₹ 15) to the rice miller. Implications of GST on the above transaction : (5) In the above transaction rice miller is rendering the service of converting the paddy into rice which is a service . Thus rice miller is supplier of the service and government or civil supplies corporation are the recipient of the service . (6) There is no specific exemption provided to the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation shall be based on the rules provided in CGST/SGST Rules. (12) As per Rule 27 of CGST/SGST Rules : where the supply of goods or services is for a consideration not wholly in money, the value of the supply shall (a) Be the open value of such supply : (b) if the open market value is not available under clause (a), be the sum total of consideration in money and any such further amount in money as is equivalent to the consideration not in money, if such amount is known at the time of supply; (c) if the value of supply is not determinable under clause (a) or clause (b), be the value of supply of goods or service or both of like kind and quantity (d) if the value is not determinable under clause (a) or clause (b) or clause (c), be the sum total of consideration in money and such further amount in money that is equivalent to consideration not in money as determination by the application of rule 30 or rule 31 in that order. (13) As per Rule 27, value of supply shall be determined as per the provisions contained there in the sequence provided in the said rule. As per the said rule 27(1)(b) value shall be the sum total of consideration i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xable commodity. (19) The consideration that the dairy is getting i.e., Milk being exempt is not relevant and will not render the transaction as exempt as milk is only the consideration. In other words, instead of getting the amount in cash, the dairy is getting the same in the form of milk. It is the value of the milk that matters but not its taxability. (20) Applying the above analogy to the instant case, rice miller is supplying the service of Milling the rice . What he gets as consideration could be cash or non-cash in the form of broken-Rice bran, and husk. Their value will have to be considered. (21) Hence the fact that broken - Rice and husk are exempt will not in any way alter the taxability of supply of the service Customs Milling . Manner of accounting and invoicing (22) The Manner of accounting and invoice required will be different from the stand points of Rice Miller and the civil supplies corporation. Compliances by Civil Supplies Corporation : (23) To start with the civil supplies corporation is the owner of the paddy. The corporation is sending the paddy to the rice miller for the job work of customs milling. As per the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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