9911796707
TMI Blog2021 (1) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... pass such other order deemed fit. 2. The petitioner's case is thus: (a) The petitioner is a Rice Miller and registered dealer under APGST Act, 2017 (for short, "GST Act") on the rolls of respondent No. 2. The State Government through the Andhra Pradesh Civil Supplies Corporation i.e., the respondent No. 4 herein procures paddy from the ryots and gives to the rice mills for milling and handing over to respondent No. 4 for public distribution. 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 Rice Millers have to supply rice equivalent to 67% of the paddy given for milling irrespective of the yield. In fact, the actual yield will be around 61% to 62% only. The balance of 5% to 6% has to be provided by the petitioner to the respondent No. 4 out of his own stock. Therefore, as a compensation/exchange for the same, 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 need to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the petitioner herein would retain the bye products. Further, as per the terms of the agreement, the taxes payable for the bye products are to be borne by the petitioner herein. (b) In the present transaction, the rice miller is running the service of converting the paddy into the rice which is "service". Thus, the rice miller is the supplier of the service and Government or the Civil Supplies Corporation is the recipient of the service. There is no specific exemption provided to the above said service. Hence, the same is taxable. As per the tariff under GST, the prescribed rate for the above referred service is 5% (clarification issued vide Circular No. 19/19/17 dated 20-11-2017). Under the GST Act, the GST is leviable on the consideration for supply. As per the definition of the term "consideration" given under section 2(31) of the APGST Act, consideration can be in the form of money or otherwise. In the present case, the consideration is not just Rs. 15/- per quintal but also includes bye products viz., broken rice, bran and husk. Unlike the previous enactments, under the GST Act 2017, consideration need not be in the form of money but anything equivalent to money. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the supply and consideration could be goods or services, which transaction can be termed as "exchange" or "barter". It is further contended that since the milling is done by the petitioner, the primary responsibility and liability for payment of the GST is with the petitioner, but not with 4th respondent. The analogy of Rural Development Cess cannot be adopted in the instance case as it was an accommodation made by the Government to pay cess directly to the Department instead of millers. (e) It is submitted that though the petitioner has filed returns duly disclosing the turnover, however, failed to pay the tax thereon and hence, the assessment was taken up quantifying the tax liability. Section 74 of the APGST Act, 2017 will be applicable where the evasion is wilful and Section 73 will be applicable where it is non-wilful. In the instant case, since the petitioner has already disclosed the turnover, but disputed the levy of tax, it is a bonafide mistake on his part and accordingly, the provisions of Section 73 were invoked. The prices arrived at are existing market prices only and are not imaginary. The information was obtained from the Civil Supplies Department relates to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to be dismissed. The writ petition does not merit consideration and hence, the same may be dismissed. 5. Heard the arguments of learned Senior Counsel, Sri S. Ravi representing Sri G. Narendra Chetty, learned counsel for petitioner, and learned Advocate General representing the respondents 1 to 3 and Sri Hemachandra, learned Standing Counsel for the 4th respondent. 6. Severely fulminating the impugned Assessment Order, learned Senior Counsel, Sri S. Ravi argued that the 1st respondent who is the assessing authority wholly misconceived while applying the provisions of the GST Act to the terms of the CMR agreement between the petitioner and 4th respondent and included the value of the by-products to the actual consideration of Rs. 15/- per quintal paid to the petitioner towards milling charges and held that the total consideration in this case is not only Rs. 15/- per quintal but also the value of the by-products and accordingly, wrongly assessed the GST on the aforesaid total value treating the same as consideration. Learned Senior Counsel strongly professed that having regard to the intention of the parties and the terms employed in the agreement, particularly clause No. 22, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This reason also compelled the 4th respondent to permit the petitioner to retain the by-products. Therefore, the retention of by-products by the petitioner can only be termed as "compensation" but not as "consideration" within the meaning of GST Act. Learned Senior Counsel lamented that without proper appreciation of these factual intricacies, the 1st respondent casually treated the by-products as part of the consideration. 7. Finally, he reiterated that to resolve the issue whether the by-products form part of the consideration or compensation, one has to necessarily read in between the terms of the agreement but shall not go by assumptions and presumptions. To buttress his argument, learned Senior Counsel placed reliance on Food Corporation of India v. State of A.P [1997 SCC Online AP 1143]. He submitted that in the light of the above judgment, the assessment of the 1st respondent made on the basis of assumption is wholly without jurisdiction and authority and therefore the Writ Petition is maintainable in spite of the fact that the right of statutory appeal is available to the petitioner. He alternatively argued that in spite of his submission, if the Court comes to conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r deferred payment or for other valuable consideration and hence the value of the by-products cannot be added to the turnover of the FCI. Learned Advocate General vehemently argued that in the instant case at clause No. 22 except mentioning that the Mill (petitioner) shall retain all by-products, there is no mentioning, as we find in FCI's case, that the by-products shall be the property of the petitioner. He thus narrated that when by-products were not intended to be treated as the property of the petitioner free of cost, the obvious conclusion was that the petitioner shall retain them as part of the consideration. 10. Nextly, learned Advocate General argued that as against the Assessment Order of the 1st respondent, a statutory appeal is provided under section 107 of GST Act. Without availing the said efficacious alternative remedy, the petitioner invoked the jurisdiction of this Court under Article 226 of Constitution of India. Therefore, the Writ Petition is liable to be dismissed in limine. To buttress his stand point of view, he placed reliance on_ Assistant Commissioner (CT) LTU v. Glaxo Smith Kline Consumer Health Care Ltd. 2020 SCC Online SC 440 Commissioner of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication was issued in F.No.354/263/2017-TRU by the Government of India, Ministry of Finance, in its letter dated 20-11-2017 to the Commercial Tax Department, a copy of which is placed on record by learned Advocate General and it reads thus: 3. Milling of paddy is not an intermediate production process in relation to cultivation of plants. It is a process carried out after the process of cultivation is over and paddy has been harvested. Further, processing of paddy into rice is not usually carried out by cultivators but by rice millers. Milling of paddy into rice also changes its essential characteristics. Therefore, milling of paddy into rice cannot be considered as an intermediate production process in relation to cultivation of plants for food, fibre or other similar products or agricultural produce. 4. In view of the above, it is clarified that milling of paddy into rice is not eligible for exemption under S.No.55 of Notification 12/2017-Central Tax (Rate) dated 28th June 2017 and corresponding notifications issued under IGST and UTGST Acts. 5. GST rate on services by way of job work in relation to all food and food products falling under Chapters 1 to 22 has been reduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard and therefore same cannot be added to its turnover. In that context, the Division Bench perused the relevant term relating to by-products embodied in clause E(v) which is as follows: "The by-products, viz., broken rice, rice fragments, rice bran and husk, etc., obtained in the shelling of paddy shall be the property of the agent and these products shall not be the responsibility of the FCI. However, sales tax, if any on the value of such by-products will be recovered from the miller at the rate fixed by the appropriate Government and in force from time to time." Analysing the above stipulation, the Division Bench observed thus: 5. Since in the agreement the service charge is indicated as only Rs. 5 per quintal of paddy and nothing else is indicated towards remuneration, there is no warrant to stipulate a further condition regarding remuneration, as has been done by the authorities under the Andhra Pradesh General Sales Tax Act. It is well-known that when the terms between the parties are under an agreement, the terms are sacrosanct between them and that it can neither be varied or altered or explained otherwise by adducing of oral evidence. (Emphasis supplied). Clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... godown. Thus, as can be seen, the above two clauses couched in the agreement are distinct and independent to each other. Whereas, clause No. 17 says that milling charges will be paid as fixed by the GOI (admittedly @Rs. 15/- per quintal), clause No. 22 states that the mill shall retain all the by-products such as brokens, bran, husk etc., derived during the process of milling. There is no slightest insinuation in either clause that the by-products shall form part of the consideration. If the parties to the agreement had such intention, nothing prevented them to do so. As we observed, all the terms of CMR, both significant and trivial, are meticulously incorporated. For instance, it was mentioned that the mill shall deliver raw rice - 67% and boiled rice - 68% as against the paddy delivered for CMR; the mill shall bear unloading charges, insurance, tarpaulin, ropes, dunnage material, prophylactic and curative treatment expenditure etc; the mill shall use SBT gunnies supplied with paddy stocks and shall return the left over gunnies to the corporation, failing which, 60% of the cost of the gunny will be collected from the mill etc. Going by the way the aforesaid terms are meticulous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the impugned Assessment Order an appeal is provided under section 107 of GST Act. It is also true that this Court will not generally entertain writ when efficacious alternative remedy is available. However, since the facts in the present case are squarely covered by the ratio laid by the Division Bench in Food Corporation of India v. State of A.P. (1 supra) and the 1st respondent without considering the same committed legal error on sheer assumptions, we thought it apposite to entertain the writ petition instead of driving the petitioner to the Appellate Authority. In this regard, the decisions relied upon by learned Advocate General can be distinguished. In Glaxo Smith Klina Consumer Health Cares Ltd. case (2 supra), the question for consideration before Apex Court was whether the High Court in exercise of writ jurisdiction ought to entertain a challenge to the Assessment Order on the sole ground that the statutory remedy of appeal against that order was foreclosed by the law of limitation. In that case, as against the Assessment Order dated 21-6-2017, the assessee filed a belated appeal on 24-9-2018 instead of within 30 days from the date of receipt of the order copy. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, does not mean that it would issue a writ which may be inconsistent with the legislative intent regarding the dispensation explicitly prescribed under section 31 of the 2005 Act. That would render the legislative scheme and intention behind the stated provision otiose. In the case on hand, the Assessment Order was passed 29-10-2018 and as per Section 107 of GST Act, an appeal shall be filed within three (3) months from the date of communication of the order. The Writ petition is filed on 17-12-2018 i.e., well within the period of limitation for filing appeal. Having regard to the dictum laid in Glaxo Smith's case (2 supra), this Court can either entertain the writ petition or refer the petitioner to Appellate authority. Since the impugned order was passed having no regard to the law laid down in the case of Food Corporation of India v. State of A.P (1 supra), the writ was entertained. For the same reason, the other decisions relied upon by learned Advocate General are not followed. 22. The objection raised by learned counsel for the 4th respondent that in view of the arbitration clause, the writ petition is not maintainable, has no teeth. It should be noted that there are n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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