2020 (11) TMI 72 - Commissioner - GST

Appellate authority upholds tax on estimated by-products value in custom milling activity.

IN RE : SRI KANAKADURGA RICE AND FLOUR MILL

The appellate authority upheld the tax orders passed by the assessing authority, confirming the levy of tax on the estimated by-products' value retained ... Levy of tax - estimated by-products value, which are retained by the millers as part of custom milling activity, treating these compensatory products value as part of value of supply - HELD THAT:- The value of by-products so retained by the appellant yielded during CMR milling, which were allowed to be retained by the appellant to meet the CMR activity cost shall obviously be included as part of value of supply and also to be termed as a bona fide form of consideration, hence the levy of tax on the resultant value of these products treating as value of supply need to be upheld as legitimate and tax so levied and impugned orders passed by the assessing authority is confirmed and the appeal on this aspect stands dismissed. Levy of tax on estimated sale value of rice bran - HELD THAT:- The appellant has not put-forth any arguments and also not pressed for any relief through hearings. However, the levy on this aspect has also been examined by exploring the provisions of Act. It is to be observed in this connection 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. Issues Involved:1. Whether the levy of tax on estimated by-products value, which are retained by the millers as part of custom milling activity, treating these compensatory products value as part of value of supply, can be held as to be in tune with the provisions of CGST/APGST Act, 2017 or notRs.2. Whether the levy of tax on estimated sale value of rice bran, can be upheld as de jure or notRs.Issue-wise Detailed Analysis:1. Levy of Tax on Estimated By-products Value:The appellant, M/s. Sri Kanaka Durga Rice and Flour Mill, contested the tax orders passed by the Assistant Commissioner (ST) for the tax periods from July 2017 to June 2018, disputing the levy of Rs. 10,04,326/-. The assessing authority determined the tax liability under CGST/APGST Act, 2017, by considering the value of by-products such as broken rice, bran, and husk retained by the miller as part of the value of supply.The appellant argued that the assessment order did not invoke any specific provision of the Act and that the value of by-products should not be considered part of the service charges. The appellant also contended that the department should take up the issue with the Government for raising an invoice for the total deemed value and that the dealer should not be burdened with unintended, uncollected, and uncharged tax.The appellate authority, after thorough verification, found that the appellant admitted to retaining by-products as compensation for milling costs. It was concluded that the value of these by-products should be considered part of the value of supply under Section 15 of CGST/APGST Act, 2017, and Rule 27 of CGST/SGST Rules. The authority upheld the tax levied on the value of by-products as legitimate, confirming the impugned orders passed by the assessing authority.2. Levy of Tax on Estimated Sale Value of Rice Bran:The appellant did not present any arguments against the levy of tax on the estimated sale value of rice bran during the hearings. The appellate authority examined the provisions of the Act and noted that rice bran is not exempted under CGST/APGST Act, 2017. Consequently, the levy of tax on the sale value of rice bran was upheld as sustainable. The authority confirmed the tax levied by the assessing authority and dismissed the appeal on this aspect.Conclusion:The appellate authority concluded that the levy of tax by the assessing authority was legitimate and upheld the tax orders. The appeal was dismissed, confirming the tax levied by the assessing authority.