Consumer subsidy under the fertiliser price support scheme was excluded from taxable turnover under sales tax law.

Consumer price support subsidy received under the fertiliser price support scheme was not treated as part of taxable turnover under the Kerala General Sales Tax Act. The price control framework fixed the maximum sale price, while the retention price mechanism provided manufacturers a government-funded return. Because the subsidy was not paid by the purchaser or on the purchaser's behalf as consideration for any specific sale, and the sale was not conditional on receipt of the subsidy, it was not an amount received in respect of sales. The subsidy therefore remained outside turnover and was not liable to sales tax.

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Issues: Whether the consumer price support subsidy received from the Central Government under the fertiliser price support scheme formed part of the taxable turnover under the Kerala General Sales Tax Act.

Analysis: The price control scheme under the Fertilizer (Control) Order, 1985 fixed the maximum sale price of fertilisers, while the retention price mechanism ensured a reasonable return to manufacturers through payments from the Government fund. The subsidy was not paid by the purchaser or on the purchaser's behalf as consideration for any particular sale, nor was the sale transaction conditional upon such payment. The amount was received for the benefit of the manufacturing unit under the Government scheme and was not linked to the sale price forming the turnover. On this reasoning, the subsidy could not be treated as an amount received in respect of the sale so as to be included in taxable turnover under section 2(xxvii) of the Kerala General Sales Tax Act.

Conclusion: The subsidy amount was not part of the taxable turnover and was not liable to sales tax under the Kerala General Sales Tax Act.

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