Linked fertiliser subsidy counted as sale consideration and formed part of taxable turnover under the sales tax law.

Fertiliser subsidy linked to a controlled sale price was treated as part of the sale consideration under the Tamil Nadu General Sales Tax Act, 1959. Because the Fertiliser (Control) Order, 1985 fixed the maximum sale price and the subsidy mechanism was integrated with the retention price and certification process, the Tribunal viewed the subsidy as a component of the aggregate amount for which the goods were sold. On that basis, it formed part of turnover under section 2(r) and was taxable as sale price, consistent with prior Madras High Court authority on linked subsidies.

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Issues: Whether fertiliser subsidy received from the Government of India forms part of the sale price and turnover of fertilisers for the purposes of sales tax under the Tamil Nadu General Sales Tax Act, 1959.

Analysis: The subsidy was not treated as a separate and independent payment divorced from the sale transaction. The sale of fertilisers was subject to the Fertiliser (Control) Order, 1985, which fixed the maximum sale price and compelled manufacturers to sell at the controlled price. The Tribunal held that the retention price mechanism, the certification process for subsidy claims, and the statutory scheme showed that the manufacturer expected to receive the balance of the consideration through subsidy. On that basis, the subsidy was linked to the actual sale and formed part of the aggregate amount for which the goods were sold within the meaning of turnover under section 2(r) of the TNGST Act. The Tribunal also relied on binding Madras High Court authority treating linked subsidies as part of the relevant turnover.

Conclusion: The subsidy was held to be part of the taxable turnover and liable to sales tax, against the assessee and in favour of the Revenue.

Ratio Decidendi: A subsidy that is inextricably linked to the sale of goods and represents part of the consideration for the controlled sale forms part of the dealer's turnover and is taxable as sale price.

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