Fertiliser subsidy not part of sale consideration and excluded from taxable turnover under sales tax law

Fertiliser subsidy received under a Government scheme to support manufacturers and ensure a reasonable return was not part of the price or consideration for any specific sale under the Kerala General Sales Tax Act, 1963. Sales were completed when purchasers paid the controlled price fixed under the Fertilizer (Control) Order, 1985, and there was no contractual obligation to pay anything beyond that price. Because the subsidy served a different purpose and was not part of the aggregate sale consideration, it was not includible in taxable turnover and could not be assessed to sales tax.

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Issues: Whether the fertiliser subsidy received from the Fertiliser Price Fund Account formed part of the taxable turnover under the Kerala General Sales Tax Act, 1963.

Analysis: The subsidy was paid under a Government scheme intended to ensure a reasonable return to fertiliser manufacturers and to support the industry, not as consideration for any specific sale of fertiliser. The sales to purchasers were complete on payment of the controlled price fixed under the Fertilizer (Control) Order, 1985, and there was no contractual obligation on the purchaser to pay any amount beyond that price. The statutory definitions of turnover and sale under the Kerala General Sales Tax Act, 1963 require an amount to be part of the aggregate price or consideration for the sale. A subsidy received for a different purpose, even if linked to quantities cleared from the factory, does not become sale consideration.

Conclusion: The subsidy was not includible in taxable turnover and could not be assessed to sales tax under the Kerala General Sales Tax Act, 1963.

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