TaxTMI 
TaxTMI 
2017 (9) TMI 680
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....impugning the judgments of the learned Single Judge. Some of the writ petitions were filed by the companies manufacturing as also importing fertilizers and some of the writ petitions were filed by Petroleum Companies which are supplying Liquefied Petroleum Gas to the domestic consumers and also Kerosene to the Public Distributing System. The question raised was whether the subsidy received by the companies would form part of the turnover for the purpose of levy of tax under the Kerala Value Added Tax Act. In the judgments under appeal, following the judgment in the case of Madras Fertilizers Limited v. Asst. Commissioner (Assessment) and Another [1994 (95) STC 134], the learned Single Judge allowed the writ petitions. It is these judg....
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....4 STC 586. Therefore, the issue that subsidy received by the assessees, whose selling price is regulated by the provisions of the Fertiliser (Control) Order of the Government of India, cannot be a matter of debate. 4. However, the learned Government Pleader raised a contention that the aforesaid judgments of this court and the Apex Court were rendered in the context of the provisions contained in the Kerala General Sales Tax Act and that having regard to the provisions contained in the Kerala Value Added Tax Act, re- examination of the issue is necessary. According to him, in terms of Section 6(1), every dealer having a total turnover beyond the limit prescribed therein is liable to be levied tax on sale or purchase of goods. It was poin....
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.... price, the amount so received shall be deemed to be turnover in respect of such goods. 6. Though the definition of turnover as contained in Section 2 (Iii) is not different from what was contained in Section 2 (XXVII) of the KGST Act, the contention of the learned Government Pleader is that Explanation VII was incorporated by the Legislature in the Kerala Value Added Tax Act to include subsidies and other amounts, such as those received by the assessees, in their turnover. However, having considered the submission made, what we find is Explanation VII is attracted only in a case where a dealer sells goods purchased by him at a price lower than that at which it was purchased and subsequently receives any amount from any person towards re....
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....n the said notification provided that the maximum price so fixed was to be inclusive of Central sales tax, State sales tax or other local taxes wherever levied. Neither in the notification nor in the Fertilizer (Control) Order is there any reference to the Retention Price Scheme of the Government. 12. The Retention Price Scheme first enunciated by letter dated 31st December, 1977 is clearly an administrative decision of the Government of India. It has been issued pursuant to the Ministry's Resolution and it enables a factory, like the appellant, to receive subsidy from the Government in case the retention price is more than the price fixed under Clause 3 of the Fertilizer (Control) Order. It is mentioned in the assessment order that ....
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.... of the bargain between the manufacturer and the purchaser of fertilizer. 8. Subsidy is given to the manufacturer/dealer to make up the difference between the Retention Price and the price fixed by the Government under the Fertiliser Control Order. Though subsidy paid is for the benefit of the consumer public to ensure that the prices are kept at a reasonable level and at the same time, a reasonable return on investment is also ensured to the manufacturers/dealers, the subsidy is not a consideration for the sales effected. It is also not a reimbursement of the difference in the purchase price and sale price, but what is paid as subsidy is the difference between the maximum price specified in the Fertiliser Control Order and the Ret....
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....espectively. Clause 11 provides for 'settlement of subsidy claims of the participating companies' and the participating companies shall raise two types of the claims every month, viz. provisional claims and final claims with the Petroleum Planning and Analysis Cell under the Ministry of Petroleum and Natural Gas. In terms of this provision, the settlement of provisional and final payments will be on monthly basis. 10. The aforesaid provisions of the PDS kerosene and domestic LPG Subsidy Scheme, 2002 shows that the principles which have been explained by the Apex Court in the context of the subsidy paid for fertilisers fully apply to the subsidy paid by the Government of India to petroleum companies for the PDS kerosene and domest....