1994 (8) TMI 283 - HC - VAT and Sales Tax

Summary

Issues involved:
Whether the subsidy allowed on fertilizer by the Central Government is liable to be included in the "turnover" as defined in section 2(i) of the U.P. Sales Tax Act, 1948.

Summary:
The petitioner, engaged in the manufacture and sale of chemical fertilizer, challenged impugned notices under section 21 calling for inclusion of subsidy amount in "turnover" for certain years. The case law from Andhra Pradesh High Court and a Full Bench decision of the Sales Tax Tribunal were cited, indicating that subsidy received by the manufacturer should not be part of "turnover." The court distinguished a Supreme Court decision on freight charges, emphasizing that subsidy is not related to a specific sale transaction. As per the definition of "turnover," subsidy amount does not fall under the ambit of goods supplied by way of sale. The court concluded that the impugned notices lacked the necessary basis for reassessment, leading to their quashing for both U.P. Sales Tax and Central Sales Tax Acts.

The judgment highlights the interpretation of "turnover" under the U.P. Sales Tax Act in relation to subsidies granted by the Central Government to manufacturers of chemical fertilizers. It underscores the distinction between subsidies and sale transactions, ultimately determining that subsidies should not be considered as part of the turnover for taxation purposes. The decision provides clarity on the scope of turnover and the inclusion of subsidies, setting a precedent for similar cases in the future.