VINEET KOTHARI, J. - (1.) THIS revision has been filed by the Revenue against the order of the Tax Board dtd.26.10.1993 whereby the learned Tax Board dismissed the Revenue's appeal and upholding the order of the Deputy Commissioner (Appeals) held that the subsidy received by the assessee on fertilizer manufactured and sold by it under the Scheme of Price Retention promulgated at the relevant point of time by the Ministry of Chemical and Fertilizer, New Delhi could not form part of the taxable turn over in the hands of respondent - assessee.
(2.) NO one appears for the respondent - assessee despite service. The learned Counsel for the petitioner - Revenue fairly submits that the Division Bench of Andhra Pradesh High Court has taken a categorical view in the case of Fertiliser Corporation of India Ltd. v. Commercial Tax Officer (OFA), Punjagutta, Division, Hyderabad and Ors. reported in 1991(83) STC 129 which was later on followed by the same Court in the case of Coromandel Fertilisers Ltd. v. the Commercial Tax Officer (OFA), Punjagutta Division, Hyderabad reported in 1992 (85) STC 552 in which Andhra Pradesh High Court has held as under; The manufacture, sale and distribution of fertilizer in the country is regulated by the Fertilizer (Control) Order, 1957, issued by the Central Government in exercise of the powers conferred under Section 3 of the Essential Commodities Act, 1955. Clause 3 of the said Order fixed the maximum prices at which fertilizers can be sold by a manufacturer or a dealer. Clause 4 of the said Control Order obliges every manufacturer or dealer to give a cash or credit memorandum to a purchaser of a fertilizer in such form as the Controller may direct. In order to ensure that none of the manufacturers become sick because of fixation of the maximum price and to ensure a fair return to them, the Government of India evolved a scheme, under which ex -factory retention price per ton is worked out on the basis of an expert committee report, net of excise duty and FPEC and exclusive of dealers margin and equated freight for the industry as a whole is fixed and is called the 'transfer price' from time to time. A manufacturer of fertilizer is paid the excess of the retention price over the transfer price. However, where the retention price of a unit calculated according to the formula in the scheme was lower than the transfer price, the said unit has to contribute such difference to the fund or pool. The question before the court was whether receipts by a manufacturer -dealer from the said pool or fund administered by the Central Government represents a part of the turnover exigible to tax under the A.P. General Sales Tax act, 1957: Held, that the subsidy had no relation to any single sale transaction and was determined on the basis of several factors. Therefore, any subsidy received by a manufacturer could not be treated as a part of turnover within the meaning of Section 2(s) of the A.P. General Sales Tax Act, 1957, especially when the assessment order itself showed that the transactions were covered by bills as required by the statutory provisions and no amount had been paid on behalf of the purchaser nor any amount collected by the dealer in excess of the price mentioned in the bills.
(3.) HAVING considered the submissions made by the learned Counsel for the Revenue at bar and having perused the judgment of Andhra Pradesh High Court, this Court is In agreement with the ratio of the aforesaid decision. Obviously, the subsidy received by the assessee during the relevant period under the Scheme floated by the Central Ministry cannot be said to be consideration passing from the purchase of goods for transfer of property in the goods sold by the assessee to its purchaser. It is rather on account of manufacture of fertilizers which are used by the agricultural sector for promoting manufacturing and sale of fertilizers at controlled rates and therefore, the same cannot be construed to be the consideration passing from purchaser or third party on behalf of such purchaser to the seller i.e. Assessee manufacturer and therefore, the same cannot be included in the taxable turn over of the respondent - assessee. Both the appellate authorities were justified in deleting such additional tax on the amount of subsidy. This Court respectfully concurs with the view of Andhra Pradesh High Court holding against the Revenue that the amount of subsidy could hot form part of taxable turnover in the hands of respondent - assessee.;