Neyveli Lignite Corporation Ltd. (NLC), a public sector enterprise, manufactured fertilizers. To ensure affordable fertilizers for farmers, the government fixed maximum selling prices through the Fertilizer (Control) Order, often lower ... than production costs. Under the Retention Price Scheme, the Government of India paid a subsidy to manufacturers like NLC to compensate for this gap. The Tamil Nadu Commercial Tax Department claimed that this subsidy formed part of NLC's taxable turnover under the Tamil Nadu General Sales Tax Act. NLC disputed this and argued that the subsidy was independent of the sale price and hence not taxable. The Tamil Nadu Taxation Special Tribunal ruled in favor of the tax authorities, prompting NLC to appeal to the Supreme Court.