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Supreme Court of India
Maruti Suzuki India Ltd. (Earlier … vs Commissioner Of Income Tax Delhi on 7 February, 2020Author: Ashok Bhushan
Bench: Ashok Bhushan, M.R. Shah
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.11923 OF 2018
MARUTI SUZUKI INDIA LTD.
(EARLIER KNOWN AS MARUTI UDYOG LTD.) …APPELLANT(S)
VERSUS
COMMISSIONER OF INCOME TAX, DELHI …RESPONDENT(S)
WITH
CIVIL APPEAL NO.11924 OF 2018
J U D G M E N T
ASHOK BHUSHAN,J.
By these appeals the assessee has challenged
the judgment of the High Court of Delhi dated
07.12.2017 deciding the Income Tax Appeal No.31 of
2005. ITA No.31 of 2005 related to Assessment year
Signature Not Verified
19992000
Digitally signed by
ARJUN BISHT
and ITA No.442 of 2005 related to
Date: 2020.02.07
15:58:29 IST
Reason:
Assessment year 20002001, in both the appeal
2
similar questions were answered against the
assessee. For deciding these two appeals it is
sufficient to notice the facts in CA No.11923 of
2018 for Assessment Year 19992000. The High Court
by the impugned judgment has affirmed the views of
Income Tax Appellate Tribunal on the questions
which have been raised in this appeal. The
Assessing Officer as well as the Commissioner of
Income Tax (Appeals) has not accepted the claim of
the appellant. The appellant (hereinafter referred
to as the “assessee”) is engaged in the business of
manufacturing automobiles, which are chargeable to
Excise Duty under the Central Excise Act, 1994. The
assessment year in question is assessment year
19992000. The assessee, a Company, has been
engaged in manufacturing and sale of various Maruti
Cars and also trades in spares and components of
the vehicles. It acquires exiceable raw materials
and inputs which are used in the manufacturing of
the vehicles. The assessee had also been taking
3
benefit of MODVAT credit on the raw material and
inputs used in the manufacturing. At the end of the
Assessment year 19992000 an amount of
Rs.69,93,00,428/ was left as unutilised MODVAT
credit. In the return it was claimed that the
Company was eligible for deduction under Section
43B of the Income Tax Act as an allowable
deduction. Similarly, the Company claimed deduction
under Section 43B of an amount of Rs. 3,08,88,171/
in respect of Sales Tax Recoverable Account.
2. The Assessing Officer passed assessment order
dated 28.03.2002. The Assessing Officer disallowed
the claim of deduction of Rs.69,93,00,428/ as well
as Rs.3,08,99,171/. Aggrieved by the assessment
order, the assessee filed an appeal before the
Commissioner of Income Tax. The Commissioner of
Income Tax also sustained the disallowance of the
above two items. An appeal to ITAT met the same
fate. The ITAT took the view that the advance
4
payment of Excise Duty which represented unutilised
MODVAT credit without incurring the liability of
such payment is not an allowable deduction under
Section 43B. The assessee filed an appeal under
Section 260A of the Income Tax Act in the High
Court. The High Court answered question Nos.(ii)
and ((iii) relating to the above noted disallowance
in favour of the Revenue. Aggrieved by the judgment
of the High Court, these appeals have been filed.
3. The two questions which were answered by the
High Court in favour of the Revenue which were
subject matter of this appeal are question Nos.(ii)
and (iii) as framed by the High Court are to the
following effect:
“(ii) Whether the ITAT had committed an
error of law in upholding the
disallowance of the amount of
Rs.69,93,00,428/ which represented
MODVAT credit of Excise Duty that
st
remained unutilised by 31 March, 1999
i.e. the end of the relevant accounting
year ?
(iii) Whether the ITAT has committed an
5
error of law in upholding the
disallowance of Rs.3,08,99,171/ in
respect of Sales Tax Recoverable
Account, under Section 43B of the
Incometax Act ?”
4. We have heard Shri S. Ganesh, learned senior
counsel for the appellantassessee and Shri Arijit
Prasad, learned senior counsel for the Revenue.
5. Shri Ganesh submits that the amount paid by
way of Excise Duty by the assessee to its suppliers
of raw materials and inputs, is accepted as Excise
Duty under the provisions of Central Excise Act and
Rules. Consequently, when the said payments are
made by the assessee to its suppliers, they should
be treated as payments of Excise Duty which
straightaway qualify for deduction under Section
43B of the Income Tax Act, irrespective of whether
or when the MODVAT credit arising from such
payments is utilised to make payment of Excise Duty
on the products manufactured by the assessee. The
6
High Court erroneously held that the above payments
made by the assessee are mere contractual payments
and not payments by way of Excise Duty. As soon as
the raw materials and inputs are received in the
appellant’s factory, the assessee becomes entitled
to avail of MODVAT credit in respect of Excise Duty
paid on the raw materials and inputs and which is
mentioned in the manufacturersupplier’s invoice.
The assessee was clearly entitled for deduction of
unutilised MODVAT credit balance as on 31.03.1999.
6. Shri Ganesh in alternative submits that
questions are squarely covered in favour of the
assessee by the 1st proviso to Section 43B. The
assessee’s Excise Returns establish that while the
untilised MODVAT credit as on 31.03.1999 was Rs.
69.30 crores, the entire amount was utilised in
April, 1999 itself. Consequently, the assessee is
entitled to the deduction under the 1 st proviso to
Section 43B. The object and purpose of Section 43B
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of the Act is to ensure that an assessee does not
get deduction in respect of an amount unless and
until the amount has been received by the
Government. In the present case the full amount of
Excise Duty was paid into the coffers of Government
when the manufacturer of raw material/inputs had
cleared the same from his factory gate for supply
to the assessee. The basic object of Section 43B of
the Act is fully subserved and deduction should
have been granted as claimed by the assessee.
7. Shri Arijit Prasad, learned senior counsel for
the Revenue refuting the submissions of the learned
counsel for the assessee contends that deduction
under Section 43B is allowable only when the amount
of tax, cess etc. are due and payable and the
assessee actually pays the same. In the present
case the Excise Duty becomes due and payable only
when the assessee removes the finished product from
the factory gate, at the point in time when the
8
assessee makes payment to the suppliers the Excise
Duty is not due and payable. It is not in dispute
that the assessee was entitled to the duty paid by
it to the manufacturer under Rule 57A to Rule 571
of the Central Excise Rules, 1944. Further it is
not in dispute that the assessee was entitled to
utilise MODVAT credit towards payment of Excise
Duty leviable on the final products manufactured by
it. The liability under the Central Excise Act to
pay Excise Duty is only on the manufacture of the
excisable goods. The assessee is not one who is
liable to pay Excise Duty on the raw
materials/inputs. It is merely the incidence of
Excise Duty that has shifted from the manufacturer
to the purchaser and not the liability to pay the
same. Answering the submission of counsel for the
assessee based on proviso to Section 43B, it is
submitted that liability to pay Excise Duty of the
assessee is incurred on the removal of the finished
goods in the subsequent year, therefore, on
9
31.03.1999, the assessee was not liable to pay the
Excise Duty and, therefore, the proviso will also
not come to the aid of the assessee.
8. We have considered the submissions of the
learned counsel for the parties and perused the
records.
9. The two issues which need to be answered by us
in these appeals are:
“(i) Whether the ITAT had committed an
error of law in upholding the
disallowance of the amount of
Rs.69,93,00,428/ which represented
MODVAT credit of Excise Duty that
st
remained unutilised by 31 March, 1999
i.e. the end of the relevant accounting
year ?
(ii) Whether the ITAT has committed an
error of law in upholding the
disallowance of Rs.3,08,99,171/ in
respect of Sales Tax Recoverable
Account, under Section 43B of the
Incometax Act ?”
10. We need to first notice the provisions of
Section 43B under which deduction is sought to be
10
claimed. Section 43B is as follows:
“43B.Certain deductions to be only on
actual payment.Notwithstanding anything
contained in any other provision of this
Act, a deduction otherwise allowable under
this Act in respect of—
(a) any sum payable by the assessee by way
of tax, duty, cess or fee, by whatever
name called, under any law for the time
being in force, or
(b)any sum payable by the assessee as an
employer by way of contribution to any
provident fund or superannuation fund or
gratuity fund or any other fund for the
welfare of employees, or
(c)any sum referred to in clause (ii) of
subsection (1) of section 36, or
(d)any sum payable by the assessee as
interest on any loan or borrowing from
any public financial institution or a
State financial corporation or a State
industrial investment corporation, in
accordance with the terms and conditions
of the agreement governing such loan or
borrowing, or
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(e) any sum payable by the assessee as
interest on any loan or advances from a
scheduled bank[or a cooperative bank
other than a primary agricultural credit
society or a primary cooperative
agricultural and rural development bank]
in accordance with the terms and
conditions of the agreement governing
such loan or advances, or
(f)any sum payable by the assessee as an
employer in lieu of any leave at the
credit of his employee, or
(g)any sum payable by the assessee to the
Indian Railways for the use of railway
assets,
shall be allowed (irrespective of the
previous year in which the liability to pay
such sum was incurred by the assessee
according to the method of accounting
regularly employed by him) only in
computing the income referred to in Section
28 of that previous year in which such sum
is actually paid by him :
Provided that nothing contained in this
section shall apply in relation to any sum
which is actually paid by the assessee on
or before the due date applicable in his
case for furnishing the return of income
under subsection (1) of section 139 in
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respect of the previous year in which the
liability to pay such sum was incurred as
aforesaid and the evidence of such payment
is furnished by the assessee along with
such return.
….”
11. The untilised MODVAT credit on 31.03.1999 to
the credit of the assessee was Rs.69,93,00,428/.
The MODVAT credit was accumulated to the account of
the assessee due to payment of Excise Duty on raw
materials and inputs which were supplied to it by
the suppliers and reflected in the invoices by
which raw materials and inputs were supplied. There
is no denial to the fact that the appellant was
entitled to utilise this credit in payment of
Excise Duty to which the assessee was liable in
payment of Excise Duty on manufacture of its
products. When we analyse provision of Section 43B
of the Act the provision indicates that deduction
thereunder is to be allowed on fulfilment of the
following conditions:
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“a. there should be an actual payment of
Excise Duty whether “by way of tax,
duty, cess or fee, by whatever name”;
b.such payment has to be “under any law
for the time being in force”;
c.the payment of such sum should have
been made by the assessee;
d.irrespective of the method of
accounting regularly employed by the
assessee, deduction shall be allowed
while computing the income tax for
the previous year “in which sum is
actually paid” by the assessee;
e.the expression “any such sum payable”
refers to a sum for which the
assessee incurred liability in the
previous year even though such sum
might not have been payable within
that year under the relevant law.”
12. The fulfillment of the above statutory
conditions is necessary for allowing deduction
under Section 43B. We have to examine the facts of
the present case to find out as to whether all the
conditions which are necessary for permissible
deduction under Section 43B are present here or
not.
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13. The crucial words in Section 43B(a) are “any
sum payable by the assessee by way of tax, duty,
cess or fee…”. We need to examine as to whether
unutilised credit under MODVAT Scheme was sum
payable by the assessee.
14. The Excise Duty is levied under the Central
Excise Act, 1944 and collected as per the Central
Excise Rules, 1944. The assessee in reference to
the Central Excise Rules, 1944 is Assessee as
defined in Rule 2(3) which is to the following
effect:
“Rule 2(3). “assessee” means
any person who is liable for
payment of duty assessed and also
includes any producer or
manufacturer of excisable goods or
a registered person of a private
warehouse in which excisable goods
are stored;”
15. The taxable event is manufacture and
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production of excisable articles and payment of
duty is relatable to date of removal of such
article from the factory. The manufacture of the
raw materials or inputs which have been used by
the appellant are the excisable items within the
meaning of Central Excise Rules, 1944. The Excise
Duty is leviable on the manufacturer of raw
materials and inputs. The supplier of raw
materials or inputs includes the Excise Duty paid
on such articles in his sale invoices. The
appellant when purchases raw materials and inputs
for manufacture of vehicles it maintains a
separate account containing the Excise Duty as
mentioned in sale invoices. The credit of such
Excise Duty paid by the appellant is to be given
to the appellant by virtue of Rule 57A to 57F of
Central Excise Rules, 1944 as it then existed. The
appellant was fully entitled to discharge his
liability to pay Excise Duty on vehicles
manufactured by adjusting the credit of Excise
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Duty earned by it as per MODVAT scheme. The
liability to pay Excise Duty is not fastened on
two entities as per the scheme of Central Excise
Act and Central Excise Rules. It is the
manufacturer of raw materials and inputs which are
used by appellant who has statutory liability to
pay Excise Duty. The appellant is not assessee
within the meaning of Central Excise Act, 1944,
with reference to raw materials and inputs
manufactured by the entities from which appellant
had purchased the raw materials and entities.
16. As per Section 43B(a) of Income Tax Act,
deduction is allowed on “any sum payable by the
assessee by way of tax, duty, cess or fee.” The
credit of Excise Duty earned by the appellant under
MODVAT scheme as per Central Excise Rules, 1944 is
not sum payable by the assessee by way of tax,
duty, cess. The scheme under Section 43B is to
allow deduction when a sum is payable by assessee
17
by way of tax, duty and cess and had been actually
paid by him.
17. Furthermore, the deductions under Section 43B
is allowable only when sum is actually paid by the
assessee. In the present case, the Excise Duty
leviable on appellant on manufacture of vehicles
was already adjusted in the concerned assessment
year from the credit of Excise Duty under the
MODVAT scheme. The unutilised credit in the MODVAT
scheme cannot be treated as sum actually paid by
the appellant. The assessee when pays the cost of
raw materials where the duty is embedded, it does
not ipso facto mean that assessee is the one who is
liable to pay Excise Duty on such raw
material/inputs. It is merely the incident of
Excise Duty that has shifted from the manufacturer
to the purchaser and not the liability to the same.
18. We thus, conclude that the unutilised credit
under MODVAT scheme does not qualify for deductions
18
under Section 43B of the Income Tax Act.
19. Shri Ganesh has relied on judgment of this
Court in Eicher Motors Ltd. and another versus
Union of India and others, (1999) 2 SCC 361, and
submits that facility of credit is as good as tax
paid, hence, it be accepted that by payment of
Excise Duty although which is part of sale invoice
issued by manufacturer or producer of raw material
or inputs, the payment by appellant was Excise Duty
which qualified for deduction under Section 43B.
20. In Eicher Motors Ltd. and another, the
challenge to the validity of scheme as modified by
introduction of Rule 57F of Central Excise Rules,
1944 was under consideration. According to Section
57F(4A) of Central Excise Rules, 1944, credit
which was lying unutilised on 16.03.1995 with the
manufacturers, stood lapsed, Rule 57F(4A) has
been extracted in paragraph 2 of the judgment which
is to the following effect:
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“2. The relevant Rule reads as
follows:
“57F. (4A) Notwithstanding
anything contained in subrule (4),
or subrule (1) of Rule 57A and
the notifications issued
thereunder, any credit of specified
duty lying unutilised on the 16th
day of March, 1995 with a
manufacturer of tractors, falling
under Heading No. 87.01 or motor
vehicles falling under Heading No.
87.02 and 87.04 [or chassis of such
tractors or such motor vehicles
under Heading No. 87.06] of the
Schedule to the Central Excise
Tariff Act, 1985 (5 of 1986) shall
lapse and shall not be allowed to
be utilised for payment of duty on
any excisable goods, whether
cleared for home consumption or for
export:
Provided that nothing contained
in this subrule shall apply to
credit of duty, if any, in respect
of inputs lying in stock or
contained in finished products
lying in stock on the 16th day of
March, 1995.”
21. This Court in reference to 57F(4A) took the
view that right to credit had become absolute at
any rate when the input is used in the manufacture
20
of the final products. This court held that the
scheme sought to be introduced cannot be made
applicable to the goods which had already come into
existence in respect of which the earlier Scheme
was applied. Following observations have been made
by this Court in paragraph 5 of the above
judgment:
“As pointed out by us that when
on the strength of the Rules
available, certain acts have been
done by the parties concerned,
incidents following thereto must
take place in accordance with the
Scheme under which the duty had been
paid on the manufactured products
and if such a situation is sought to
be altered, necessarily it follows
that the right, which had accrued to
a party such as the availability of
a scheme, is affected and, in
particular, it loses sight of the
fact that the provision for facility
of credit is as good as tax paid
till tax is adjusted on future goods
on the basis of the several
commitments which would have been
made by the assessees concerned.
Therefore, the Scheme sought to be
introduced cannot be made applicable
to the goods which had already come
into existence in respect of which
21
the earlier Scheme was applied under
which the assessees had availed of
the credit facility for payment of
taxes. It is on the basis of the
earlier Scheme necessarily that the
taxes have to be adjusted and
payment made complete. Any manner or
mode of application of the said Rule
would result in affecting the rights
of the assessees.”
22. The observations in the above paragraph that
facility of credit is as good as tax paid till tax
is adjusted on future goods were made in context of
57F(4A) of Central Excise Rules,1944.
23. The above observation cannot be read to mean
that payment of Excise Duty by the appellant which
was component of sale invoice purchasing the raw
material/inputs by the appellant is also payment of
Excise Duty on raw material/inputs.
24. By payment of component of Excise Duty as
included in sale invoice is benefit which is given
to appellant by virtue of credit as envisaged in
statutory scheme of Rule 57A to 57I of Central
22
Excise Rules, 1944. The above judgment thus in no
manner supports the submissions of the appellant
for the purposes of the present case.
25. Next judgment relied by Shri Ganesh in
Collector of Central Excise, Pune and others
versus Dai Ichi Karkaria Ltd. and others; (1999) 7
SCC 448. In the above case, this Court had
occasion to consider Section 4 of Central Excise
Act, 1944, which provides for valuation of raw
material covered by MODVAT Scheme. Referring to
Rule 57A(1) and Rule 57F(1), this Court laid
down following in paragraph 18, 19 and 20:
“18. It is clear from these
rules, as we read them, that a
manufacturer obtains credit for the
Excise Duty paid on raw material to
be used by him in the production of
an excisable product immediately it
makes the requisite declaration and
obtains an acknowledgment thereof.
It is entitled to use the credit at
any time thereafter when making
payment of Excise Duty on the
excisable product…
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19. It is, therefore, that in
the case of Eicher Motors Ltd. vs.
Union of India, this Court said
that a credit under the MODVAT
Scheme was as good as tax paid.
20. With this in mind, we must
now determine whether the Excise
Duty paid on the raw material
should form part of the cost of the
excisable product for the purposes
of Section 4(1)(b) of the Act read
with Rule 6 of the Valuation
Rules.”
26. In the above case, this Court held that in
determining the cost of the excisable product
covered by MODVAT Scheme under Section 4(1)(b) of
the Act read with Rule 6 of the Valuation Rules,
the Excise Duty paid on raw material covered by
MODVAT Scheme is not to be included. The question
which was answered in the above case was entirely
different to one which has arisen in the present
case.
27. This Court as noted above in the above case has
laid down that credit for the Excise Duty paid for
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the raw material can be used at any time when
making payment of Excise Duty on excisable product.
The user of such credit is at the time of payment
of Excise Duty on the excisable product i.e. at the
time when appellant is to pay Excise Duty on its
manufactured vehicle.
28. The judgment of this Court in Berger Paints
India Ltd. versus Commissioner of Income Tax, 2004
(266) ITR 99, has also been referred to. The
assessee company in the above case had claimed that
under Section 43B of the Income Tax Act, it was
entitled to deduction of the entire sum being the
duties actually paid during the relevant previous
years. The appellant in the year in question had
incurred expenditure on account of customs and
Excise Duty aggregating to Rs.5,85,87,181/ which
was duties debited to the profit and loss account
of the company for the relevant previous year. In
assessment proceedings the company’s claim that it
25
was entitled to deduct the entire sum of
Rs.5,85,87,181/ being the duties actually paid
during the relevant year was accepted. The
Commissioner of Income Tax initiated proceedings
under Section 263 of the Act claiming that
Assessing officer had wrongly allowed the claim for
deduction. The Commissioner held that assessing
officer incorrectly relied on judgment of Gujarat
High Court in Lakhan Pal National Ltd. versus ITO
(1986) 162 ITR 240, ITAT also. ITAT referred a
question to the High Court. The High Court answered
the question in favour of Revenue against which the
appeal was filed. The relevant facts have been
noticed in the judgment of this Court in following
words:
“…In the assessment proceedings of
the assessment year 198485, the
Inspecting Assistant Commissioner of
Incometax allowed the appellant
assessee’s claim that it was entitled
to deduct the entire sum of
Rs.5,85,87,181/ being the duties
actually paid during the relevant year
26
previous to the assessment year 1984
85. The Commissioner of Incometax
initiated proceedings under section 263
of the Act on the ground that the
Assessing Officer had wrongly allowed
the claim for deduction of an amount of
Rs.98,25,833/ towards customs and
Excise Duty paid during the previous
year but credited to the profit and
loss account in closing stock of goods
under the provisions of Section 43B.
the assessee relied upon the judgment
of the Gujarat high Court in Lakhanpal
National Ltd. Vs. ITO[1986] 162 ITR
240[hereinafter referred to as
“Lakhanpal National Ltd.’s case”] in
support of its claim. The Commissioner
of Incometax took the view that the
Gujarat High Court’s decision was
distinguishable on facts and,
therefore, made an order under section
263 of the Act disallowing the claim of
the assessee. On appeal to the
Tribunal, the Tribunal held that the
Gujarat high court’s judgment in
Lakhanpal National Ltd.’s case [1986]
162 ITR 240 was distinguishable and
confirmed the order of the Commissioner
of Incometax. On an application made
under section 256(1) of the Act at the
instance of the appellantassessee, the
Tribunal, inter alia, referred the
following question of law for the
opinion of the High Court (see [2002]
253 IT 738, 739):
“Whether, on the facts and in
the circumstances of the case, the
Tribunal was right in law in
27
rejecting the assessee’s claim for
deduction of the excise and
customs duties of Rs.98,25,833
paid in the year of account and
debited in the profit and loss
account, on the ground that the
crediting of the profit and loss
account by the value of the
closing stock, which included the
aforesaid duties, did not have the
effect of wiping out the debit to
the profit and loss account?”
The High Court by its judgment dated
September 24, 2001, in I.T.R.No.213 of
1993 (see [2002] 253 ITR 738), answered
the question referred in favour of the
Revenue and against the assessee.”
29. This Court in Berger Paints Ltd. (Supra)
upheld the view of assessing officer and decided
the question in favour of the assessee. This Court
held that the Commissioner of Income Tax has
incorrectly distinguished the judgment of Lakhan
Pal National Ltd. Case.
30. As noted above in the above case, the claim of
the assessee was that entire sum of
Rs.5,85,87,181/ was the duties actually paid
28
during the relevant previous year. The above was
not a case for unutilised MODVAT credit, hence, the
said case cannot be held to lay down any ratio with
respect to allowable deduction under Section 43B in
respect of unutilised MODVAT credit.
31. Now coming to the second question i.e. with
regard to disallowance of Rs.3,08,79,171/ in
respect of Sale tax recoverable amount,the High
Court in paragraph 52 of the judgment has noticed
relevant facts in above reference in following
words:
“52. The facts are the Assessee
pays sales tax on the purchase of
raw materials and computers used in
the manufacture of cars. Though,
the salestax paid is part of the
cost of raw material, the Assessee
debits the purchases net of sales
tax; the sales tax paid is debited
to a separate account titled
‘Salestax Recoverable A/c”. Under
the Haryana General Sales Tax Act
1973, the Assessee cold set off
such salestax against its
liability on the sales of the
29
finished goods i.e. cars. Whenever
the goods are sold, the tax on such
sales is credited to the aforesaid
account.”
32. The High Court had rightly answered the above
question in favour of the Revenue relying on its
discussion with respect to Question No.1. The
sales tax paid by the appellant was debited to a
separate account titled ‘Sales Tax recoverable
account’. The assessee could have set off sales
tax against his liability on the sales of finished
goods i.e. vehicles. We do not find any infirmity
in the view of the High Court answering the above
question.
33. The next submission which has been advanced by
Shri Ganesh is on the first proviso to Section
43B. It has been submitted that Return for the
assessment year in question was to be filed before
30.09.1999 and unutilised credit in fact was fully
utilised by 30.04.1999 itself. It is submitted
30
that since the unutilised credit was utilised for
payment of Excise Duty on the manufactured
vehicles, the said amount ought to have been
allowed as permissible deduction under Section
43B.
34. The proviso to Section 43B provides that
nothing contained in the Section shall apply in
relation to any sum which is actually paid by
assessee on or before due date applicable in his
case for furnishing the return in respect of the
previous year in which the liability to pay such
sum was incurred. The crucial words in the proviso
to Section 43B are “in respect of the previous
year in which the liability to pay such sum was
incurred”. The proviso takes care of the situation
when liability to pay a sum has incurred but could
not be paid in the year in question and has been
paid in the next financial year before the date of
31
submission of the Return. In the present case,
there was no liability to adjust the unutilised
MODVAT credit in the year in question since had
there been liability to pay Excise Duty by the
appellant on manufacture of vehicles, the
unutilised MODVAT credit could have been adjusted
against the payment of such Excise Duty. In the
present case, the liability to pay Excise Duty of
the assessee is incurred on the removal of
finished goods in the subsequent year i.e. year
beginning from 01.04.1999 and what we are
concerned with is unutilised MODVAT Credit as on
31.03.1999 on which date the asseessee was not
liable to pay any more Excise Duty. Hence, present
is not a case where appellant can claim benefit of
proviso to Section 43B. The submissions of Shri
Ganesh on proviso to Section 43B also does not
support his claim.
35. In view of the foregoing discussions, we are
32
of the view that High Court has correctly answered
both the questions against the assesseeappellant
and in favour of the Revenue. Consequently, the
appeals are dismissed.
……………..J.
[ ASHOK BHUSHAN ]
……………..J.
[ NAVIN SINHA ]
NEW DELHI,
FEBRUARY 07, 2020.
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