| COURT: | Supreme Court |
| CORAM: | Ashok Bhushan J, Navin Sinha J |
| SECTION(S): | 43B |
| GENRE: | Domestic Tax |
| CATCH WORDS: | modvat credit, sales-tax |
| COUNSEL: | S. Ganesh |
| DATE: | February 7, 2020 (Date of pronouncement) |
| DATE: | February 15, 2020 (Date of publication) |
| AY: | 2000-01 |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| U/s 43B(a), deduction is allowed on “any sum payable by the assessee by way of tax, duty, cess or fee.” The scheme of s. 43B is to allow deduction when the sum is actually paid. (i) The credit of Excise Duty earned under MODVAT scheme is not sum payable by the assessee by way of tax, duty, cess. It is merely the incident of Excise Duty that has shifted from the manufacturer to the purchaser and not the liability to the same. Consequently, the unutilised credit under MODVAT scheme does not qualify for deduction u/s 43B. (ii) The sales tax paid by the appellant was debited to a separate account titled ‘Sales Tax recoverable account’ and is liable for disallowance u/s 43B. | |
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
Recent Comments