Deduction of unutilised MODVAT credit balance not allowed under sec 43B
IN THE SUPREME COURT OF INDIA
The Relevant Text of the Order are as follows :
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 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 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 of the view that High Court has correctly answered both the questions against the assessee appellant and in favour of the Revenue. Consequently, the appeals are dismissed.
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