9911796707
TMI Blog1984 (2) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee is engaged in the export of prawns to foreign countries. In the trading account, the assessee made a provision for Rs. 3,53,398 for payment of purchase tax to the sales tax department. The claim was disallowed by the ITO for the following reasons, namely, that the assessee was always disputing the liability by claiming exemption from payment of purchase tax under the provisions of section 5(3)(j) of the Sales Tax Act, that the sales tax department had not also issued any demand for the payment of the amount and that later, the Government of Kerala, by a notification dated 29-3-1979, waived the purchase tax in respect of all exporters of sea-foods for the period from 1-4-1977 to 31-3-1979. 5. The Commissioner (Appeals) held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advanced by the learned departmental representative was that in the light of a subsequent notification issued by the Kerala State Government on 29-3-1979, the State Government waived the claim for purchase tax for the period from 1-4-1977 to 31-3-1979. In the light of this notification, no purchase tax was payable for the accounting period ending on 31-3-1978, relating to the assessment year under appeal. It was argued that when the liability has subsequently disappeared, there was no justification for allowing the claim for deduction. It is also contended, relying upon the decision in CIT v. Indian Motors Transport Co. (P.) Ltd. [1974] 95 ITR 73 (Punj, Har.), that it is not necessary to make an assessment allowing the deduction and then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the liability of the assessee arose on the cancellation of the exemption by notification on 9-11-1973 and on this basis, he claimed deduction of the sales tax amount in the assessment year 1974-75 for which the accounting period was 1-4-1973 to 31-3-1974. This claim, though allowed by the Tribunal, was rejected by the High Court. It was held by the High Court, relying upon the decision of the Supreme Court in the case of Kedarnath Jute Mfg. Co. Ltd., that the liability to pay the tax arose in the year in which the transactions of purchase took place, that the liabilities had to be provided for in the respective years and that although the liabilities ceased to be operative on a subsequent date due to an exemption notification, it rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to pay tax arises in the year in which the transactions take place. For the period from September 1, 1970 to March 31, 1973, the assessee had effected purchases. Such purchases were liable to tax under the law as it stood then. The liability to tax arose under such law. That the Government took no steps for recovery of tax is irrelevant. That possibly pressure was brought to bear upon the Government by the trade not to enforce recovery of tax on such sales is also irrelevant. The liability having arisen in the year in which the transaction took place provision had to be made for such liability. If the assessees had not made provision in that year but such provision was made in a later year that would not mean that the liability arose only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the High Court. The attempt of the Government to revive the liability by a subsequent legislation also failed but the assessee was actually assessed to tax by the sales tax department and the tax was also actually paid later. It was held by the High Court that the assessee cannot claim deduction of the amount during the accounting period as under the law obtaining during the period the assessee was not liable to pay the tax. It was also held that the assessee can claim deduction of the tax paid in the year of payment on the basis of the actual payment. This will also show that the question whether the assessee can claim deduction of the amount will only depend upon whether, under the law as obtaining during the relevant accounti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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