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TMI Blog1987 (5) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... the Companies Act, 1956. It carries on the business of manufacture and sale of steel tubes. In respect of sale of tubes for the year 1962-63, it was liable to pay sales tax under the Central Sales Tax Act, 1947. Under the scheme of the sales tax law, a dealer is liable to pay the tax on the turnover of the sale. The rate of tax depends on the nature of sale. A dealer is liable to file the return and along with the return pay the tax admitted to be the liability. If the return figure is accepted by the assessing authority, the assessment is completed. Where the assessing officer requires examination of the accounts for examining the correctness of the return, he calls upon the dealer to produce the accounts and on examination of such accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mercantile method of accounting is employed by the assessee. In this method, entries are posted in the books of account on the date of the transaction, i.e., on the date on which rights accrue or liabilities are incurred, irrespective of the date of payment. See AIR 1964 SC 1843 (Commissioner of Income-tax, Madras v. A. Krishnaswami Mudaliar) and AIR 1986 SC 757 (State Bank of Travancore v. Commissioner of Income-tax, Kerala). Even when the assessee failed to post the entry in its books of account, it would be entitled to the benefits since the same would depend on the provision of law relating thereto and not on the view which the assessee might take of his rights since the existence or absence of entries in the books of account cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in higher forums. In that context, it was observed: "........the moment a dealer makes either purchases or sales which are subject to taxation, the obligation to pay the tax arises and taxability is attracted. Although that liability cannot be enforced till the quantification is effected by assessment proceedings, the liability for payment of tax is independent of the assessment. It is significant that in the present case, the liability had even been quantified and a demand had been created............ It is not possible to comprehend how the liability would cease to be one because the assessee had taken proceedings before higher authorities for getting it reduced or wiped out so long as the contention of the assessee did not prevail with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand is reduced or enhanced, a further demand notice would issue in accordance with the appellate or revisional order." Thus, on the decision in the second appeal by the Sales Tax Tribunal reducing the demand by the Sales Tax Officer, a fresh demand notice is to be given. This attracts the liability of the assessee and in view of the fact that it regularly keeps its books of account adopting the mercantile system, it can claim the deduction under section 37 during the assessment year 1971-72 since the liability was of the year 1970-71. 6.. Reliance has been placed by Mr. B.K. Mohanty, on a decision of the Gauhati High Court reported in [1973] 88 ITR 234 (Commissioner of Income-tax, Assam v. Nathmal Tolaram). Mr. S.C. Roy, the learned S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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