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TMI Blog2011 (4) TMI 1436X X X X Extracts X X X X X X X X Extracts X X X X ..... ction for upholding the service Tax (unpaid/liability) amount for ₹ 311613/- is being challenged since not paid before due date of filing of return challenged since not paid before due date of filing of return u/s 43B whereas per assessee the same is not statutory liability u/s 43B. 2. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has shown commission receipts of ₹ 67,02,289/- out of which a sum of ₹ 7,30,899/- was deducted on account of service tax and, in this manner, the commission receipts were shown at ₹ 59,71,390/-. Since the assessee did not produce books of account, the Assessing Officer inferred that the assessee s claim could not be verified and, in this manner, an addition of ₹ 7,30,899/- was made on account of service tax. The addition was contested in an appeal filed before the CIT (A). As a finding of fact, learned CIT (A) has observed that out of total disallowance of `7,30,899/- the assessee has made the payment of service tax within the due date of filing the return of income of a sum of `4,19,286/- and the balance addition of ₹ 3,11,613/- has been confirmed on account of non-paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the IT Act as well as Servicetax Act. We find that relevant portion of s.43B reads as under : 43B. Notwithstanding anything contained in any other provisions 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. From a plain reading of the above provision it becomes clear that the rigour of this provision would be attracted only in a case where an item is allowable as deduction but because of the failure to make payment such deduction will not be allowed. It can be argued that in the case of sales-tax also the assessee does not claim deduction since it has been held that non-payment of sales-tax would attract provisions of s. 43B, but that is being done on the basis of the principles laid down by the Hon'ble Supreme Court in the case of Chowringhee Sales Bureau (P.) Ltd. v. CIT [1977] 110 ITR 385 [sic-1973 CTR (SC) 44 : [1973] 87 ITR 524 (SC)] that sales-tax is part of the trading receipt. Further, s.145A clearly provides that for the purpose of determining income under the head profits and gains of bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o service-tax, it is not necessary that the client will accept the bill as such and make payment accordingly. In that situation, the chartered accountant cannot be fastened with the liability to pay the service-tax. But, in any case the sales-tax situation is different. For example, section 6(1) of Central Sales-tax Act, 1956 provides that: 6. Liability to tax on inter-State sales.-(1) Subject to the other provisions contained in this Act, every dealer shall, with effect from such date as the Central Government may, by notification in the Official Gazette, appoint, not being earlier than thirty days from the date of such notification, be liable to pay tax under this Act on all sales of goods other than electrical energy effected by him in the course of inter-State trade or commerce during any year on and from the date so notified : Provided that a dealer shall not be liable to pay tax under this Act on any sale of goods which, in accordance with the provisions of sub-section (3) of section 5, is a sale in the course of export of those goods out of the territory of India. The above provision clearly shows that the dealer would become liable to make sales-tax payment the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d this has been prescribed in r. 6 of Service-tax Rules. A plain reading of r. 6 would show that service provider becomes liable to make the payment of service-tax by the 5th of the month immediately following the calendar month in which the payments are received towards the value of taxable service. The first proviso gives an exception in case of individual or proprietary firm or partnership firm, and in such cases, service-tax has to be paid to the credit of Central Government by the 5th of the month immediately following the quarter in which the payments are received. The only difference is that in case of individual or proprietary or partnership firm, payment has to be made on 5th of the following month after the following quarter whereas in the case of other organisations it has to be paid on the 5th of the month immediately following the calendar month. But, in both the cases, the liability arises to make the payment only after the service provider has received the payments. 16. If there is no liability to make the payment to the credit of Central Government because of non-receipt of payments from the receiver of the services, then it cannot be said that such service-tax h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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