MARUTI SUZUKI INDIA LTD. versus COMMISSIONER OF INCOME TAX, DELHI

Citation: [2020] 2 S.C.R. 658 · Decided: 07-02-2020 · Supreme Court of India · Bench: ASHOK BHUSHAN · Disposal: Dismissed

cites 1 · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
658
SUPREME COURT REPORTS
[2020] 2 S.C.R.
MARUTI SUZUKI INDIA LTD.
(EARLIER KNOWN AS MARUTI UDYOG LTD.)
v.
COMMISSIONER OF INCOME TAX, DELHI
(Civil Appeal No. 11923 of 2018)
FEBRUARY 07, 2020
[ASHOK BHUSHAN AND NAVIN SINHA, JJ.]
Income Tax Act, 1961 – Proviso to s.43B – Allowable
deduction u/s.43B in respect of unutilised MODVAT credit –
Appellant-assessee manufactures automobiles chargeable to Excise
Duty under the 1944 Act– It acquires excisable raw materials &
inputs, which are used in manufacturing of vehicles, on which it
was also taking benefit of MODVAT credit – At the end of assessment
year 1999-2000, Rs.69,93,00,428/- was left as unutilised MODVAT
credit – Assessee claimed deduction u/s.43B and also claimed
deduction of Rs.3,08,88,171/- in respect of Sales Tax Recoverable
Account – Assessing Officer disallowed both claims of deductions
– Upheld by Commissioner of Income Tax & ITAT – High Court
answered questions relating to the aforesaid disallowance in favour
of Revenue – Held: Under s.43B(a), deduction is allowed on “any
sum payable by the assessee by way of tax, duty, cess or fee” –
Credit of Excise Duty earned by appellant under MODVAT scheme
as per 1944 Rules is not sum payable by the assessee by way of tax,
duty, cess – Scheme u/s.43B is to allow deduction when a sum is
payable by assessee by way of tax, duty & cess and had been
actually paid by him – Excise Duty leviable on appellant on
manufacture of vehicles was already adjusted in the concerned
assessment year from the credit of Excise Duty under MODVAT
scheme – Unutilised credit in the MODVAT scheme cannot be treated
as sum actually paid by appellant – 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 manufacturer to purchaser and not the liability
to the same – Unutilised credit under MODVAT scheme does not
qualify for deductions u/s.43B – Proviso to s.43B takes care of the
 [2020] 2 S.C.R. 658
658
A
B
C
D
E
F
G
H
659
situation when liability to pay a sum has incurred but could not be
paid in the year in question and has been paid in next financial
year before the date of submission of the Return – 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 01.04.99 and what the Court is 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– Present is
not a case where appellant can claim benefit of proviso to s.43B –
High Court correctly answered both the questions against the
appellant and in favour of Revenue– Central Excise Act, 1944–
Central Excise Rules, 1944 – rr.57A-57F.
Central Excise Act, 1944 – Statutory liability to pay Excise
Duty – Appellant-assessee manufactures automobiles chargeable
to Excise Duty under the 1944 Act – It acquires excisable raw
materials & inputs which are used in manufacturing of vehicles –
Held: Excise duty is levied under 1944 Act and collected as per
1944 Rules – Assessee in reference to the 1944 Rules is Assessee as
defined in r.2(3) – Manufacture of the raw materials or inputs used
by the appellant are the excisable items within the meaning of 1944
Rules – Liability to pay Excise Duty is not fastened on two entities
as per the scheme of 1944 Act and 1944 Rules – It is the
manufacturer of raw materials and inputs which are used by
appellant who has statutory liability to pay Excise Duty – Appellant
is not assessee within the meaning of 1944 Act, with reference to
raw materials and inputs manufactured by the entities from which
appellant had purchased the raw materials – Central Excise Rules,
1944 – r.2(3).
Dismissing the appeals, the Court
HELD: 1.1 Section 43B of the Act the provision indicates
that deduction thereunder is to be allowed on fulfilment of the
following conditions: (a) there should be an actual payment of
Excise Duty whether “by way of tax, duty, cess or fee, by whatever
name”; (b) such payment has to be “under any law for the time
being in force”; (c) the payment of such sum should have been
made by the assessee; (d) irrespective of the method of
accounting regularly employed by the assessee, deduction shall
be allowed while computing the income tax for the previous year
MARUTI SUZUKI INDIA LTD. (EARLIE

Excerpt shown. Read the full judgment & AI analysis in Lexace.