Section 43B disallowance applies to unpaid service tax collected and retained beyond the statutory due date.

Unpaid service tax collected by an assessee can be disallowed under section 43B if it is not remitted to the Government by the due date, even where the amount was not debited to the profit and loss account and no deduction was claimed. The Tribunal treated section 43B as covering sums payable by way of tax, duty, cess or fee, and held that separate bookkeeping treatment does not prevent disallowance when the statutory payment obligation remains unmet. On that reasoning, the disallowance was upheld against the assessee.

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Issues: (i) Whether service tax collected by the assessee but not paid to the Government exchequer by the due date of filing the return could be disallowed under section 43B, even though it was not debited to the profit and loss account and no deduction was claimed.

Analysis: The assessee collected service tax in the course of business but did not remit the unpaid amount within the statutory time. The Tribunal held that section 43B applies to sums payable by way of tax, duty, cess or fee, and the disallowance is not avoided merely because the amount was shown separately in the books or not claimed as an expenditure in the profit and loss account. The Tribunal distinguished the authorities relied on by the assessee and preferred the line of reasoning that unpaid service tax, when collected and retained beyond the prescribed time, attracts section 43B.

Conclusion: The issue was decided against the assessee and the disallowance under section 43B was upheld.

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