https://www.taxtmi.com/caselaws?id=5490 The Supreme Court ruled against the assessee, holding that under the mercantile system of accounting, the liability to pay sales tax arises when sales subject to tax are made, regardless of ongoing disputes or appeals. The Court emphasized that even if the liability amount is reduced later, the original accrual remains valid. The Court rejected the High Court's interpretation that the liability accrued upon the issuance of the demand notice, stating that liabilities accrue when sales subject to tax are made. Consequently, the Court allowed the appeal, setting aside the High Court's decision and ruling in favor of the Revenue, denying the deduction for the sales tax liability in the assessment year 1971-72. en-us Mon, 08 Jan 1996 00:00:00 +0530 Tue, 23 Jun 2026 11:13:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=5490 The Supreme Court ruled against the assessee, holding that under the mercantile system of accounting, the liability to pay sales tax arises when sales subject to tax are made, regardless of ongoing disputes or appeals. The Court emphasized that even if the liability amount is reduced later, the original accrual remains valid. The Court rejected the High Court's interpretation that the liability accrued upon the issuance of the demand notice, stating that liabilities accrue when sales subject to tax are made. Consequently, the Court allowed the appeal, setting aside the High Court's decision and ruling in favor of the Revenue, denying the deduction for the sales tax liability in the assessment year 1971-72. Case-Laws Income Tax Mon, 08 Jan 1996 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=5490