TaxTMI 
TaxTMI 
2021 (9) TMI 874
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....nts that part of the purchase tax paid by appellant on purchase of raw materials and packing materials, which is allowed to be retained by it as the materials purchased are consumed in the manufacture of finished goods which are again liable to sales tax. This means that the said amount is not payable to the sales tax authorities at the time of paying the sales tax on the sale of finished goods by appellant. According to appellant, the fact that they are entitled to claim the set off would mean that a legal fiction is created to the effect that this amount of Rs. 7,06,590/- be treated to have been paid as a tax liability deductible under Section 43B of the Act. This was disallowed by the Assessing Officer by an order dated 21st February 199....
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....pressed the ground relating to the disallownce of the sales tax set off Rs. 7,06,590/- under Section 43B for the assessment year 1988-89 is correct? 2. Whether on the facts and circumstances of the case and in law, the claim for sales tax set off of Rs. 7,06,590/- for the assessment year 1988-89 has been rightly disallowed under Section 43B of the Act ?" 4. As regards the first question, Mr. Suresh Kumar submitted that since this point was not pressed for by appellant before the Tribunal, the court should not even consider the second question. We are at final hearing stage. In question no.1, the court has recorded whether the conclusion of the Tribunal that appellant had not pressed the ground relating to the disallowance under ....
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....d. As noted earlier the amount of Rs. 7,06,590/- has been set off because appellant was entitled to set off this amount. In our view, the amount of Rs. 7,06,590/- which has since been liability due to be paid having been adjusted, is a deemed payment amounting to actual payment within the meaning of Section 43B of the Act. Since the law permits appellant to set off or adjust the sales tax already paid at the time of purchase of raw materials against the sales tax collected at the time of sale of finished goods, the assessee has retained the sales tax amount which has already paid and claimed a set off. In fact to the extent of the sales tax paid on the raw materials, the assessee has actually been reimbursed to that extent by the sales tax ....
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.... of the sales tax collected has since been paid. The balance has been sought for being adjusted or being set off under Rule 41D read with Rule 45(3) of the Bombay Sales Tax Rules. Therefore, it is to be presumed to be a deemed payment within the time to be included in the relevant assessment. The allowance is allowed in respect of the sales tax payable by the assessee, which is qualified by the Explanation to Section 43B of the Income-tax Act to mean to have been actually paid or incurred. That the liability was incurred is not in dispute. In this case it has not been actually paid, but was sought to be adjusted or set off against payment of sales tax by the assessee on its purchase of raw material used for the product against which the sal....