TaxTMI 
TaxTMI 
1996 (1) TMI 139
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....ue, bad in law?" 2. Some relevant facts: The assessee-company, amongst other items, is also engaged in the manufacture of blended yarn. It had started manufacturing such yarn a few years prior to 1972. Till 1972, the assessee paid excise duty on the yarn manufactured by it under tariff item 18 and 18A of the First Schedule to the Central Excises and Salt Act, 1944 (the Excise Act). The Finance Act, 1972, introduced a new Tariff Item 18-E whereby for the first time, blended yarn was subjected to excise duty under the new Tariff Item w.e.f. from 16th March, 1972. After protracted litigation, the trial Court held that the levy of excise duty on blended yarn upto 15th March, 1972, was illegal, void and ultra vires. The Union of India appealed....
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....d for in its accounts for the year ending on 30th June, 1985, and deduction thereof was claimed. 3. The learned CIT, exercising his jurisdiction under s. 263 of the Act held that the impugned interest was a statutory liability and hence came within the purview of s. 43B of the Act which permits the deduction of such specified liabilities only on actual payment. For this proposition, the learned CIT drew strong support from the Heydon's case which laid down the mischief rule. He held the order of the learned Dy. CIT (Asst.) to be erroneous and prejudicial to the interests of the Revenue. He also enhanced the assessment to the extent of Rs. 2,63,658. 4. Shri J.P. Shah, the learned counsel for the assessee, argued that the impugned liabili....
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....lf. He drew our attention to the provisions of cl. (a) of s. 43B, wherein the words "tax, duty, cess or fee" were followed by the words "by whatever name called, under any law for the time being in force, and contended that the interest liability foisted on the assessee was duty". Thus, it was fully covered by s. 43B and hence strongly urged that the order of the learned CIT be upheld. He also placed reliance on the decisions in Addl. CIT vs. Mukur Corpn. (1978) 111 ITR 312 (Guj) and Lakhanpal National Ltd. vs. ITO (1986) 54 CTR (Guj) 241 : (1986) 162 ITR 240 (Guj). 6. We have thoughtfully pondered over the rival submissions and also over the material on record. The issue, apparently simple it may seem to be, nonetheless raises some impor....
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....eds to be noted that s. 43B as originally enacted and as amended from time to time, specified only certain obligations arising out of certain laws, the deduction of which were to be allowed subject to actual payment irrespective of the method of accounting followed by the assessee. As mentioned earlier, the contention of the learned Departmental Representative was that the interest liability in question before us was "duty" and hence came within the purview of s. 43B, although, it needs to be noted that under which law this "duty" was levied, was not specified by him. Nevertheless, his contention needs to be analysed in the light of the discussion made hereinbefore. 9. At the outset, it would be useful to decide whether the liability of i....
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....cting officer or authority". 10. Similarly, in the case of Digvijay Cement, the Tribunal found that the provisions of Gujarat Sales-tax Act about imposition of interest or arrears of sales-tax were pari materia with the provisions relating to imposition of interest on arrears of cess in the U.P. Sugar Cane Cess Act, 1956. The Tribunal, therefore, held that the interest levied under the Gujarat Sales-tax Act was a part and parcel of the tax and hence within the purview of s. 43B. 11. From the above, it will be observed that the Supreme Court held the interest to be part of the cess because it was in the nature of compensation paid to the Government in the payment of cess, and no sooner there was delay, interest started accruing. In other....