High Court Of Gujarat
CIT vs. Shree Talal Taluka Sahakari Khand Udyog Mandli Ltd.
Section 43B
Asst. Year 1984-85
M.S. Shah & K.A. Puj, JJ.
IT Ref. No. 291 of 1994
26th July, 2002
Counsel Appeared
Tanvish U. Bhatt, for the Petitioner : None, for the Respondent
JUDGMENT
K.A. PUJ, J. :
In this reference, at the instance of the applicant-Revenue, the following question of law is referred to for the opinion of this Court for asst. yr. 1984-85 : “Whether, the Tribunal is right in law and facts in deleting the addition of Rs. 1,01,81,278 made by the ITO under s. 43B in respect of outstanding sales-tax amount, when the resolution of the Government was passed on 14th Dec., 1984, and the assessee had not discharged its liability on 31st March, 1984, i.e., prior to the date of resolution ?”
In this reference, the only dispute is about disallowance under s. 43B for unpaid sum of Rs. 1,01,81,278 for sales- tax. It is the stand of the assessee before the assessing authority that the State Government had allowed the assessee to return sales-tax collected as a sort of incentive provided for the growth of industry. On this basis, it was contended by the assessee that its case was covered by the provisions contained in s. 43B of the IT Act. The ITO has, however, rejected the assessee’s claim.
Being aggrieved by the said order of the ITO, the assessee has preferred an appeal before the CIT(A) and while disposing of the said appeal, the CIT(A) has taken note of Circular No. 496, dt. 25th Sept., 1987, issued by the CBDT and Gujarat Ordinance No. 1 of 1988, dt. 24th March, 1988, and on the basis of the said circular, the CIT(A) has allowed the appeal of the assessee. Thereafter, in appeal filed by the Revenue before the Tribunal, a view was taken by the Tribunal, on the basis of the circular issued by the CBDT as well as the resolutions of the State Government as referred to above, that the requirement of getting exemption from the mischief of s. 43B in respect of Sales-tax Deferment Scheme of the Gujarat Government are satisfied.
Being aggrieved by the aforesaid decision of the Tribunal, the Revenue has come in reference The Tribunal, therefore, held that the amount of Rs. 1,01,81,278 of deferred sales-tax is not caught by mischief of s. 43B of the Act. before this Court and the above question was referred for the opinion of this Court.
5. Heard Mr. Tanvish Bhatt, learned standing counsel appearing for the applicant-Revenue. Nobody appears on behalf of the respondent-assessee though the notice was duly served. At the time of hearing of his reference, our attention is drawn to the decision of the Hon’ble Supreme Court in the case of CIT vs. Gujarat Polycrete (P) Ltd. (2001) 165 CTR (SC) 402 : (2002) 246 ITR 463 (SC) wherein it is held that the CBDT Circular dt. 25th Sept.,1987, would apply only if a State would have amended its sales-tax to provide that the sales-tax that was deferred by an incentive scheme framed by it would be treated as actually paid, so as to meet the requirements of s. 43B of the IT Act, 1961. It was further held on the basis of the facts of that case that notice had not been taken of the Gujarat Sales-tax Act, 1969, to ascertain whether or not there was such an amendment. The Hon’ble Supreme Court thereafter has taken the view that the question whether the Tribunal was right in law and facts in directing the AO to allow the claim of the assessee in respect of unpaid sales-tax if the same was covered by the specific scheme of the Gujarat Government whereby the deferred payment scheme was converted into interest-free loan particularly when the provisions of s. 43B are retrospective in operation was a question of law which had to be referred. Mr. Bhatt has, therefore, urged that the matter may be remanded to the Tribunal to ascertain as to whether any amendment is made by the State Government in Gujarat Sales-tax Act, 1969. Here, in the present case, as already observed hereinabove, the Gujarat Government has passed a resolution bearing No. INC/1087/143-1, dt. 21st March, 1988, and the said resolution was made operative from 1st April, 1983. The period involved in the present assessment is, therefore, covered by the said resolution. The benefit is given vide Circular dt. 25th Sept., 1987, wherein the Board has made it clear that if the sales-tax due to the Government is converted as a loan which may be repaid by the assessee subsequently by instalments, the Department shall see that the sales-tax due as actually paid for all purposes is available to the assessee. The combined reading of this circular of CBDT as well as the resolution issued by the State Government would make it clear that the assessee is entitled to relief and benefit given under s. 43B can be claimed by the assessee.
6. It is required to be noted here that subsequently, the State Government has made an amendment in the Gujarat Sales-tax Act, and second proviso to s. 47(4) of the Act was inserted by Gujarat Act V of 1988, w.e.f. 24th March, 1988, which reads as under : “Provided further that notwithstanding anything contained in this Act or in the rules made thereunder but subject to such conditions as the State Government or the Commissioner may by general or special order specify, where a dealer to whom incentives by way of deferment of sales-tax or purchase-tax or both have been granted by virtue of an eligibility certificate granted by the Commissioner of Industries, Gujarat State, or any officer authorised by him in this behalf and where a loan liability equal to the amount of any such tax payable by such dealer has been raised by the Gujarat Industrial Investment Corporation Limited or the Gujarat State Financial Corporation Limited, then such tax shall be deemed, in the public interest, to have been paid.”
7. Since the resolution issued by the State Government earlier was made affective from 1983, the assessee’s case was covered by the said resolution and amendment made thereafter on 24th March, 1988, is clarificatory in nature. We are, therefore, of the view that the Tribunal was right in deleting the addition made by the ITO invoking the provision of s. 43B in respect of unpaid sales-tax liability.
8. We, therefore, answer this question in the affirmative i.e., in favour of the assessee and against the Revenue. This reference is accordingly disposed of with no order as to costs.
[Citation : 259 ITR 21]
