In Brief
Maruti Suzuki India Ltd. (then Maruti Udyog Ltd.) challenged the High Court's dismissal of its income tax appeals concerning assessment years 1999–2000 and 2000–2001. The assessee claimed deductions under Section 43B of the Income Tax Act for: (1) Rs.69,93,00,428 in unutilised MODVAT (Modified Value Added Tax) credit on Excise Duty, and (2) Rs.3,08,99,171 in Sales Tax Recoverable. The Supreme Court held that unutilised MODVAT credit does not qualify for deduction under Section 43B because it is not a sum 'payable by the assessee'—the statutory liability to pay Excise Duty rests on the manufacturer of raw materials, not the purchaser. Although the purchaser receives a credit facility, this is not actual payment of a tax owed by the purchaser. The proviso to Section 43B did not apply because the liability to pay Excise Duty on finished vehicles arose only in the subsequent financial year. Both appeals were dismissed.
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