In Brief
Maruti Suzuki India Ltd. claimed a deduction under Section 43B of the Income Tax Act for Rs. 69.93 crores of unutilised MODVAT (Modular Value Added Tax) credit on excise duty as of March 31, 1999. The Supreme Court upheld the High Court's dismissal of the claim, holding that unutilised MODVAT credit does not qualify as 'sum actually paid by the assessee by way of duty' under Section 43B. Although the assessee paid excise duty on raw materials purchased from suppliers, the legal liability to pay excise duty rested with those manufacturers, not the assessee. MODVAT credit is merely a facility to adjust future excise duty liability, not a payment made by the assessee itself.
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