Section 43B disallowance for GST cannot be avoided by crediting liability to Sales a/c
Facts and Issue of the Case
The assessee has raised the following grounds of appeal
“1. Because the “CIT(A)” was not correct either on facts or in law in holding that “the applicant has not deposited the GST liability within the due date under section 139(1) and liable to tax u/s 43B, whereas the aforesaid GST Tax had already been deposited by the assessee in the subsequent year.
2. Because the CIT(A) was not correct in making the addition on account of GST payable in the books of the assessee, ignoring the facts that the GST was not routed through profit and loss account.
3. Because as the GST is neither debited in profit and loss account nor the assessee had made any claim against her income on account of non-deposit of GST, hence it should not be disallowed u/s 43B of the I.T. Act, 1961.
4. Because the sale proceeds of the invoice against which GST was payable, are not received during the year under consideration, hence the assessee was unable to pay the GST within the stipulated time prescribed under statute. Though in the subsequent year on account of the realization the GST had already been paid to the department.
5. Because the case law relied upon by “CIT(A)” is on the peculiar set of facts of that case and the same is not applicable to the case of the assessee.
6. Because the order appealed against is contrary to the facts, law and principles of natural justice.
7. Because in any view of the matter the appellant put craves leave to furnish any grounds of appeal at the time of hearing.”
None has appeared on behalf of the assessee when this appeal was called for hearing. It transpires from the record that the assessee has been seeking adjournment of hearing on one pretext or the other. Earlier, the counsel of the assessee sought the adjournment as time was required for collection of papers and records for preparing the submissions. The hearing was adjourned on three occasions on the same ground. Now again the learned counsel for the assessee sought adjournment on the ground that he needs more time to prepare the case as he has returned from Haj tour.
Having considered the past conduct of the assessee seeking adjournment of hearing, one more opportunity was granted to the assessee and the appeal was again fixed for today i.e. 23.08.2022. Nobody has appeared on behalf of the assessee and therefore, the Bench proposes to hear and dispose of this appeal ex parte.
The solitary issue arises in this appeal of the assessee is regarding disallowance made by the Assessing Officer under section 43B on account of non deposit of GST before the due date of filing of return of income under section 139(1) of the Act. The assessee has contended before the authorities below that the assessee has not claimed the deduction of GST in the profit and loss account and therefore, no disallowance can be made under section 43B of the Act.
On the other hand, learned DR has submitted that the assessee has bye- passed the profit and loss account and directly taken the GST amount to the balance-sheet which is not permissible. He has further submitted that the GST is a part and partial of the sale and therefore, it is inseparable part of the turnover as well as the closing stock and therefore, the non deposit of the GST within the time prescribed under section 43B would attract the provisions of section 43B. The learned DR has also referred the tax Audit report and submitted that the Auditor has specifically reported this amount of GST as disallowable under section 43B of the Act. He has referred to para 16 of the Audit report wherein the Auditor has specifically reported about the non-payment of GST of Rs. 22,21,501/-.
Observation by the Court
The court considered the submissions of the assessee made before the authorities below as well as the submissions of the learned Sr. DR. There is no dispute that the assessee has not paid the GST within the time limit as prescribed under section 43B and shown in the Balance-Sheet as outstanding. This fact is also evident from the Audit report in Form No. 3CB, balance-sheet as on 31.03.2019 wherein this amount of Rs. 22,21,501/- is shown as outstanding being GST payable. The Auditor has also reported this amount in para 26 in respect of the sum which is referred under section 43B. Even otherwise, the assessee has not disputed this fact that it has not paid the GST. The only contention of the assessee is that it has not debited this amount in the profit and loss account but directly taken to the balance-sheet. This modus operandi of the assessee is not acceptable as the GST is part and partial of the sales and turnover of the assessee and it has to be shown as part of the inventory / closing stock. The assessee is required to maintain the books of accounts as per the accounting standards which are notified in the official gazette from time to time as per section 145 of the Act. The method of accounting is required to be regularly followed by the assessee. Even as per the provisions of section 145A, the valuation of the purchase and sales of goods and services and sale of inventory shall be adjusted to include the amount of duty, cess or fee actually paid or incurred by the assessee. Hence, the contention of the assessee that it has not claimed any deduction on account of GST by taking the same directly to the balance-sheet and not taking through the profit and loss account is not acceptable. The assessee cannot be permitted to adopt a modus operandi and giving an accounting treatment to the GST without passing through the profit and loss account to circumvent the provisions of section 43B.
The CIT(A) has followed and referred various decisions of this Tribunal as well as decision of Hon’ble Supreme Court. No contrary decisions have been brought by the assessee either to the record of the authorities below or to the record of the Tribunal. Accordingly, I do not find any error or illegality in the impugned order of the CIT(A) and the same is upheld.
The appeal of the assessee is dismissed by the court.Smt.-Husna-Parveen-Vs-CIT-ITAT-Varanasi