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TMI Blog1962 (3) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... previous years, and that such production was likely to exceed 5 lakhs gross of match boxes, annual ceiling fixed for category No. 2 factory. This meant that the factory would have to be re-classified and treated as category No. 1. In the event of the factory being classified as category No. 1 the excise duty payable would also be more than that levied for category No. 2 factory. The assessee, therefore, submitted a petition to the Assistant Collector of Central Excise, Trivandrum, on August 23, 1954, and prayed for permission to work the factory so as to produce more than the maximum limit of 5 lakhs gross of match boxes permissible for category No. 2 factory. The excise duty payable in respect of category No. 2 factory is ₹ 1-15-0 per gross on 40s. and ₹ 2-14-6 per gross on 60s. The duty payable by factory under category No. 1 exceeds the duty in respect of category No. 2 by 1 anna 6 pies for 60s. and 1 anna for 40s. per gross. The Assistant Collector of Central Excise, Trivandrum, by his communication to the assessee dated September 27, 1954, granted permission for the transfer of the factory from category No. 2 to category No. 1. But two conditions were imposed on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... During the pendency of these proceedings the assessee debited his account on April 12, 1955, the last day of his accounting year 1954-55 with the sum of ₹ 21,373. He claimed this amount as a proper deductible allowance in computing his income of the year of assessment 1955-1956. The assessee's claim was that though the amount was not actually paid in the year of account, having regard to the fact that he was maintaining the accounts on the mercantile basis, he was entitled to the deduction as the legal liability to pay the duty accrued to him in the previous year relevant to the assessment year 1955-56 in view of the Collector's demand for payment on December 9, 1954. The Additional Income-tax Officer, Tuticorin, disallowed the claim for deduction of the amount as the assessee did not actually pay the amount in the year of account and as he was disputing his liability to pay that amount, having preferred appeals to the statutory authorities against the order demanding payment of the duty. The assessee preferred an appeal to the Appellate Assistant Commissioner, Tuticorin, who however affirmed the order of the Income-tax Officer. He took the view that with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he demand. No assessee can after the receipt of such demand treat it as an idle demand not meant to be enforced. Rule 10A referred to in the demand notice of the Collector reads: "Where these rules do not make any specific provision for the collection of any duty, or of any deficiency in duty if the duty had for any reason been short-levied or of any other sum of any kind payable to the Central Government under the Act or these rules, such duty, deficiency in duty or sum shall, on a written demand made by the proper officer, be paid to such person and at such time and place, as the proper officer may specify." Section 11 of the Act (Central Excise and Salt Act of 1944) provides that in respect of duty and any other sums of any kind payable to the Central Government under any of the provisions of this Act or of the rules made thereunder, the officer empowered by the Central Board of Revenue may recover the amount by attachment and sale of excisable goods belonging to the person liable to pay and if the amount payable is not so recovered he may prepare a certificate signed by him specifying the amount due and send it to the Collector of the district in which such person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... propriety of the assessment and levy of the duty cannot minimise the liability or impair its effectiveness. He may raise a dispute over it and strain every nerve to avoid that liability. He may file appeals to the proper authorities questioning the imposition of the liability and praying for relief by way of cancellation of the duty. These are only constitutional modes in which a subject reacts to the levy of taxes and, indeed, there is nothing improper in them. A protest or opposition by a subject to the levy of tax or other duties payable to the Government cannot carry with it the implication that there is no proper levy legally recoverable till such protest or opposition ceases or is silenced. Learned counsel for the department referred to the decision in James Spencer & Co. v. Commissioner of Inland Revenue*. In that case the appellant (assessee) was a firm which took over the business of another firm from April 1, 1945. The firm was carrying on business as stevedores. Neither the appellant firm nor its predecessor had insured against risks or liabilities arising from claims by workmen either under the Workmen's Compensation Acts or under common law. In taking over the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of it is ascertained at a later date; but the payment is to be made as at the date when it rightly occurs in the accounts, even if the quantum of it cannot be fixed at that moment'....it seems to follow that, if in the earlier period there is only a provisional or contingent 'liability', it is not until it has been subsequently determined to be an actual 'liability' by admission or decision that it can properly be brought into computation, and it should then be debited even if it is not until a still later period that the exact quantum can be inserted, if need be by reopening the accounts." This decision does not help the department in asserting before us that the excise duty payable, namely, the sum of ₹ 21,373, cannot be debited in the assessee's year of account 1954-55. It was not a contingent liability on the part of the assessee which the Collector of Central Excise was seeking to enforce by making the demand for payment. The duty was levied for an ascertained sum, and the levy was accompanied by a statutory demand. It was undoubtedly open to the excise authorities to have collected the amount fully in December, 1954, or January, 1955, by ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility and a payment depending upon a contingency. In fact the expression of the opinion by the Division Bench was obiter as is apparent from the following observation of the learned judge at page 295: "The learned counsel for the department urged that, even if the requirements of section 10(2)(xv) were satisfied, the deduction should not be permitted in the assessment year 1952-53, and that the bonus payments for 1949 and 1950 were properly debitable only to the years of account that ended on January 31, 1950, and January 31, 1951, respectively. That was not one of the grounds on which the Tribunal negatived the claim of the assessee company. Such a contention was never put forward by the department for adjudication by the Tribunal. Such a contention does not arise for consideration at this stage. As a question of law it does not arise on the order of the Appellate Tribunal." The payment of Deepavali bonus was a matter of dispute between the management and its employees and the liability to pay bonus for the years 1949 and 1950 would not therefore be said to have arisen in those years. The award by the Industrial Tribunal itself was made only on February 9, 1951, with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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