TMI Blog1997 (2) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... to as "the Tribunal") to the Allahabad High Court (see [1982] 134 ITR 718) wherein two questions were referred for opinion. Both the questions have been answered against the assessee and in favour of the Revenue. In the present appeal, we are only concerned with question No. 2 which is in the following terms : " Whether, on the facts and in the circumstances of the case, the payment of sales tax composition fee of Rs. 1,91,887 was an allowable expenditure for the assessment year 1968-69 ? " The matter relates to the assessment year 1968-69. The assessee deals in the business of manufacture and sale of biris. By notification published in the U. P. Gazette dated December 14, 1957, it was prescribed that no sales tax was payable with effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 81,994 was found payable for the period from April 1, 1958, to June 30, 1958. The total amount of tax came to Rs. 1,96,351. The stay against recovery of sales tax that was granted in the year 1959 was vacated on October 16, 1967. Thereafter, the assessee paid a sum of Rs. 1,91,887 out of the aforesaid tax liability of Rs. 1,96,351. The assessee claimed deduction of the amount of tax paid in the assessment year 196869 on the ground that the actual payment was made in the previous year relevant to that assessment year. The said claim was not allowed by the Income-tax Officer as well as the Appellate Assistant Commissioner and the Tribunal. The question aforementioned was referred by the Tribunal to the High Court which has been answered agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecent judgment in CIT v. Kalinga Tubes Ltd. [1996] 218 ITR 164, wherein, following the decision in Kedarnath Jute Mfg. Co. Ltd. [1971] 82 ITR 363 (SC), it has been held that when the assessee is following the mercantile system of accounting, in the case of sales tax payable by the assessee, the liability to pay sales tax would accrue the moment the dealer made sales which are subject to sales tax and, at that stage, the obligation to pay the sales tax arises and the raising of the dispute in this connection before the higher authorities would be irrelevant. The present case is thus fully covered by the aforesaid decision of this court. We, therefore, do not find any merit in the appeal and the same is accordingly dismissed. But in the cir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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