Explanation 2 of Section 43B v/s Service tax

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Purvi Desai (Querist)
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10 October 2007 Explanation 2 of s.43B states clarifies the meaning of words " any sum payable" means a sum for which the assessee incurred liability in the previous year even though such sum might not have been payable within that year under the relevant law

Reading s.43B and Explanation 2 together Will the service tax on the uncollected invoices be disallowed u/s 43B??

When is liabilty for service tax incurred?? When the invoices are collected or when the Invoices are raised for services rendered??

Please Note :
Rule 6 of Service Tax Act, substituted from 16.10.1998 clearly provides that service tax is payable only on the value of taxable services recieved during any calender month

Ravikumar.G

Ravikumar.G (Expert)
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10 October 2007 Thanks for your information. Your earlier same question the detailed answers also have been provided.

CMA Gul S

CMA Gul S (Expert)
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10 October 2007 This is Great information Purvi

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Purvi Desai

Purvi Desai (Querist)
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11 October 2007 Thanks to both of you.

But I really need advice to my argument. Mr. Ravikumar the matter that you gave me was really helpful to me but the same was not enough to convince my view.

I want a clear picture whether the service tax will be disallowed u/s 43B??
I feel it should not be disallowed

Please refer this case law:
Label of charge as tax or fee is not conclusive of its character. It is only if any amount becomes payable by way of tax, duty, cess or fee, that it falls within the purview of section 43B - CIT v. Udaipur Distillary Co. Ltd. (No. 1) [2004] 134 Taxman 398/268 ITR 305 (Raj.).

Awaiting your reply.

Ravikumar.G

Ravikumar.G (Expert)
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11 October 2007 I am also finding out the relevant case laws regarding this. As soon as i will get those things i will immediately inform you.

Purvi Desai

Purvi Desai (Querist)
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23 October 2007 Dear Mr. Ravikumar & Ms. Gul,
My Query is unresolved and please let me know whether my opinion on the issue is corect?

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
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27 October 2007 The answere is very simple.

Section 43B is for disallowance of expenditure claimed . When there is no claim for allowing a deduction/expenditure , section 43B will disallow what????

Now whether you have claimed the service tax as expenditure????