Assessee can’t escape Sec. 43B disallowance by crediting GST amount to B/S instead of taking it in P&L a/c: ITAT
The question arises as to whether disallowance can be done for GST payable if the amount is not debited to the P & L A/c.
Normally, it is presumed that disallowance presupposes allowance. If nothing is debited or claimed in the P & L A/c then how the disallowance can be done is the most sought after query?
One may note that section 145A requires adjustment with the turnover and stock figures towards the tax liability.
On the issue of disallowance, ITAT Varanasi in the case of Smt. Husna Parveen, N-12/224, Bajardiha, Varanasi PAN-CSEPP4360A Vs. CIT has Observed as under:
In view of the above binding precedents, we are of the view that the service tax collected by the assessee and not paid to the Government exchequer before the due date of filing of return, is to be disallowed, though it was not charged to the profit and loss account and it attracts the provisions of section 438 of the Act and the present provisions of section 145A of the Act cannot be applied in view of non obstante clause in section 438 of the Act. Thus, this ground of appeals of the Revenue for both the assessment years is allowed.
The ITAT further observed as under:
In view of section 145A, assessee can’t escape disallowance of GST payable u/s 43B by crediting GST to liability a/c instead of to sales a/c. In view of the provisions of section 145A requiring adjustment by inclusion of GST on sales in sales/turnover, assessee cannot escape disallowance of GST payable u/s 43B by crediting GST to separate liability account and taking it direct to balance sheet (exclusive method) instead of routing it through profit and loss account by crediting GST to sales account (inclusive method of accounting).
The copy of the ITAT order is as under:
