I heard the 45-day MSME payment rule was challenged in the Supreme Court. Was it struck down?
Nothing has been struck down. Section 43B(h) is in force. Tax-press reports in 2024 said a traders' federation had moved the Supreme Court against the clause and that the Court did not take up the challenge, but no order of any court in that matter has been located, and the reports do not agree with each other on what was actually done. Treat the position as: no court has struck down or read down s.43B(h), and there is no order you can cite.
Decided by the Supreme Court. It bears on section 43B(h), section Income-tax Act, 2025 s.37(2)(g), section Income-tax Act, 2025 s.37(3), section Constitution Art. 14, section Constitution Art. 19(1)(g), section Constitution Art.32 of the Income Tax Act 1961, in Deductions & Disallowances matters.
Clients hear that the 45-day rule is 'in the Supreme Court' and want to hold the deduction on that basis. There is nothing to hold it on: no ruling, no stay, no reading down, and no order anyone has been able to produce. The grounds that were reported as argued — that the clause taxes gross transaction value rather than profit, and discriminates between micro and small enterprises and medium ones — have not been decided by anybody. Comply with clause (h); the challenge is not a defence to a disallowance.
Binding on every court and authority in India.
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Tax-press reports in May 2024 said that a traders' federation representing micro and small enterprises had moved the Supreme Court against s.43B(h), which restricts the credit period for payments to micro and small enterprises to 45 days, invoking Articles 14 and 19(1)(g) and pleading that the clause taxes the full transaction value rather than profit, squeezes working capital, and creates an unfair classification favouring medium units over smaller firms. No petition, order or cause title in that matter has been located in any court record or law report.
No order has been located, so nothing can be recorded as having been held. What is established is only the negative: no court has struck down, read down or stayed s.43B(h), and the clause remains in force. The account previously given here — that the Supreme Court declined to entertain the petition, permitted withdrawal and granted liberty to move a High Court — is not supported by any source and has been removed.
There is no order text to reason from. The reports that exist do not agree: one says the Court dismissed the plea and opted not to consider the challenge, another records only that a petition had been filed. Neither reproduces an order, names a bench or gives a petition number.
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Handle my notice → Ask a CA on WhatsAppNothing has been struck down. Section 43B(h) is in force. Tax-press reports in 2024 said a traders' federation had moved the Supreme Court against the clause and that the Court did not take up the challenge, but no order of any court in that matter has been located, and the reports do not agree with each other on what was actually done. Treat the position as: no court has struck down or read down s.43B(h), and there is no order you can cite. This was decided by the Supreme Court and bears on section 43B(h), section Income-tax Act, 2025 s.37(2)(g), section Income-tax Act, 2025 s.37(3), section Constitution Art. 14, section Constitution Art. 19(1)(g), section Constitution Art.32 of the Income Tax Act 1961. Clients hear that the 45-day rule is 'in the Supreme Court' and want to hold the deduction on that basis. There is nothing to hold it on: no ruling, no stay, no reading down, and no order anyone has been able to produce. The grounds that were reported as argued — that the clause taxes gross transaction value rather than profit, and discriminates between micro and small enterprises and medium ones — have not been decided by anybody. Comply with clause (h); the challenge is not a defence to a disallowance. If it applies to you, the first step is this: Tell the client plainly that there is no order to rely on and no ground to defer compliance with clause (h).
Tax-press reports in May 2024 said that a traders' federation representing micro and small enterprises had moved the Supreme Court against s.43B(h), which restricts the credit period for payments to micro and small enterprises to 45 days, invoking Articles 14 and 19(1)(g) and pleading that the clause taxes the full transaction value rather than profit, squeezes working capital, and creates an unfair classification favouring medium units over smaller firms. No petition, order or cause title in that matter has been located in any court record or law report. It was decided by the Supreme Court. On those facts the Supreme Court held as follows. No order has been located, so nothing can be recorded as having been held. What is established is only the negative: no court has struck down, read down or stayed s.43B(h), and the clause remains in force. The account previously given here — that the Supreme Court declined to entertain the petition, permitted withdrawal and granted liberty to move a High Court — is not supported by any source and has been removed.
There is no order text to reason from. The reports that exist do not agree: one says the Court dismissed the plea and opted not to consider the challenge, another records only that a petition had been filed. Neither reproduces an order, names a bench or gives a petition number.
It was decided by the Supreme Court. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 43B(h), section Income-tax Act, 2025 s.37(2)(g), section Income-tax Act, 2025 s.37(3), section Constitution Art. 14, section Constitution Art. 19(1)(g), section Constitution Art.32, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. No order has been located, so nothing can be recorded as having been held. What is established is only the negative: no court has struck down, read down or stayed s.43B(h), and the clause remains in force. The account previously given here — that the Supreme Court declined to entertain the petition, permitted withdrawal and granted liberty to move a High Court — is not supported by any source and has been removed. It arises in Deductions & Disallowances matters, on section 43B(h), section Income-tax Act, 2025 s.37(2)(g), section Income-tax Act, 2025 s.37(3), section Constitution Art. 14, section Constitution Art. 19(1)(g), section Constitution Art.32 of the Income Tax Act 1961. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Do not cite this in a notice reply as authority on the validity of s.43B(h) — no order text exists to cite. If the constitutional grounds matter to your matter, check whether any petition has since been filed and decided, because nothing on the challenge has been traced.
Validity check could not be completed. Unverified, and on a positive negative result rather than an absence of search hits. A comprehensive law-reporting database has now been searched four times - on the federation's short name and on its full name in an earlier pass, and again on the full name and on the statutory subject in this one - and carries no judgment or order of this name on s.43B(h): not as a Supreme Court order, not as a High Court order, under either name form. The full-name search returns six records and every one is non-judicial: three state GST grievance-redressal committee constitutions naming the federation as a trade representative, a parliamentary standing committee press release, an article and a news item. The short-name search returns twenty-four records whose only income-tax decision is Vyapar Mandal Ltd. v. CIT (1965) 58 ITR 426 (Calcutta), an unrelated 1964 writ on transfer of a case under s.127(1). That database reports Supreme Court income-tax matters comprehensively, so a reported judicial decision on a constitutional challenge to s.43B(h) would appear there. No High Court judgment on such a challenge under this name was found either, so the reported intention to move a High Court has produced no traceable decision. Because no order decided anything on the merits, there is also nothing for a later court to apply, and the positive-authority test cannot be met on this entry however long it is searched. On the provision, which is the part of this entry that can be checked: the rule survives the recodification. Section 43B(h) of the 1961 Act is now section 37(2)(g) of the Income-tax Act, 2025, which makes deductible only on actual payment any 'amount payable by the assessee to a micro or small enterprise beyond the time limit specified in section 15 of the Micro, Small and Medium Enterprises Development Act, 2006'; the Act's own note against the section records it as corresponding to s.43B of the 1961 Act. Section 37(3) carries forward the old first proviso and carries forward its exception too: the relief for sums paid after the year end but before the return due date applies to every sum in sub-section (2) 'except the sum referred to in clause (g) thereof'. The 45-day rule and its exclusion from the pay-by-return-date relief are therefore both in force in the current statute. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The judgment could not be found in a law-reporting database. Four searches have now been run - twice on the federation's full name and once on its short name in earlier passes, and again on the full name in this one, together with a search on the statutory subject - and none returned any judgment or order of this description, in any court, under either name form. The full-name search returns six records and not one is judicial. What is recorded here therefore comes from tax-press reporting alone, and the reports conflict on what was done. The bench, the petition and diary numbers, the operative wording and the date are all unknown; the date of 6 May 2024 that circulated is supported by no source read. The entry is carried at the Supreme Court tier, and its sourcing does not support that: it should not be presented or cited as a Supreme Court authority. It is kept because the point it makes is worth making - that no court has struck down or read down the 45-day payment rule - and not because there is a decision behind it. One thing has changed since this entry was written and a reader needs it: the provision has been renumbered. The rule that was s.43B(h) of the Income-tax Act, 1961 is now s.37(2)(g) of the Income-tax Act, 2025, in the same words, and the exclusion of that clause from the relief for sums paid before the return due date is now s.37(3). Cite the new numbering for anything arising after the recodification. Bench composition, writ petition number, diary number and the operative wording of the order could not be obtained; api.sci.gov.in and indiankanoon did not yield the order. No subsequent High Court order in this or any parallel challenge to section 43B(h) was located, so the outcome of the challenge remains unknown. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
No order has been located, so nothing can be recorded as having been held. What is established is only the negative: no court has struck down, read down or stayed s.43B(h), and the clause remains in force. The account previously given here — that the Supreme Court declined to entertain the petition, permitted withdrawal and granted liberty to move a High Court — is not supported by any source and has been removed.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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