V/DGST/ 30-Misc-46/2000 Dated:- 23-8-2000 Order-Instruction – Circulars – Service Tax – DIRECTORATE OF SERVICE TAX, Mumbai F.NO. V/DGST/ 30-Misc-46/2000, Dated 23rd August, 2000 . Payment of Service Tax by cheque in authorized Banks-Consequences of delay in encashment beyond due date The Rule 7 of the Central Government Account (Receipts and Payments) Rules ,1983 interalia provides that Government dues including taxes can be credited by the taxpayers directly into any branch of an authorised Bank. As per Rule 79 of the Treasury Rules of the Central Government, such payments / credits can be mad by cheques also. Accordingly, a large number of tax payers including the Service tax assessees discharge their tax li
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interest and penalty. This practice has developed presumably because the Rule 79(1) (a) of the Treasury Rules interalia states that “, until the cheque is cleared, the Government cannot admit that payment has been received; ” 4. A number of representations have been received in this Directorate stating that recovery of interest and imposition of penalty in the cases where cheques have been deposited before due date and the amount is credited to the Government account in due course, but after the due date, is 5. The matter has been examined. 6. It is observed that the identical issue had arisen in case of payment of Inland Air Travel Tax (IATT) by Sahara Airlines Ltd. The concerned authorities had imposed penalty and ordered recovery o
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bankers. Accordingly, the Government set aside the imposition of penalty / interest etc. in the said case. 7. The ratio of above cited decision of the Government would apply mutatis – mutandis to the payment of service tax also. Therefore, it is clarified that in the cases where the service tax amount has been deposited by an assessee in the authorized Bank, by cheque, before the due date and such cheque is not dishonored later, the Department need not initiate proceedings for recovery of interest /penalty etc. However, if the cheque is not honored in due course or the clearance is abnormally delayed for any lapse on the part of the assessees, the Department would be free to take penal action etc., as deemed fit. 8. The contents of t
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