Service Tax — Payment by cheque — Delay in encashment beyond due date — No interest/penalty charged
V/DGST/30-Misc-46/2000 Dated:- 23-8-2000 Order-Instruction
Service Tax
Service Tax Payment by cheque Delay in encashment beyond due date No interest/penalty charged
F. No. V/DGST/30-Misc-46/2000, dated 23-8-2000 of the Mumbai Directorate of Service Tax
The Rule 7 of the Central Government Account (Receipts and Payments) Rules, 1983 inter alia 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 made by cheques also. Accordingly, a large number of tax payers i
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, in such cases also, the department has been levying interest and penalty. This practice has developed presumably because the Rule 79(1)(a) of the Treasury Rules inter alia 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 not fair since the assessee has no control over the time taken by the Bankers of the Government in clearing the cheque.
5. The matter has been examined.
6. It is observed that the
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authorized Bank. And if the cheque is not dishonored later, the payment shall be deemed to have been made on the date when the cheque was handed over to the Government's 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 clea
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