"if tax is deposited on or before due date through cheque but en cashed after the due date ,whether it can/will be treated as "default in payment?"
First of all I take clear provisions regarding the above question.
As far as Service tax is concerned the position is very much clear .As per service tax rules 1994 rule 6 (2A) if the service tax has been deposited through cheque than the date of presentation of cheque to the bank will be deemed date of payment .so for service tax rule is clear.
rule is reproduced hereunder
"(2A) For the purpose of this rule, if the assessee deposits the service tax by cheque, the date of presentation of cheque to the bank designated by the Central Board of Excise and Customs for this purpose shall be deemed to be the date on which service tax has been paid subject to realization of that cheque."
other important points regarding payment of service tax
- If last date is a holiday - If last day of payment and filing return is a public holiday, tax can be paid and return can be submitted on next working day - CBE&C circular No. 63/12/2003-ST dated 14-10-2003.
- IF payment of service tax made through internet/net banking on or before 8.00pm will be treated on same day and payment made after 8.00 pm will be treated /deemed to be made on next working day.for online payment service tax rules provide one day extra than normal due date.
vat rules bihar ,rule 27(2) explanation
Explanation For the purposes of calculating penalty, if any, under the Act and the rules, the date of receipt of cheque or draft, as the case may be, by Bank or the treasury or the Circle concerned, as the case may be, shall ordinarily be deemed to be the date of payment by the dealer, save in the case of a cheque, which is dishonored.
The most important and controversial is Income tax.lets try to clear the dust from the provisions of Income tax Act,rules,circulars,notification and other relevant act.
- In terms of provisions of Income-Tax Act, 1961 (Act) the payment of taxes i.e. advance Income-Tax, fringe benefit tax, tax deducted/ collected at source are to be made before the specified due dates and even a day's delay in payment attracts penal interest or may lead to dis allowance of expenses in tax assessments/ returns. In cases where taxes are paid through cheque, the date of payment could be the date of tender of cheque to the authorised banker or the date of clearance of cheque from the payer's account.
- Payments to government accounts were regulated by Central Treasury Rules (Old Rules). As per the said rules when a cheque/draft is honoured the payment shall be deemed to have been made on the date the cheque/draft is handed over to the government's bankers or to a government officer authorised to receive money on behalf of the government;
- Central Board of Direct Taxes (CBDT) vide its Circular No. 261 of August 8, 1979.This circular is important so reproduced at the end of the post.This Circular was in confirmation to Central Treasury rules clause shown above and according to the the cheque tender date to banker will be deemed date of payment subject to realisation of cheque.
- Thereafter,Central Government Account (Receipts and Payments) Rules 1983 (1983 Rules) were framed. These rules provide that the date of payment of government dues tendered in form of cheque/draft shall be the date on which it was cleared and entered in the receipt scroll;
- The question now arises whether the issue to be resolved by Central Government Account (Receipts and Payments) Rules 1983 or by the CBDT circular 261 august 8,1979?.the same question was decided in the case of PL Haulwel Trailers Ltd reported in 100 ITD 485 before tribunal and it is held that the position that in case of payment of tax by cheque, the date of presentation should be taken as date of payment. While rendering its decision, the tribunal has duly considered the conflict between the Rules, Circular and the provisions of Negotiable Instruments Act, 1881.
- Other than upholding the binding nature of the Circular, the tribunal has observed that under the Negotiable Instruments Act, 1881 it has been held that once the cheque is encashed in ordinary course, it will discharge the drawer from payment, and thus there exists an apparent conflict between interpretation of Negotiable Instrument Act, 1881 and the Rules which have been framed by executive authorities in exercise of powers under Article 283(1) of the Constitution of India.
- The tribunal has thereafter, held that in such a scenario, the law enacted by the Parliament would prevail i.e. Negotiable Instruments Act, 1881 would prevail over the Rules.
- So ,One thing is clear that though the rules of central govt has been changed but CBDT has not withdrawn the circular issued in this regard so it will binding on tax authority unless it withdrawn.
- CBDT has clarified in its Circular No 678 of January 14, 1994, that if the last date for payment is a holiday, Section 10 of the General Clauses Act, 1897 will be applicable and, accordingly, the assessee can make the payment on the next immediately following working day and, in such cases, the mandatory interest leviable under Sections 234B and 234C would not be charged.
- if there is a clear provision under the any act/rules./circular/notification/press release then they prevails and cheque tender date will be treated as payment date .
- if there is no such clear provision than for government due "Central Government Account (Receipts and Payments) Rules 1983 "will apply according to which the date of payment of government dues tendered in form of cheque/draft shall be the date on which it was cleared and entered in the receipt scroll;
Circular 261 ,8 August ,1979