Honoured cheque treated as completed tax payment despite office misappropriation, defeating criminal liability for alleged default.

Payment of sales tax by cheque was treated as complete in law once the cheque was honoured, even though office staff misappropriated the amount before it was credited to the Government account. The payer had drawn the cheque in favour of the proper tax officer and complied with the demand notice, so the subsequent loss arose from fraud within the tax office and not from any default by the payer. On that basis, the payer was not criminally liable for the alleged tax offence under the relevant sales tax law.

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Issues: Whether payment of sales tax by cheque, which was honoured but misappropriated by office staff before being credited to the Government account, amounted to payment so as to avoid conviction under Section 15(b) of the Madras General Sales Tax Act.

Analysis: The cheque was sent in response to the notice, drawn in favour of the proper tax officer, and was in fact cashed. The amount not reaching the Government account was attributable to misappropriation within the office and not to any default by the payer. In these circumstances, payment in law was complete when the cheque was honoured, and the petitioner could not be held responsible for the fraud of subordinate staff or menials in the tax office.

Conclusion: The petitioner had paid the amount due and was not guilty of the offence under Section 15(b) of the Madras General Sales Tax Act.

Ratio Decidendi: Where a cheque tendered towards a tax liability is honoured, the payer is not criminally liable merely because the amount is misappropriated after encashment and is not credited to the Government account.

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