Cheque payment under the compliance scheme was valid where service tax rules deemed presentation as payment, subject to realisation.

Payment under the Voluntary Compliance Encouragement Scheme, 2013 could be made by cheque where the service tax rules recognised cheque payment and treated the date of presentation as the date of payment, subject to realisation. A declaration tendered with a cheque on the scheme's closing date could not be rejected merely on an assumption drawn from bank details; the department had to present the cheque and verify whether it was honoured. On that basis, the declarant was treated as having complied with the payment requirement, and rejection of the declaration was not sustainable.

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Issues: Whether the declarant under the Voluntary Compliance Encouragement Scheme, 2013 could be treated as having paid 50% of the declared tax dues when part payment was tendered by cheque on the last date of the scheme.

Analysis: Rule 6 of the Scheme requires payment of tax dues in the manner prescribed for service tax under the Service Tax Rules, 1994. Rule 6(2A) of the Service Tax Rules, 1994 specifically recognises payment by cheque and deems the date of presentation of the cheque to be the date of payment, subject to realisation. The declaration was accompanied by the cheque on the closing date, and the department was required to present the cheque and determine the matter on the basis of whether it was honoured, rather than rejecting the declaration merely on an assumption drawn from bank details obtained without presentation of the cheque. The applicable rule, read with the scheme, therefore protected the declarant where the cheque was realised.

Conclusion: The declarant was entitled to be treated as having complied with the payment requirement under the scheme, and the rejection of the declaration could not be sustained.

Ratio Decidendi: Where the governing service tax rules permit payment by cheque and deem the date of presentation of the cheque as the date of payment subject to realisation, a declaration under the compliance scheme cannot be rejected without first presenting the cheque and ascertaining whether it is honoured.

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