1999 (11) TMI 293 - CGOVT - Customs

Interpretation of Payment Date in Tax Penalty Case: Cheque Presentation vs. Clearance

IN RE: SAHARA AIRLINES LTD.

The Revision Application challenged a penalty of Rs. 1 crore imposed for delayed deposit of Inland Air Travel Tax (IATT) collected. The central issue was ... Revision - Dues Issues involved: Penalty imposed for delayed deposit of Inland Air Travel Tax (IATT) collected, interpretation of the date of payment into the Government treasury concerning cheque clearance.Penalty Imposed for Delayed Deposit of IATT:The Revision Application was filed against the penalty of Rs. 1 crore imposed u/s 46(3) of the Finance Act, 1989 for delayed deposit of IATT collected. The penalty was based on the delay in depositing amounts collected within the mandatory 30 days into the Treasury, with interest also confirmed u/s 43A(i) ibid. The Commissioner (Appeals) upheld the penalty, leading to the appeal.Interpretation of Date of Payment into Government Treasury:The central issue revolved around whether the date of receipt of the cheque by the bank should be considered as the date of payment into the Government treasury or the date when the cheque was cleared. The argument presented highlighted that as per various statutes and judicial pronouncements, the date of cheque receipt should be deemed as the date of payment into the treasury.Relevant Legal Provisions and Precedents:The Central Government Account (Receipts & Payments) Rules, 1983, and Treasury Rules of the Central Government were crucial in understanding the issue. The Rules emphasized the process of crediting Government dues directly into accredited banks and the treatment of cheques as payment upon acceptance and clearance. Legal precedents, such as the Supreme Court case of K. Saraswatty v. P.S.S. Somasundaram Chettiar and the Madras High Court case of CIT v. Kumudam Publications Pvt. Ltd., supported the notion that cheque payment should be considered valid once encashed or handed over to Government officials.Decision and Conclusion:After considering the submissions and legal framework, the Government concluded that the date of cheque presentation to the bank for payment of IATT should be recognized as the date of payment into the Government treasury. As there was no dispute regarding the bank's status or the cheque presentation dates, the Revision Application was allowed, overturning the lower authorities' orders. Consequently, the penalty for delayed deposit was set aside, providing consequential relief to the appellant.