Cheque payment of government dues relates back to tender date when honoured, defeating penalty and interest for alleged delay.

Government dues paid by cheque through the prescribed treasury procedure are treated as paid on the date the cheque is tendered to the authorised bank, provided the cheque is honoured on presentation. The account rules and treasury rules were read harmoniously to apply the relation-back principle, so clearance of the cheque was not the operative date of payment. On that basis, the alleged delay in depositing Inland Air Travel Tax did not survive, and the penalty and interest were set aside in favour of the assessee.

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Issues: Whether payment of Government dues by cheque is treated as made on the date the cheque is tendered to the authorised bank or only on the date the cheque is cleared, and whether penalty and interest were sustainable for alleged delay in depositing Inland Air Travel Tax.

Analysis: The relevant account and treasury rules permit Government dues to be paid by cheque through authorised banks. Under the Treasury Rules, the Government cannot treat payment as received until the cheque is cleared, but where a cheque is accepted under the prescribed procedure and is honoured on presentation, payment is deemed to have been made. Reading the account rules and treasury rules harmoniously, the controlling principle is that a duly tendered and honoured cheque relates back to the date of tender to the Government's bankers. The cited judicial authorities were applied to support this understanding in the context of tax payments.

Conclusion: Payment was to be treated as made on the date the cheque was handed over to the authorised bank, not on the date of clearance; the alleged delay did not survive, and the penalty and interest were set aside in favour of the assessee.

Ratio Decidendi: Where Government dues are tendered by cheque under the prescribed treasury procedure and the cheque is honoured, the payment is deemed made on the date of tender to the authorised bank.

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