Payment of Service Tax by cheque in authorized Banks-Consequences of delay in encashment beyond due date

Deemed payment by cheque: deposited before due date and honoured, no interest or penalty recovery thereafter.

Where a service tax cheque is deposited in an authorized bank before the due date and is subsequently honoured, the payment is deemed to have been made on the date the cheque was handed to the Government's bankers; in such cases the department should not recover interest or impose penalty merely because the bank credited the amount after the due date, though dishonour or abnormal delay attributable to the assessee permits penal action.