2003 (3) TMI 1 - AT - Service Tax

Service Tax (1) Duty liability (2) Payment of duty made by cheque (3) Delay in encashment beyond due date (4) Date of payment

Summary

Issues:
Interpretation of "payment" of Central Excise Duty by an assessee - Whether depositing a Cheque towards payment of duty in the authorized Bank satisfies the requirement or if the requirement is met only when the Cheque is cleared and the amount deposited to the Government Account.

Analysis:
The dispute in this case revolves around the interpretation of the term "payment" concerning Central Excise Duty by an assessee. The primary question is whether the deposit of a Cheque towards the duty in the authorized Bank fulfills the obligation, or if the requirement is only satisfied upon the clearance of the Cheque and crediting the amount to the Government Account. Rule 8 of the Central Excise Rules mandates the payment of duty by specific dates, and the crux of the issue lies in whether the Cheques deposited by these dates should be cleared for the duty to be considered paid. The Adjudicating authority insisted on clearance as the criterion for payment, while the Commissioner (Appeal) held that depositing the Cheque meets the requirement.

The matter was escalated to a Division Bench of the Tribunal by the Revenue, arguing that as per the Central Government Account (Receipt and Payments) Rules, 1983, the Cheque clearance is essential for meeting the payment requirement. The Division Bench referred the case to the Larger Bench due to a previous decision overlooking the provisions of the said Rules. The arguments presented by both parties focused on Rule 20 of the Central Government Account (Receipt and Payments) Rule, 1983, which specifies the date of receipt of Government dues tendered via Cheque or draft.

The assessee's counsel cited precedents, including a decision by the High Court of Andhra Pradesh, which held that the date of receipt of the Cheque should be considered as the date of payment. Referring to relevant Supreme Court decisions, the counsel emphasized that the order of the Commissioner (Appeals) aligned with established legal principles. The Tribunal examined a similar decision by the Andhra Pradesh High Court concerning Rule 49 and Rule 173G of the Central Excise Rules, affirming that the date of Cheque receipt should be deemed as the date of payment, not the realization date. The Central Excise Manual and clarifications on service tax payment further supported the view that Cheque deposit, if not dishonored, fulfills the payment obligation.

Based on the clarifications and legal precedents, the Tribunal concluded that the deposit of a Cheque, provided it is not dishonored, satisfies the requirement for the "payment" of duty. Consequently, the appeal by the Revenue was dismissed, and the impugned order of the Commissioner (Appeals) was upheld, in line with the legal interpretations and precedents discussed.

In summary, the judgment clarifies the definition of "payment" concerning Central Excise Duty, emphasizing that depositing a Cheque towards duty payment in the authorized Bank, if not dishonored, meets the obligation. The decision is supported by relevant legal provisions, precedents, and clarifications, ensuring consistency in interpreting the payment requirements for excise duties.