Interest u/s 234 as per cheque clearing

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TRIBHUVAN PUROHIT (Querist)
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21 January 2012 Sir,
Peoples are depositing cheques on due dates for e.g. say 15/09/2011 and the cheque gets cleared on 18/09/2011

Bank provide us challan showing details as below

Challan Tender Date : 15/09/2011
Payment Realised on : 18/09/2011

Now, I feel that interest can be charged only if cheque returns, if the cheque is cleared than we are not liable to pay interest anyway as we have deposited the payment as per government guidelines within its due date of 15/09/2011.

Please let me know the clarification regarding the same.

Awaiting reply.

Thanking you,
Tribhuvan Purohit

CA Deepak S

CA Deepak S (Expert)
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21 January 2012 Yes, Your views are correct.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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21 January 2012 Collection of tax revenues is governed by Central Government Accounts (Receipt & Payment) Rules, 1983, and as per the rule 20 of the same, government dues shall be deemed to have been paid in the case of cheques and drafts tendered to the bank on the date on which it is cleared and entered into the receipts scroll. In other words, the date of payment shall be the date on which cheque is cleared/ realized by the bank.

In the given case date of payment is 18/09/2011.

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CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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21 January 2012 Explanation-2 to the Rule 19 of the CGA(R&P) Rules 1983 is being reproduced -

2) The Government may, in relation to any particular class of transactions involving payment of Government dues,
issue orders varying or relaxing any of the conditions prescribed in this rule.
.
Any circular issued by the CG prior to implementation of these Rules is also effective, unless such circular has not been withdrawn.
.
To my view, the language of the above Explanation is acceptable in reference to all the circulars whether past or prospective.
.

According to Negotiable Act and
according to Circular No 261 of 08-08-1979 of IT, the position is clear that date of tender be deemed as the date of receipt.
.
Circular No 261, if has not been withdrawn then it can be said as the circular issued
under Rule 19.
.
Hence 15/09/2011 can be considered as the date of payment of Govt Due.

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