When the last date for payment of duty is a holiday?
The 5th of November 2006, the last date for payment of monthly excise duty and Service Tax, was a holiday, a Sunday. Can the duty/tax be paid on Monday? No doubt it can be paid but DDT understands that Central Excise officers are demanding and collecting interest for the delayed payment, especially in respect of Service Tax. Similarly the last date for filing return last month was a holiday. Regarding return, there is really no problem as excise officers would oblige by accepting a back dated return, but for duty payment there can be no such concession.
Is payment made on the next working day delayed?
Once upon a time, not so long ago, it so happened that 31st March happened to be a holiday. This is a day when you see officers going crazy about targets and what happens if that fell on a holiday? Can the tax be paid the next day?
Board had in Circular No. 629/2002, dated 19-3-2002 dealt with this issue and clarified that
++ The last day of this month/Financial Year i.e. 31-3-2002 happens to fall on a Sunday, on which day the Banks are normally closed. In terms of rule 8 of the Central Excise Rules, 2002 an assessee availing facility of fortnightly payment of duty has to deposit the duty for the second fortnight of March by 31st day of the month. Further, as per Explanation to the rule, duty liability is deemed to be discharged only when the amount payable is credited to the account of the Government by the specified date. Hence, duty is to be paid by 31-3-2002 and not on the last date of the month. Secondly, duty should be credit to the Government account by 31-3-2002. Thus, the assessees should ensure the duty is paid by 31-3-2002 otherwise the clearances would be treated as non-duty paid. . Hence, this year assessees should calculate their duty liability up to 31-3-2002 and credit it to the Government account by 31-3-2002.
But was the Board right? They made a U turn in 2003. By Circular No. 63/2003 dated 14-10-2003, Board clarified,
++Doubts have arisen with regard to the last date of payment of Service Tax and for filing the Service Tax return in case the 25th of the month in which the Service Tax is to be paid or return filed happens to be public holiday.
++ In case of genuine hardship on account of public holiday on 25th of the month in which a service provider has to pay the service tax or file the returns, he may pay the service tax in Government account on next working day immediately following the holiday. Same thing applies with regard to the filing of return.
Now which of these clarifications is to be followed? Is it that the principle of next day payment is normally applicable except in March?
Let us see some statutes:
GENERAL CLAUSES ACT, 1897:
10. Computation of time
(1) Where, by any 12[Central Act ] or Regulation made after the commencement of this Act, any act or proceeding is directed or allowed to be done or taken in any Court or office on a certain day or within a prescribed period, then, if the Court or office is closed on that day or the last day of the prescribed period, the act or proceedings shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the Court or office is open:
PROVIDED that nothing in this section shall apply to any act or proceeding to which the 22[Indian Limitation Act, 1877 (15 of 1877)], applies.
(2) This section applies also to all Central Acts or Regulations made on or after the fourteenth day of January, 1887.
LIMITATION ACT, 1963
4. Expiry of prescribed period when court is closed
Where the prescribed period for any suit, appeal or application expires on a day when the court is closed, the suit, appeal or application may be instituted, preferred or made on the date when the court reopens.
Explanation: A court shall be deemed to be closed on any day within the meaning of this section if during any part of its normal working hours it remains closed on that day.
NEGOTIABLE INSTRUMENTS ACT, 1881
25. When day of maturity is a holiday
When the day on which a promissory note or bill of exchange is at maturity is a public holiday, the instrument shall be deemed to be due on the next preceding business day.
Explanation: The expression "Public Holiday" includes Sundays and any other day declared by the Central Government, by notification in the Official Gazette, to be a public holiday.
Let us also see some judicial decisions:-
In Meck Lubricants & Petrochemicals Pvt Ltd - , the Tribunal held that the last day of the period of limitation of six months under Section 11B of the Central Excise Act being a holiday, the refund claim filed under the said Section 11B on the next day would be deemed to have been filed within time.
In Sahuwala Cylinders Limited , the tribunal held that when the last date for filing an appeal falls on a holiday, the same can be filed on the next working day.
In Indian Seamless Steel And Alloys Ltd, the Bombay High Court held that that time prescribed by statute for doing any act if expires on a holiday should be treated to have been done within period prescribed if done on the next working day. Consequently, payment of excise duty made by the petitioners on the next working day i.e. on Monday, the 21st January, 2002 has to be treated to have been made on due date i.e. within the period prescribed as 20th January, 2002 was a Sunday when office of the Bank of Maharashtra was closed and payment could not have been made on that day.
The Court also observed, It is also a well settled principle of law that the law does not compel a man to do that which he cannot possibly do and the said principle is well expressed in legal maxim “lex non cogit ad impossibilia” which is squarely attracted to the facts and circumstances of the present case.
So it is clear that duty/tax can be paid and returns and appeals can be filed on the next working day if the due date happens to be a holiday.