Service Tax Audit report cannot be regarded as an order of determination

Federal Mogul Goeteze India Limited Vs Commissioner, Central Tax, (GST) (CESTAT Delhi)

CESTAT Delhi held that an audit report cannot be regarded as an order of determination under Voluntary Compliance Encouragement Scheme. Accordingly, audit report is akin to an order of determination under the relevant sections of the Scheme.

Facts- An audit of the records of the appellant was conducted for the period 2004 – 05 to 2007 to 2007– 08 resulted in issuance of show cause notice dated 19 October 2012 alleging wrongful availment of Cenvat credit by the applicant in respect of Medical Insurance Services provided to its employees for the period 2007 – 08 to 2011 – 12.

Thereafter, Voluntary Compliance Encouragement Scheme was introduced vide Chapter VI of the Finance Act, 2013. The appellant submitted a VCES declaration u/s. 107 of the Finance Act 2013 and made declaration of its service tax dues amounting to Rs. 7,22,89,051/- for the period 2007-08 to 2011-12.

As per the condition of the VCES, 2013, the appellant deposited an amount of Rs. 3,61,44,524/- as service tax dues by 31.12.2013. In response to the appellant’s VCES declaration, the designated authority issued a letter dated 9.1.2014 proposing to reject the application.

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