2023 (3) TMI 540 - AT - Service Tax

Wrongful availment of CENVAT Credit - Input Services - Medical Insurance Services provided to its employees for the period 2007 – 08 to 2011 – 12 - rejection of appellant’s VCES declaration on the ground that the working of the audit through the Internal audit report was the determination of liability by the Central Excise Officer - HELD THAT:- The show cause notice dated 19.10.2012 has been issued to the appellant alleging wrongful availment of CENVAT credit of Rs. 1,34,18,976/- on Medical Insurance Services provided to its employees for the period F.Y. 2007 – 08 to F.Y. 2011 – 12. This Notice was adjudicated in favour of the Appellant vide order dated 28.10.2016. A perusal of the list of services on which the appellant declared under the VCES does not include “Medical Insurance Services”.

The VCES declaration indicates that appellant had declared nine other services on which they had chosen to pay the service tax dues under the VCES, 2013. So the argument that a notice on the said issues was pending as on 01.03.2013 is factually incorrect.

Whether an Audit report forms determination of liability under section 106(1) & 160(2) of the Finance Act, 2013? - Commissioner (Appeals) has rejected the appellant’s VCES declaration on the ground that the working of the audit through the Internal audit report was the determination of liability by the Central Excise Officer - HELD THAT:- An order of determination under sections 72, 73 or 73A would be an order in relation to a show cause notice issued under such indirect tax enactment. An audit report cannot be regarded as an order of determination. If that be the case, it would render clause (b) of section 106(2) infructuous - the Commissioner (Appeals) has erred in holding that the audit report is akin to an order of determination under the relevant sections of the Scheme.

The VCES declaration filed by the Appellant was correct - Appeal allowed.