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TMI Blog2023 (3) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - SERVICE TAX APPEAL NO. 51340 OF 2018 - FINAL ORDER No. 50304/2023 - Dated:- 13-3-2023 - HON BLE MR.JUSTICE DILIP GUPTA, PRESIDENT AND HON BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) APPEARANCE: For the Appellant : Shri B.L. Narsimhan, Advocate For the Department : Shri Ravi Kapoor, Authorized Representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified conditions that rendered a declarant ineligible to declare his/her tax dues under the VCES, which is, that any person may declare his tax dues in respect of which no notice or an order of determination under section 72 or section 73 or section 73A has been issued before the 1st day of March, 2013. He contended that none of the restrictive clauses as illustrated in section 106 of the Finance Act, 2013 is applicable to them as no show cause notice nor an order in original had been issued to them. He also pointed out that the audit had concluded on 22.9.2012, which is prior to 1.3.2013. In addition, he stated that the show cause notice which was pending did not include the tax issues as declared in the VCES. He also placed reliance on the Circular No. 169/4/2013 dated 13.05.2013 which had clarified that all tax dues that were not covered by a show cause notice or an order of determination can be declared under the scheme, subject to the provisions of the scheme. To buttress his arguments that an audit report is not an order, the learned counsel for the appellant placed reliance on the Supreme Court judgement in Jaswant Sugar Mills Vs Laxmi Chand Ors. [1962 (9) TMI 63-SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said return. Provided further that where a notice or an order of determination has been issued to a person in respect of any period on any issue, no declaration shall be made of his tax dues on the same issue for any subsequent period. (2) Where a declaration has been made by a person against whom, - (a) an inquiry or investigation in respect of a Service Tax not levied or not paid or short-levied or short-paid has been initiated by way of - (i) search of premises under Section 82 of the Chapter; or (ii) issuance of summons under Section 14 of the Central Excise Act, 1944, as made applicable to the Chapter under Section 83 thereof; or (iii) requiring production of accounts, documents or other evidence under the Chapter or the rules made thereunder; or (b) an audit has been initiated, and such inquiry, investigation or audit is pending as on the 1st day of March, 2013, then, the designated authority shall, by an order, and for reasons to be recorded in writing, reject such declaration. Procedure for making declaration and payment of tax dues. 107. (1) Subject to the provisions of this Scheme, a person may make a declaration to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me conclusive upon issuance of acknowledgement of discharge under sub-section (7) of Section 107 and no matter shall be reopened thereafter in any proceedings under the Chapter before any authority/or Court relating to the period covered by such declaration. 8. It is noticed that the said Scheme was introduced as a one time amnesty opportunity to Service Tax defaulters to pay their dues. The Scheme provided that the assessment to the liability has to be made, the declaration or application will be scrutinized for its compliance with the provisions. Thereafter, the authority would accept the application and grant immunity from prosecution and also exempt interest and penalty liability. Keeping in mind the spirit of the Scheme, certain safeguards and conditions have been indicated. The applicant should deposit 50% of the admitted liability with the declaration itself on or before 31-12-2013 and the balance was to be paid latest by 30-06- 2014. The second condition was that there should be no issue pending or determined before any of the tax authorities or Tribunals for adjudication. The object of this was to avoid reopening of settled matters. It is in this light that we examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1944, as made applicable to the chapter under section 83 thereof; or (iii) requiring production of accounts, documents or other evidence under the chapter or the rules made there under; or 4. Whereas, audit against you has been conducted for the period under VCES, 2013 and a demand cum show cause notice No. 132/ST/GGN/2012-13 dated 19.10.2012 has been also issued same is pending as on 01.03.2013 under the provisions of the Finance act, 1994, therefore, as per provisions under section 106 of the Finance act, 2013, it appears that you are not eligible to file declaration under the said scheme 5. Hence in view of the above your hereby called upon to show cause to Sh Karan Thapar, designated authority, VCES, room No. 206, 17 B, IAEA House, I.P. Estate, New Delhi as to why the declaration filed by you should not be rejected in terms of section 106 of the Finance act, 2013. You are requested to appear in person or through authorised representative o on20.01.2014 at 12.30 hrs before the designated authority with your written submission in this regard. You are required to produce at the time of showing cause, all evidences upon which you intend to rely in support of you ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ragraph above, the issues declared under VCES was completely different from the Show Cause Notice dated 19.10.2012 Accordingly, we hold that the aforesaid notice does not bar the Appellant from filing the declaration on 01.03.2013. 10. We now address the second issue to determine whether an Audit report forms determination of liability under section 106(1) 160(2) of the Finance Act, 2013. We note that the 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. To appreciate this argument we need to go back to the wording of the section 106(1) of the Finance act 2013. Section 106(1) reads as follows: 106. (1) any person may declare his tax dues in respect of which no notice or in order of determination under section 72 or section 73 or section 73A of the chapter has been issued or made before the 1st day of March, 2013: .. 10.1 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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