Madhukar N Hiregange . B.Com., FCA, DISA(ICAI). Passed CISA. Jointly Authored 12 books on Central Excise, Service Tax, Karnataka VAT and Excise / Service Tax audit. Currently working on an IPCC Study Material and a Book on const control and tax planning under IDT. Also 2 online books on Service Tax and Central Excise. Senior Partner Hiregange & Associates having offices in Bangalore and Hyderabad and Associated with CAs across India as mentor. Had been active in the field of spreading awareness through seminars, articles, online replies including pdicai.org and CA club India for the past few years. Had been a visiting faculty at various Professional and Management Institutes including the IIM Bangalore. Was a Central Council Member of the Institute of Chartered Accountants of India for the term 2010-13 with a vision to enhance the credibility of the profession, strengthen the professional in practice and employment, make the course less painful while increasing the quality of the student coming out. Involved in efforts to make the Indirect Tax laws in India simple, certain and fair and creating an awareness of the potential of knowledge of Indirect Taxes in India. Managing Trustee – Empower Education Foundation. Interested in education of lesser privileged. Believes in “Value Based Practice and Life”.
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362 Replies on 197 Issues
Issue Id: 107470
Dear experts,Weather selling / transferring lease land taxable under service tax law? If it is taxable what will be taxable value? Is it on ...
Read Full Issue Service Tax
Issue Id: 107436
Dear Expert,one of my client is traders, he is importing the goods and doing the trading activity. during the time of import he has paying 4% ...
Read Full Issue Central Excise
Issue Id: 107435
Generators are given on rent , Rs. 90000 per month. whether service tax applicable under rent of immovable property
Service Tax
Issue Id: 107434
Greetings!!Please advice on the below issue.While preparing RG-23D register, whether we have to mention the page and entry no. of the purchase from ...
Read Full Issue Central Excise
Issue Id: 107420
Dear Sir,I would like to have clarification regarding service tax applicability on commission income received for giving surety bond.Secondly, as a ...
Read Full Issue Service Tax
Issue Id: 107418
Dear Sir,Wish to know that that CENVAT credit of Service Tax is available on Product liability for Company and Public Liability for company product ...
Read Full Issue Service Tax
Issue Id: 107415
Dear Sir,I would like to discuss on determining category of services. A service provider who will take care of gardening, factory upkeep, and would ...
Read Full Issue Service Tax
Issue Id: 107414
Dear Sir,I came across an invoice which provides "Skill development" courses to the candidate. The bill raised does not have service tax ...
Read Full Issue Service Tax
Issue Id: 107405
Dear Learned Friends,Kindly clarify the following query: A company manufacture several goods which are covered under central excise. In order to push ...
Read Full Issue Central Excise
Issue Id: 107392
Dear Sir,we are going to install 2 no's of Lift , one for moving raw materials from Basement to ground 1st floor (shop floor). Supplier will ...
Read Full Issue Central Excise
Issue Id: 107390
Is R&D Cess also applicable on import of consulting engineering services Please reply. Thanks and regards
Service Tax
Issue Id: 107389
Dear expertsWho will pay the service tax in the following cases:-1. services provided by GTA to a SSI unit engaged in manufacturing of goods. Both ...
Read Full Issue Service Tax
Issue Id: 107383
Sir, Entry no. 19A of Notification no. 25/2012 dated 20.06.12 inserted dated 20.06.12 vide notification no. 14/2013 dated 22.1013 envisages ...
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Issue Id: 107382
We are receiving Excise duty paid Raw material through trucks. The consignments received by us per day are around 20 to 30 trucks. kindly let us know ...
Read Full Issue Central Excise
Issue Id: 107377
Is trading of goods is classifiable under service or exempted service before April 01, 2011 and whether rule 6 of CCR 2004 is also applicable before ...
Read Full Issue Service Tax
Issue Id: 107375
Dear Experts,We want to avail service tax exemption under notification no. 18/2009 dt. 7th july 2009 amended notification no. 42/2012 dt. 29th june ...
Read Full Issue Central Excise
Issue Id: 107374
We are manufacturer as well as service provider and we are doing both the business from same premise. Accordingly, we are registered with Excise ...
Read Full Issue Service Tax
Issue Id: 107372
Dear Experts, Warm greetings to all. Please do reply the below mentioned query:- Xyz Ltd. (A manufacturer) has been granted permission under ...
Read Full Issue Service Tax
Issue Id: 107371
Dear sirs. Xyz ltd. is having huge amount of cenvat credit accumulated in his credit due to supply of goods under notification no. 12/2012-ce sl. no ...
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Issue Id: 107282
Dear Learned Friends, As per Notification No:45/2012 Serial No:5 A services provided or agreed to be provided by a director of a company to ...
Read Full Issue Service Tax
Showing 1 to 20 of 45 Results
Credit restriction under Rule 6 mandates proportionate reversal or alternative payment, affecting eligibility and recordkeeping for input credits.
Restriction under Rule 6 prescribes three compliance options: separate accounting to apportion credit to taxable activity; pay the specified percentage in lieu of reversal; or calculate proportionate ineligibility under the rule's formula. Exclusively used capital goods and inputs qualify fully for credit when applied to taxable activity; those used for exempt activity do not. Common input services must be allocated by objective measures or by Rule 6(3). The rule lists specific inclusions for the exempt value pool and certain clear exclusions, while noting persistent drafting and interpretive ambiguities that cause disputes. (AI Summary)
Service Tax
Indirect tax evasion detection in plastics industry: targeted audits and data-driven checks to bring unregistered sellers into the tax net.
Practical enforcement measures recommended include identifying major raw-material buyers for audited submissions, mining trader and buyer information, conducting ABC-style consumption analyses using electricity bills, generator presence and machine capacity, establishing product-specific input-output norms to detect quantity suppression, checking scrap streams for reprocessed material, correlating cash raw-material purchases with operational indicators, monitoring machinery acquisitions and workforce data, appointing dedicated technical officers for verification, and instituting periodic follow-up visits by different officers to prevent recurrence and curb informal settlements. (AI Summary)
Central Excise
Place of Provision rules should align to customer-location principle to protect service exporters and preserve forex incentives.
Service exporters need parity in export incentives and timely refunds: implement service-specific export incentive schemes, disburse a substantial portion of refunds upon verification of identity and turnover with the balance within a reasonable period, and remove multi-year refund delays. Place of Provision rules should follow the customer-location principle and international best practices instead of provider-location presumptions; address Rule 7's deeming of entire services in India, the misclassification of software support and technical services by reference to location of goods, and ambiguities in freight forwarding and digital/telecom/banking services under Rule 9 to prevent relocation and preserve export exemptions. (AI Summary)
Service Tax
Indirect tax disclosure obligations expanded, increasing auditor reporting duties and cross-checks between income and indirect tax compliance.
Amendments to Forms 3CA, 3CB and 3CD expand auditor verification and disclosure obligations to cover indirect tax liabilities and related registrations, require explicit observations or qualifications, and mandate disclosure of books examined and their locations. Form 3CD additions compel reporting of cenvat/Central VAT credits and their accounting treatment, admitted refunds and drawbacks, depreciation adjustments for credits on capital goods, details of expenditures with potential service tax implications, Section 43B indirect tax liabilities, quantitative manufacturing data, and any disqualifications or disagreements from cost or excise audits. (AI Summary)
Income Tax
Input service distribution: allocation required by usage; specific credits limited to units and common credits shared by turnover.
Statutory changes require input-service credits to be allocated based on usage: credits for units producing exempted outputs are ineligible; credits specifically used by one unit must be passed only to that unit even if billed to the head office; common credits (not exclusively for exempted outputs) must be shared among units in proportion to turnover (previous year, last quarter, or actuals) and distribution must not exceed credit availed. (AI Summary)
Service Tax
Time-bar on cenvat credit restricts retrospective claims; taxpayers must inventory and timely claim eligible input and service credits.
A proviso effective 1 September 2014 imposes a six-month time-bar on taking cenvat credit for inputs and input services based on documents listed in rule 9(1); capital goods are excluded. The change converts previously retrospective availment practices into a period-limited entitlement, risking loss of credits unless taxpayers inventory and claim eligible items before the cut-off, use returns to record August credits, or employ remedies such as cash basis availment, re-invoicing/returns to generate fresh documentary triggers, and specific service tax provisions for renegotiated or unprovided services. (AI Summary)
Cenvat Credit
Indirect tax compliance: expanded audit disclosures require auditors to verify liabilities and report registration and credit reconciliations.
Amendments to Forms 3CA/3CB/3CD expand auditors' duties by requiring examination-based certification, disclosure of indirect tax liabilities and registration numbers, and numerous specific disclosures including locations and nature of books examined, reconciliation and treatment of CENVAT/central VAT credits, particulars of indirect tax refunds/drawbacks admitted as due, Section 43B liabilities, depreciation adjustments tied to input credits, and reporting of audit disqualifications or disagreements under cost, excise and service tax audits. (AI Summary)
Income Tax
Indirect tax disclosure obligations expanded; auditors must verify liability, registrations, credits and report observations under revised audit forms.
Revisions to Forms 3CA/3CB/3CD expand auditor verification and disclosure obligations regarding indirect taxes: auditors must state assessee liability and registration for indirect taxes, document examination of books and relevant documents, disclose record locations and nature of documents examined, and report on cenvat/central VAT credits, depreciation adjustments tied to tax credits, refunds/drawbacks admitted as due, and other indirect tax exposures; auditors are directed to reconcile tax payments and credits with financials and flag discrepancies or risk indicators for further action. (AI Summary)
Income Tax
Cenvat credit time-bar may preclude claiming past credits; taxpayers urged to capture and claim missed credits promptly.
A budgetary amendment inserts a second proviso to Rule 4(1) effective 1 September 2014, barring manufacturers and output service providers from taking cenvat credit more than six months after issuance of documents specified in Rule 9(1). Taxpayers must identify and avail missed credits before the effective date, adopt periodic completeness checks, and weigh potential litigation over the amendment's effect on precedents allowing retrospective credit availment. (AI Summary)
Service Tax
Pre-deposit requirement introduced for tax appeals, alongside tightened CENVAT credit limits and widened service-tax coverage.
The Budget revises indirect tax architecture by changing excise and customs duties, extending targeted exemptions for renewable-energy inputs, imposing a statutory pre-deposit requirement for appeals (including service tax), tightening CENVAT credit rules with a six-month claim limit and revised reverse-charge credit conditions, and amending service-tax coverage and valuation rules - including narrowing the negative list, altering abatement for transport and works-contract valuation, and updating point-of-taxation and place-of-provision rules. (AI Summary)
Service Tax
Pre-deposit requirements and accelerated interest increase compliance burdens and weaken taxpayer procedural protections.
The Finance Bill strengthens administrative powers by mandating staged pre-deposit requirements for contested Central Excise, Customs and Service Tax demands and appeals, and by imposing accelerated, high-rate interest on delayed payments and long-pending disputes while refunds attract much lower interest. It narrows Cenvat credit availability through a limited window and stricter reversals, threatening seamless credit and transitional arrangements, and alters Place of Provision of Services rules that shift tax liability in export-related intermediary and marketing services. (AI Summary)
Service Tax
Change in central excise liability triggers compliance obligations and credit adjustments upon effective notification.
Change in Central Excise liability or rate triggers duty from the notified cutoff at midnight for goods first becoming liable, earlier exempt goods now taxable, and goods with rate changes; obligations include registration, duty paid procurement of inputs, prompt removal of finished goods, invoice disclosures, stock taking of RM/WIP/FG, cenvat credit adjustment or reversal, and assessing SSI exemption eligibility. Similar timing principles apply to Service Tax (rate, exemption or negative list changes) and Customs (timing of Bill of Entry and warehouse status). (AI Summary)
Central Excise
Central excise on textiles: withdrawal of exemptions could reinstate duty and trigger increased compliance and documentation requirements.
If excise is restored, duty will attach to removals from manufacturers' premises from budget midnight; stock present then may qualify for cenvat credit only with valid duty-paying documents. Manufacturers should undertake stock-taking at that moment, consider stamping documents to evidence pre-budget manufacture, and procure capital goods/inputs on duty-paid invoices to secure credit. Small-scale exemption eligibility depends on prior-year clearance thresholds, with larger clearances triggering immediate liability and smaller units retaining limited exemption until prescribed turnover bands are exceeded. (AI Summary)
Central Excise
Departmental audit procedures: prepare records and assert procedural safeguards to prevent improper demands and preserve rights.
Departmental audit is a risk based verification of an assessee's private records to ensure correct payment of excise duty and service tax and compliance with procedures; auditors perform desk reviews, on site inspections and issue audit notes recording observed non compliance that may lead to recovery, while formal demands require a show cause notice and auditors cannot act as assessing officers. Key audit focuses include cenvat credit validation, input-output analysis, capital goods adjustments, job work controls and segregation of exempt activities. Assessees should maintain robust records, implement internal controls, require written audit requests, restrict removal of documents, and record explanations to protect rights during audit. (AI Summary)
Service Tax
Taxpayer transparency reduces disputes by ensuring written disclosures, timely filings, documented interactions, and safeguarded responses.
Taxpayer disputes commonly stem from legal ambiguity, legislative loopholes, retrospective amendments, inconsistent internal tax policies, inaccurate disclosures and poor communication. Mitigation requires proactive transparency: written expert advice, prior intimation to the department, clear SOPs for indirect tax, inclusion of IDT in internal audits and MIS, accurate returns, timely payments, and documented interactions (oral follow ups, verified visits, guarded handling of searches/seizures and summonses) to avoid assumptions and show cause notices. (AI Summary)
Service Tax
Input tax credit availability affects service providers' treatment of supplies and choice to pay tax on a gross basis.
Input credit is available for goods used in providing taxable or exempted services except for specified fuels and goods used in original construction or works contracts; repair, renovation, erection, installation and similar service-portion works remain eligible. Valuation rules may limit credit, and providers may opt to pay tax on a gross basis instead of claiming material deductions, a practical consideration where customers can avail credit. The note questions availability of credit on duty-paid inputs used to manufacture exempt products consumed in taxable services and suggests possible need for judicial clarification. (AI Summary)
Service Tax
Job work taxation: excise applies if processing amounts to manufacture; otherwise service tax and cenvat rules govern compliance.
Job work involves processing raw materials supplied by another; tax liability depends on whether the process amounts to manufacture. If it does, Central Excise principles apply and duties may be avoided only when the principal furnishes the prescribed declaration and goods are returned or cleared as specified; if not, service tax may apply subject to exemptions. Principal manufacturers must follow Rule 4(5)(a) for cenvat credit, ensure return of goods within the stipulated period, maintain challans and job-work records, and monitor scrap/waste for duty and credit consequences. (AI Summary)
Service Tax
Seamless Cenvat Credit reform to enable full input tax credit, improve compliance and reduce indirect tax leakage.
Recommendations seek to strengthen indirect tax administration by data sharing between central and state authorities, instituting excise/service tax audits akin to income tax tax audit for large turnovers, using independent professionals and randomized audits in customs, and improving officer training and public awareness. Substantively, the note calls for seamless Cenvat credit for capital goods, inputs and input services, review of exemptions and CENVAT ratios, faster refunds for service exporters, restrictions on misuse of summons, appellate route amendments, and institutional reforms to reduce frivolous litigation and expedite adjudication. (AI Summary)
Service Tax
Voluntary payment before notice prevents penalty where tax and interest are paid absent fraud or suppression.
Voluntary payment of service tax and interest before issuance of a show cause notice prevents penalty proceedings where the short levy, short payment or non payment is not due to fraud, collusion, wilful misstatement or suppression of facts; such payment must be intimated in writing to the Chief Commissioner to bar issuance of the notice and secure exemption from penalty for non fraudulent defaults. (AI Summary)
Service Tax
Cenvat credit management improves procurement competitiveness by ensuring eligible credits, proper documentation and timely reconciliation.
Procurement officers must prioritise identification and preservation of eligible input tax credits-Cenvat credit and VAT set offs-by ensuring duty paying documentation, vendor registration, timely reconciliation, and adherence to reversal rules, while utilising duty relief routes for exporters, import planning, job work structuring, and supplier selection that passes on credits to reduce landed cost and maintain competitiveness. (AI Summary)
Budget - Tax Proposals
TaxTMI 
TaxTMI 
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13 Oct 2014 
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