Service tax on advance receipts arises only after taxable service is actually provided; mere advance receipt is not taxable.

Service tax liability arises only on provision of a taxable service, not merely on receipt of an advance. On the facts stated, the amount was taken as an advance against a bank guarantee and no taxable service had yet been provided; the timing of any later adjustment would matter only for fixing when tax incidence arose. Accordingly, the advance receipt was not subject to service tax in the absence of an actual taxable service.

---

---

Issues: Whether service tax was leviable on advance received before provision of taxable service.

Analysis: Service tax liability arises only when there is provision of taxable service. On the facts recorded, the amount received was an advance against bank guarantee and no taxable service had yet been provided. The adjustment of the advance, if and when made, was relevant only to determine the time at which tax incidence could arise.

Conclusion: Service tax was not payable on the advance receipt in the absence of provision of taxable service, and the appeal was allowed.

Ratio Decidendi: Advance received cannot be subjected to service tax unless and until it is adjusted against an actual provision of taxable service.

---