Advance receipts are not taxable as service tax before service performance; levy fails if the taxable event has not occurred.

Service tax could not be levied on an advance receipt where the taxable service had not yet been performed, because the record did not show that the advance represented consideration for service already rendered. The demand was raised on the basis of treating the advance as taxable value and applying the prescribed percentage, but the levy was premature since the taxable event arises only upon rendition of the service. Accordingly, the demand was held not sustainable.

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Issues: Whether service tax could be levied on advance receipts before the service was actually provided.

Analysis: The demand was based on treating the advance amount as the value of taxable service and applying the prescribed percentage under the relevant notifications. The record did not establish that the advance itself represented consideration for a service already rendered, and the levy proceeded before the taxable service had been provided. On that basis, the demand was found to have been raised prematurely.

Conclusion: Service tax could not be levied on the advance receipt before performance of the service, and the demand was not sustainable.

Ratio Decidendi: A tax on service cannot be sustained when levied on an advance receipt in the absence of provision of the taxable service, since the taxable event arises upon rendition of the service.

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