Service tax on forfieted AMount

[Prakash Gupta]

Dear All,

Please share your view on applicability of the service tax on forfieted amount. the assessee is providing service of residential construction services.

Thanks,

Regards

Pankaj Singh

AI Summary

Service tax on forfeited advances: taxable if treated as consideration for agreed service, not if purely penal.
The core dispute is whether forfeited advances retained by a construction service provider are taxable as consideration: one position treats retained advances as taxable consideration for a service "agreed to be provided," while the counter-position treats forfeiture as a penal/compensatory outcome of breach - not an activity constituting a "service" - and therefore outside taxable value unless contractually included or invoiced as part of the service charge.