Applicability of service tax on advances or deposits received from the prospective buyers of complexes from the contractors cum owner- Whether advance or deposits

[samiuddin ansari]

Applicability of service tax on advances or deposits received from the prospective buyers of complexes from the contractor cum owner- Whether advance or deposits received from the buyers are to be included in the taxable value?

[KASTURI SETHI]

Advances are to be included in the taxable value only when these are to be adjusted against taxable service to be provided in piece meal. Suppose you take advance and your point of taxation is the date of taking advance and you pay ST but later on you are not in a position to provide service against that amount of advance on which ST has been paid. You can claim refund from the department.

The point is advance forms part of taxable value only if taxable service is to be provided otherwise not.

AI Summary

Advance receipts as taxable value - taxable when tied to provision of taxable service; otherwise excluded, with refund if paid.
Advances or deposits form part of the taxable value only when received against a taxable service to be provided piecemeal and the point of taxation is the date of receipt; if tax is paid on such advances but the service is not rendered, the payer may claim refund. Advances not linked to any future taxable service are excluded from the taxable value.